===============================================================================
BROKER-DEALER AGREEMENT
among
THE BANK OF NEW YORK
as Auction Agent
------------------------------------
as Broker-Dealer
Dated as of June [ ], 2002
Relating to
SERIES C AUCTION RATE CUMULATIVE PREFERRED STOCK OF
THE GABELLI EQUITY TRUST INC.
===============================================================================
BROKER-DEALER AGREEMENT dated as of June [ ], 2002 (this
"Agreement"), among (i) The Bank of New York, a New York banking
corporation, as auction agent (the "Auction Agent") (not in its individual
capacity but solely as agent) pursuant to authority granted to it in the
Auction Agency Agreement, dated as of June [ ], 2002, (the "Auction Agency
Agreement") between the The Gabelli Equity Trust Inc., (the "Corporation")
and the Auction Agent and (ii) each broker-dealer whose name appears on the
signature page hereof, as broker-dealer (together with its successors and
assigns as such hereinafter referred to as "BD").
The Corporation intends to issue shares of Series C Auction Rate
Cumulative Preferred Stock, par value $0.001 per share, liquidation
preference $25,000 per share (the "Preferred Shares") pursuant to the
Corporation's Articles Supplementary, as defined below. The shares of
Preferred Shares shall be issued in book-entry form through the facilities
of the Securities Depository. References to "Preferred Shares" in this
Agreement shall refer only to the beneficial interests in the Preferred
Shares unless the context otherwise requires.
The Auction Procedures require the participation of a
Broker-Dealer.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Auction Agent
and BD agree as follows:
1. Definitions and Rules of Construction
1.1 Terms Defined by Articles Supplementary. Capitalized terms not
defined herein shall have the respective meanings specified in the Articles
Supplementary.
1.2 Terms Defined Herein. As used herein and in the Settlement
Procedures, the following terms shall have the following meanings, unless
the context otherwise requires:
(a) "Agent Member" of any Person shall mean the member
of, or participant in, the Securities Depositary that will act on behalf of
a Bidder.
(b) "Agreement" with respect to the Corporation shall
mean this Agreement as may be amended in writing with written consent of
the Corporation.
(c) "Articles Supplementary" shall mean the Articles
Supplementary Creating and Fixing the Rights of the Series C Auction Rate
Cumulative Preferred Stock, as the same may be amended, supplemented or
modified from time to time.
(d) "Auction" shall have the meaning specified in Section
2.1 hereof.
(e) "Auction Procedures" shall mean the auction
procedures constituting Article II of the form of Articles Supplementary as
of the filing thereof.
(f) "Authorized Officer" of the Auction Agent shall mean
each Vice President, Assistant Vice President and Assistant Treasurer of
the Auction Agent assigned to the Dealing and Trading Group of its
Corporate Trust Department and every other officer or employee of the
Auction Agent designated as an "Authorized Officer" for purposes hereof in
a written communication to the Corporation.
(g) "Corporate Officer" shall mean the Chairman and Chief
Executive Officer, the President, each Vice President (whether or not
designated by a number or word or words added before or after the title
"Vice President"), the Secretary, the Treasurer, each Assistant Vice
President, each Assistant Secretary and each Assistant Treasurer of the
Corporation and every other officer or employee of the Corporation
designated as a "Corporate Officer" for purposes hereof in a notice to the
Auction Agent.
(h) "Late Charge" has the meaning given in Section
2.7(a).
(i) "Preferred Shares" shall mean the preferred shares,
par value $.001 per share, of the Corporation designated as its "Series C
Auction Rate Cumulative Preferred Stock" and bearing such further
designation as to series as the Board of Directors, as the case may be, of
the Corporation or any committee thereof shall specify.
(j) "Settlement Procedures" shall mean the Settlement
Procedures attached to the Auction Agency Agreement as Exhibit B.
1.3 Rules of Construction. Unless the context or use indicates
another or different meaning or intent, the following rules shall apply to
the construction of this Agreement:
(a) Words importing the singular number shall include the
plural number and vice versa.
(b) The captions and headings herein are solely for
convenience of reference and shall not constitute a part of this Agreement
nor shall they affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other
words of similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day
shall be to New York City time.
(e) Section 1 and 2 hereof shall be read in conjunction
with the Articles Supplementary and in the event of any conflict with the
Articles Supplementary, the Articles Supplementary shall take precedence.
1.4 Warranties of BD. BD hereby represents and warrants that this
Broker-Dealer Agreement has been duly authorized, executed and delivered by
BD and that, assuming the due authorization, execution and delivery hereof
by the Auction Agent, this Broker-Dealer Agreement constitutes a valid and
binding agreement of BD, enforceable against it in accordance with its
terms. BD's representations and warranties in this Section 1.4 shall
survive the termination of this Agreement.
2. The Auctions
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of
determining the Applicable Rate for the Preferred Shares for the next
Dividend Period. Each periodic implementation of such procedures is
hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction
Procedures and the Settlement Procedures are incorporated herein by
reference in their entirety and shall be deemed to be a part of this
Agreement to the same extent as if such provisions were fully set forth
herein.
(c) BD agrees to act as, and assumes the obligations of
and limitations and restrictions placed upon, a Broker-Dealer under this
Agreement. BD understands that other Persons meeting the requirements
specified in the definition of "Broker-Dealer" contained in Section 13 of
Part I of the Articles Supplementary may execute a Broker-Dealer Agreement
and participate as Broker-Dealers in Auctions.
(d) BD acknowledges and agrees that each provision of the
Auction Procedures that requires BD to perform an obligation or procedure
is hereby incorporated herein by reference and that this Agreement shall
constitute the Corporation's instruction, and BD hereby agrees, to perform
such obligations and procedures without further request by or instructions
from the Corporation.
(e) BD may participate in Auctions for its own account if
it is not an affiliate of the Corporation, unless the Corporation notifies
all Broker-Dealers that they may no longer do so, in which case BD may
continue to submit Hold or Sell Orders for its own account. If BD is an
affiliate of the Corporation, it may participate in Auctions, but not for
its own account.
2.2 Preparation for Each Auction.
(a) Not later than 9:30 a.m. on each Auction Date for the
Preferred Shares, the Auction Agent shall advise BD by telephone or other
electronic means of the Maximum Rate, Reference Rate and Treasury Index
Rate.
(b) BD shall cause the Maximum Rate to be communicated as
promptly as practicable to its customers who hold or may be interested in
acquiring Preferred Shares.
(c) As promptly as practicable after determining each
Auction Date, but not later than 9:15 a.m. on the Business Day preceding
such Auction Date, the Auction Agent shall notify BD, by such means as the
Auction Agent deems practicable, of the scheduled date of such Auction
Date. If the Auction Date for any Auction shall be changed after the
Auction Agent has given such notice or the notice referred to in clause
(vii) of paragraph (a) of the Settlement Procedures, the Auction Agent, by
such means as the Auction Agent deems practicable, shall give notice of
such change to BD not later than the earlier of (x) 9:15 a.m. on the
Business Day preceding the new Auction Date, and (y) 9:15 a.m. on the
original Auction Date. Thereafter, BD shall promptly notify customers of BD
that are Existing Holders of such change in the Auction Date.
(d) If required by applicable law, or requested by the
Auction Agent, BD shall provide a list of Existing Holders based upon
inquiries of those Persons such Broker-Dealer believes are Beneficial
Owners as a result of the most recent Auction to the Auction Agent promptly
after any date so requested by the Auction Agent. The Auction Agent shall
keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the other parties hereto,
provided that the Auction Agent reserves the right to disclose any such
information if (a) it is ordered to do so by a court of competent
jurisdiction or a regulatory, judicial or quasi-judicial agency, (b) it is
advised by its counsel that its failure to do so would be unlawful or (c)
failure to do so would expose the Auction Agent to loss, liability, claim,
damage or expense for which it has not received indemnity satisfactory to
it.
(e) BD agrees to maintain a list of customers relating to
the Preferred Shares and to use its best efforts, subject to existing laws
and regulations, to contact the customers on such list whom BD believes may
be interested in participating in the Auction on each Auction Date, as a
Potential Holder, for the purposes set forth in the Auction Procedures.
Nothing herein shall require BD to submit an Order for any customer in any
Auction.
(f) The Auction Agent's registry of Existing Holders of
Preferred Shares shall be conclusive and binding on BD. BD may inquire of
the Auction Agent between 3:00 P.M. on the Business Day preceding an
Auction for Preferred Shares and 9:30 A.M. on the Auction Date for such
Auction to ascertain the number of Preferred Shares in respect of which the
Auction Agent has determined BD to be an Existing Holder. If BD believes it
is the Existing Holder of fewer Preferred Shares than specified by the
Auction Agent in response to BD's inquiry, BD may so inform the Auction
Agent of that belief. BD shall not, in its capacity as Existing Holder of
Preferred Shares, submit Orders in such Auction in respect of Preferred
Shares covering in the aggregate more than the number of Preferred Shares
specified by the Auction Agent in response to BD's inquiry.
2.3 Auction Schedule; Method of Submission of Orders.
(a) The Auction Agent shall conduct Auctions in
accordance with the schedule set forth below. Such schedule may be changed
at any time by the Auction Agent with the consent of the Corporation, which
consent shall not be unreasonably withheld. The Auction Agent shall give
written notice of any such change to BD which shall have the right to
review such change. Such notice shall be received prior to the close of
business on the Business Day immediately preceding the first Auction Date
on which any such change shall be effective.
Time Event
---- -----
By 9:30 a.m. Auction Agent advises the Corporation
and the Broker-Dealer of the applicable
Maximum Rate, the Reference Rate and
Treasury Index Rate as set forth in
Section 2.2(a) hereof.
9:30 a.m. - 1:00 p.m. Auction Agent assembles information
communicated to it by Broker-Dealer as
provided in Section 2(a) of the Auction
Procedures. Submission Deadline is 1:00
p.m.
Not earlier than Auction Agent makes determinations pursuant
1:00 p.m. to 4(a) of the Auction Procedures.
By approximately Auction Agent advises the Corporation of
3:30 p.m. results of Auction as provided in Section
4(b) of the Auction Procedures.
Submitted Bids and Submitted Sell
Orders are accepted and rejected in
whole or in part and Preferred Shares
are allocated as provided in Section 5
of the Auction Procedures. Auction
Agent gives notice of Auction results
as set forth in paragraph (a) of the
Settlement Procedures.
(b) BD may designate one or more individuals in its
organization who will coordinate its procedures in connection with Auctions
and purchases and sales of Preferred Shares.
(c) BD agrees to handle its customers' order in
accordance with its duties under applicable securities laws and rules.
(d) To the extent that pursuant to Section 5 of the
Auction Procedures of the Corporation, BD continues to hold, sell or
purchase a number of shares that is fewer than the number of shares in an
Order submitted by BD to the Auction Agent in which BD designated itself as
an Existing Holder or Potential Holder in respect of customer Orders, BD
shall make appropriate pro rata allocations among its customers for which
it submitted Orders of similar tenor. If as a result of such allocations,
any Existing Holder would be entitled or required to sell, or any Existing
Holder would be entitled or required to purchase, a fraction of a Preferred
Share on any Auction Date, BD shall, in such manner as it shall determine
in its sole discretion, round up or down the number of Preferred Shares to
be purchased or sold on such Auction Date by any Existing Holder or
Potential Holder on whose behalf BD submitted an Order so that the number
of shares so purchased or sold by each such Existing Holder or Potential
Holder on such Auction Date shall be whole shares.
(e) BD shall submit Orders to the Auction Agent in
writing in substantially the form attached hereto as Exhibit A prior to
1:00 p.m. on each Auction Date. BD shall submit separate Orders to the
Auction Agent for each Potential Holder or Existing Holder on whose behalf
BD is submitting an Order and shall not net or aggregate the Orders of
Potential Holders or Existing Holders on whose behalf BD is submitting
Orders. Any Order submitted by BD to the Auction Agent prior to the
Submission Deadline on any Auction Date shall be irrevocable.
(f) BD shall deliver to the Auction Agent a written
notice, substantially in the form attached hereto as Exhibit B, of
transfers of Preferred Shares made through BD by an Existing Holder to
another Person other than pursuant to an Auction and a written notice,
substantially in the form attached hereto as Exhibit C, of the failure of
any Preferred Shares to be transferred to or by any Person that purchased
or sold Preferred Shares through BD pursuant to an Auction. The Auction
Agent is not required to accept any notice delivered pursuant to the terms
of the foregoing sentence with respect to an Auction unless it is received
by the Auction Agent by 3:00 p.m. on the Business Day next preceding the
applicable Auction Date.
2.4 Notices.
(a) On each Auction Date, the Auction Agent shall notify
BD by telephone or facsimile (or other electronic means acceptable to both
parties) of the results of the Auction as set forth in paragraph (a) of the
Settlement Procedures. By approximately 11:30 A.M. on the Business Day next
succeeding such Auction Date, the Auction Agent shall notify BD in writing
of the disposition of all Orders submitted by BD in the Auction held on
such Auction Date.
(b) BD shall notify each Existing Holder or Potential
Holder on whose behalf BD has submitted an Order as set forth in paragraph
(b) of the Settlement Procedures and take such other action as is required
of BD pursuant to the Settlement Procedures.
2.5 Designation of Special Dividend Period.
(a) If the Corporation delivers to its Auction Agent a
notice of the Auction Date for the Preferred Shares of the Corporation for
a Dividend Period thereof that next succeeds a Special Dividend Period in
the form of Exhibit C to the Auction Agency Agreement, the Auction Agent
shall deliver such notice to BD as promptly as practicable after its
receipt of such notice from the Corporation.
(b) If the Board of Directors of the Corporation proposes
to designate any Dividend Period as a Special Dividend Period and the
Corporation delivers to its Auction Agent a notice of such proposed Special
Dividend Period in the form of Exhibit D to the Auction Agency Agreement,
such Auction Agent shall deliver such notice to BD as promptly as
practicable after its receipt of such notice from the Corporation.
(c) If the Board of Directors of the Corporation
determines to designate such Dividend Period as a Special Dividend Period,
and the Corporation delivers to its Auction Agent a notice of such Special
Dividend Period in the form of Exhibit E to the Auction Agency Agreement
not later than 3:00 P.M. on the second Business Day next preceding the
first day of such Dividend Period, such Auction Agent shall deliver such
notice to BD promptly after being notified by the Corporation on such
second Business Day.
(d) If the Corporation shall deliver to its Auction Agent
a notice not later than 3:00 P.M. on the second Business Day immediately
preceding the first day of any Dividend Period stating that the Corporation
has determined not to exercise its option to designate such Dividend Period
as a Special Dividend Period, in the form of Exhibit F to the Auction
Agency Agreement, or shall fail to timely deliver either such notice or a
notice in the form of Exhibit E to the Auction Agency Agreement, such
Auction Agent shall deliver a notice in the form of Exhibit F to the
Auction Agency Agreement to BD promptly after being notified by the
Corporation on such second Business Day.
2.6 Allocation of Taxable Income.
If the Corporation delivers to its Auction Agent a notice
in the form of Exhibit I to the Auction Agency Agreement designating all or
a portion of any dividend on Preferred Shares of the Corporation to consist
of net capital gains or other income taxable for Federal income tax
purposes, and BD is a Broker-Dealer for Preferred Shares, such Auction
Agent shall deliver such notice to BD on the Business Day following its
receipt of such notice from the Corporation. On or prior to the Auction
Date referred to in such notice, BD will contact each of its customers that
is a Existing Holder of Preferred Shares or a Potential Holder of Preferred
Shares interested in submitting an Order in the Auction to be held on such
Auction Date, and BD will notify such Existing Holders and Potential
Holders of the contents of such notice. BD will be deemed to have notified
such Existing Holders and Potential Holders if, for each of them, (i) BD
makes a reasonable effort to contact such Existing Holder or Potential
Holder by telephone, and (ii) upon failing to contact such Existing Holder
or Potential Holder by telephone BD mails written notification to such
Existing Holder or Potential Holder at the mailing address indicated in the
account records of BD.
The Auction Agent for the Preferred Shares shall be
required to notify BD within two Business Days after each Auction of the
Auction Agent's receipt of notice from the Corporation that such Auction
involves an allocation of income taxable for Federal income tax purposes as
to the dollar amount per share of such taxable income and income exempt
from Federal income taxation included in the related dividend.
2.7 Default.
(a) If: (i) any Default shall have occurred with respect
to Preferred Shares of the Corporation during any Dividend Period thereof,
but, prior to 12:00 Noon, New York City time, on the third Business Day
next succeeding the date on which such Default occurred, such Default shall
have been cured in accordance with Section 2.8 of the Auction Agency
Agreement and the Corporation shall have paid to the Auction Agent the late
charge (the "Late Charge") as described in Section 2.8 of the Auction
Agency Agreement, then such Auction Agent shall deliver a notice in the
form of Exhibit G to the Auction Agency Agreement by first-class mail,
postage prepaid, to BD not later than one Business Day after its receipt of
the payment from the Corporation curing such Default and such Late Charge.
(b) If any Default shall have occurred with respect to
Preferred Shares of the Corporation during any Dividend Period thereof,
and, prior to 12:00 Noon, New York City time, on the third Business Day
next succeeding the date on which such Default occurred, such Default shall
not have been cured as described in Section 2.8 of the Auction Agency
Agreement or the Corporation shall not have paid to the Auction Agent the
applicable Late Charge described in Section 2.8 of the Auction Agency
Agreement; then such Auction Agent shall deliver a notice in the form of
Exhibit H to the Auction Agency Agreement to the Broker-Dealers not later
than one Business Day after the receipt of the payment from the Corporation
curing such Default and Late Charge.
2.8 Service Charge to Be Paid to BD.
(a) No later than 12:00 noon on each Dividend Payment
Date, the Auction Agent after each Auction will pay a service charge from
funds provided by the Corporation to each Broker-Dealer on the basis of the
purchase price of Preferred Shares placed by such Broker-Dealer at such
Auction. The service charge shall be (i) in the case of any Dividend Period
of less than 365 days, the product of (A) a fraction, the numerator of
which is the number of days in such Dividend Period and the denominator of
which is 365, times (B) 1/4 of 1%, times (C) $25,000 times (D) the
aggregate number of Preferred Shares placed by such Broker-Dealer at such
Auction and (ii) in the case of any Dividend Period of 365 days or more,
the amount determined by mutual consent of the Corporation and any such
Broker-Dealers and shall be based upon a selling concession that would be
applicable to an underwriting of fixed or variable rate Preferred Shares
with a similar final maturity or variable rate dividend period,
respectively, at the commencement of the Dividend Period with respect to
such Auction. For the purpose of this Section 2.8(a), Preferred Shares will
be considered "placed" by a Broker-Dealer if such shares were (I) the
subject of Hold orders deemed to have been submitted to the Auction Agent
by the Broker-Dealer and were acquired by such Broker-Dealer for its
customers who are Beneficial Owners or (II) the subject of an order
submitted by such Broker-Dealer that is (A) a Submitted Bid of an Existing
Holder that resulted in such Existing Holder continuing to hold such shares
as a result of the Auction, (B) a Submitted Bid of a Potential Holder that
resulted in such Potential Holder purchasing such shares as a result of the
Auction or (C) a valid Hold Order.
(b) If the Corporation determines to change the rate at
which the Broker-Dealer Fee accrues, the Corporation shall mail to the
Auction Agent a notice thereof within two Business Days of such change. Any
change in the Broker-Dealer fee rate shall be effective on the Auction Date
next succeeding the Auction Agent's receipt of notice of such change.
2.9 Settlement.
(a) If any Existing Holder selling Preferred Shares in an
Auction fails to deliver such Preferred Shares (by authorized book-entry),
the BD of any Person that was to have purchased Preferred Shares in such
Auction may deliver to such Person a number of Preferred Shares that is
less than the number of Preferred Shares that otherwise were to be
purchased by such Person. In such event, the number of Preferred Shares to
be so delivered shall be determined by BD. Delivery of such lesser number
of Preferred Shares shall constitute good delivery. Upon the occurrence of
any such failure to deliver Preferred Shares, BD shall deliver to the
Auction Agent the notice required by Section 2.3(f) hereof. Notwithstanding
the foregoing provisions of this Section 2.9(a), any delivery or non
delivery of Preferred Shares which represents any departure from the
results of an Auction, as determined by the Auction Agent, shall be of no
effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 2.3(f)
hereof. The Auction Agent shall have no duty or liability with respect to
enforcement of this Section 2.9(a).
(b) Neither the Auction Agent nor the Corporation shall
have any responsibility or liability with respect to the failure of an
Existing Holder, a Potential Holder or an Agent Member or any of them to
deliver Preferred Shares or to pay for Preferred Shares sold or purchased
pursuant to the Auction Procedures or otherwise.
(c) Notwithstanding any provision of the Auction
Procedures or the Settlement Procedures to the contrary, in the event BD is
an Existing Holder with respect to Preferred Shares and the Auction
Procedures provide that BD shall be deemed to have submitted a Sell Order
in an Auction with respect to such shares if BD fails to submit an Order in
that Auction with respect to such shares, BD shall have no liability to any
Person for failing to sell such shares pursuant to such a deemed Sell Order
if (i) such shares were transferred by the beneficial owner thereof without
notification of such transfer in compliance with the Auction Procedures or
(ii) BD has indicated to the Auction Agent pursuant to Section 2.2(f) of
this Agreement that, according to BD's records, BD is not the Existing
Holder of such shares.
(d) Notwithstanding any provision of the Auction
Procedures or the Settlement Procedures to the contrary, in the event an
Existing Holder of Preferred Shares with respect to whom a Broker-Dealer
submitted a Bid to the Auction Agent for such shares that was accepted in
whole or in part, or submitted or is deemed to have submitted a Sell Order
for such shares that was accepted in whole or in part, fails to instruct
its Agent Member to deliver such shares against payment therefore, partial
deliveries of Preferred Shares that have been made in respect of Potential
Holders' Submitted Bids for Preferred Shares that have been accepted in
whole or in part shall constitute good delivery to such Potential Holders.
3. The Auction Agent
3.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the
Corporation hereunder and owes no duties, fiduciary or otherwise, to any
Person other than by reason of the Auction Agency Agreement.
(b) The Auction Agent undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement and
the Auction Agency Agreement, and no implied covenants or obligations shall
be read into this Agreement, the Auction Agency Agreement, Auction
Procedures or the Settlement Procedures against the Auction Agent.
(c) In the absence of gross negligence or willful
misconduct on its part, the Auction Agent shall not be liable for any
action taken, suffered, or omitted or for any error of judgment made by it
in the performance of its duties under the Agreement. The Auction Agent
shall not be liable for any error of judgment resulting from the use or
reliance on a source of information used in good faith unless the Auction
Agent shall have been grossly negligent in the determination, calculation
or declaration thereunder. The Auction Agent shall not be liable for any
error of judgment made in good faith unless the Auction Agent shall have
been grossly negligent in ascertaining (or failing to ascertain) the
pertinent facts.
(d) The Auction Agent shall not be: (i) required to, and
does not, make any representations or have any responsibilities as to the
validity, accuracy, value or genuineness of any signatures or endorsements,
other than its own; (ii) obligated to take any legal action hereunder that
might, in its judgment, involve any expense or liability, unless it has
been furnished with indemnity satisfactory to the Auction Agent; and (iii)
responsible for or liable in any respect on account of the identity,
Corporation or rights of any Person (other than itself and its agents and
attorneys) executing or delivering or purporting to execute or deliver any
document under this Agreement or any Broker-Dealer Agreement.
(e) The Auction Agent shall not be responsible or liable
for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control; it being understood that the
Auction Agent shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely and shall be
fully protected in acting or refraining from acting upon any communication
authorized by this Agreement and upon any written instruction, notice,
request, direction, consent, report, certificate, share certificate or
other instrument, paper or document believed by it to be genuine. The
Auction Agent shall not be liable for acting upon any communication
authorized by this Agreement (including, but not limited to, any made by
telephone, telecopier or other means of electronic communication acceptable
to the parties hereto) which the Auction Agent believes in good faith to
have been given by the Corporation or by BD. The Auction Agent may record
telephone communications with BD.
(b) The Auction Agent may consult with counsel of its own
choice, and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance,
expend or risk its own funds or otherwise incur or become exposed to
financial liability in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise
its rights hereunder either directly or by or through agents or attorneys
and shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed by it with due care.
(e) The Auction Agent shall not be responsible or liable
for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, it being understood that the
Auction Agent shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.
3.3 Auction Agent's Disclaimer. The Auction Agent makes
no representation as to, and shall have no liability with respect to, the
correctness of the recitals in, or the validity, adequacy or accuracy of,
this Agreement, the Auction Agency Agreement, the Auction Procedures, the
offering material used in connection with the offer and sale of the
Preferred Shares or any other agreement or instrument executed in
connection with the transactions contemplated herein or in any thereof.
4. Duties and Responsibilities of BD
(a) BD undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement, the Auction
Agency Agreement or Settlement Procedures against BD.
(b) In the absence of gross negligence or willful
misconduct on its part, BD shall not be liable for any action taken,
suffered, or omitted or for any error of judgment made by it in the
performance of its duties under this Agreement. BD shall not be liable for
any error resulting from the use or reliance on a source of information
used in good faith and without gross negligence to make any determination,
calculation or declaration hereunder. BD shall not be liable for any error
of judgment made in good faith unless BD shall have been grossly negligent
in ascertaining or failing to ascertain the pertinent facts.
(c) BD shall not be: (i) required to, and does not, make
any representations or have any responsibilities as to the validity,
accuracy, value or genuineness of any signatures or endorsements, other
than its own; (ii) obligated to take any legal action hereunder that might,
in its judgment, involve any expense or liability, unless it has been
furnished with indemnity satisfactory to BD; and (iii) responsible for or
liable in any respect on account of the identity, trust or rights of any
Person (other than itself and its agents and attorneys) executing or
delivering or purporting to execute or deliver any document under this
Agreement or any Broker-Dealer Agreement.
(d) BD shall not be responsible or liable for any failure
or delay in the performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God;
earthquakes; fires; floods; wars; civil or military disturbances; sabotage;
epidemics; riots; interruptions, loss or malfunctions of utilities,
Internet or communications services; acts of civil or military authority;
or governmental actions; it being understood that BD shall use reasonable
efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the
circumstances.
5. Miscellaneous
5.1 Termination. (a) Any party may terminate this Agreement at any
time upon five (5) days written notice to the other parties, which notice may
be given by facsimile as provided in Section 5.3 hereof. This Agreement shall
automatically terminate upon the redemption of all outstanding Preferred
Shares or upon termination of the Auction Agency Agreement.
(b) BD represents that it (or if BD does not act as Agent
Member, one of its affiliates) shall make all dividend payments on the
Preferred Shares available in same-day funds on each Dividend Payment Date
to customers that use BD or affiliate as Agent Member.
5.2 Agent Member. BD is, and shall remain for the term of this
Agreement, a member of, or participant in, the Securities Depository (or an
affiliate of such a member or participant).
5.3 Communications. Except for (i) communications authorized to be
by telephone pursuant to this Agreement or the Auction Procedures and (ii)
communications in connection with the Auctions (other than those expressly
required to be in writing), all notices, requests and other communications
to any party hereunder shall be in writing (for the purposes of this
Agreement, telecopy or other means of electronic communication acceptable
to the parties shall be deemed to be in writing) and shall be given to such
party, addressed to it, at its address, telecopy number set forth below
and, where appropriate reference the particular Auction to which such
notice relates:
If to BD, ___________________________
addressed: ___________________________
___________________________
Attention: ________________
Telephone No.: ____________
Facsimile No.: _____________
If to the Auction The Bank of New York
Agent, addressed: 0 Xxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group - Auction Desk
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to the Corporation, The Gabelli Equity Trust Inc.
addressed: Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Telecopier No.: 914-921-5100
Telephone No.: 000-000-0000
or such other address or facsimile number as such party may hereafter
specify for such purpose by notice to the other parties. Each such notice,
request or communication shall be effective when delivered at the address
specified herein. Communications shall be given on behalf of BD by a BD
Officer, on behalf of the Auction Agent by an Authorized Officer and on
behalf of the Corporation by a Corporate Officer. Telephone communications
may be recorded.
5.4 Entire Agreement. This Agreement contains the entire agreement
between the parties relating to the subject matter hereof, and there are no
other representations, endorsements, promises, agreements or
understandings, oral, written or inferred, between the parties relating to
the subject matter hereof.
5.5 Benefits. Nothing in this Agreement, express or implied, shall
give to any person, other than the Auction Agent, the Corporation and BD
and their respective successors and permitted assigns, any benefit of any
legal or equitable right, remedy or claim under this Agreement.
5.6 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part,
except by a written instrument signed by a duly authorized representative
of each of the parties hereto.
(b) Failure of any party to this Agreement to exercise
any right or remedy hereunder in the event of a breach of this Agreement by
any other party shall not constitute a waiver of any such right or remedy
with respect to any subsequent breach.
5.7 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the respective successors
and permitted assigns of each of the parties hereto. This Agreement may not
be assigned by any party hereto absent the prior written consent of the
other parties.
5.8 Severability. If any clause, provision or section of this
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision
or section shall not affect any remaining clause, provision or section
hereof.
5.9 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
5.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW, OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK). THE
PARTIES AGREE THAT ALL ACTIONS AND PROCEEDINGS ARISING OUT OF THIS
BROKER-DEALER AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
BROUGHT IN THE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW
YORK, STATE OF NEW YORK. EACH PARTY WAIVES ANY OBJECTION THAT IT MAY HAVE
THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN THE COURTS LOCATED IN THE
BOROUGH OF MANHATTAN, CITY OF NEW YORK AND STATE OF NEW YORK WAS BROUGHT IN
AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME. EACH OF
THE PARTIES HERETO ALSO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
THE BANK OF NEW YORK
as Auction Agent
By:
-------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
[ ]
as Broker-Dealer
By:
-------------------------------------
Name:
Title:
Exhibit A
To BROKER-DEALER
AGREEMENT
AUCTION BID FORM
(Submit only one Order on this Order Form)
THE GABELLI EQUITY TRUST INC.
Series C Auction Rate Cumulative Preferred Stock ("Preferred Shares")
To: The Bank of New York Date of Auction ___________
0 Xxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group - Auction Desk
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder: __________________________________
Bidder placed the Order listed below covering the number
of shares indicated (complete only one blank):
_________________ number of Preferred Shares now held by
Bidder (an Existing Holder), and the Order is a (check
one):
|_| Hold Order; or
|_| Bid at a rate of ____%; or
|_| Sell Order;
-- or -
_________________ number of Preferred Shares not now held
by Bidder (a Potential Holder), and the Order is
a Bid at a rate of ______%
Notes:
(1) If submitting more than one Bid for one Bidder, use additional Order
Forms.
(2) If one or more Bids covering in the aggregate more than the
outstanding number of Preferred Shares held by any Existing Holder
are submitted, such Bids shall be considered valid in the order of
priority set forth in the Auction Procedures.
(3) A Hold or Sell Order may be placed only by an Existing Holder
covering a number of Preferred Shares not greater than the number
of Preferred Shares currently held by such Existing Holder.
(4) Potential Holders may make Bids only, each of which must specify a
rate. If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
specified.
(5) Bids may contain no more than three figures to the right of the
decimal point (.001 of 1%).
(6) An Order must be submitted in whole Preferred Shares with an
aggregate liquidation preference of $25,000.
Name of Broker-Dealer: ____________________
By: _______________________________________
Exhibit B
To BROKER-DEALER
AGREEMENT
(To be used only for transfers made other than
pursuant to an Auction)
TRANSFER FORM
THE GABELLI EQUITY TRUST INC.
Series C Auction Rate Cumulative Preferred Stock ("Preferred Shares")
We are (check one):
|_| the Existing Holder named below; or
|_| the Broker-Dealer for such Existing Holder; or
|_| the Agent Member for such Existing Holder.
We hereby notify you that such Existing Holder will
transfer ___ Preferred Shares to ____________________.
GABELLI EQUITY TRUST INC.
______________________________________ _______________________________________
______________________________________ _______________________________________
By: _______________________________
Name:
Title:
______________________________________ _______________________________________
______________________________________ _______________________________________
(Name of Existing Holder)
______________________________________ _______________________________________
______________________________________ _______________________________________
(Name of Broker-Dealer)
______________________________________ _______________________________________
______________________________________ _______________________________________
(Name of Agent Member)
______________________________________ _______________________________________
______________________________________ _______________________________________
By: _______________________________
Name:
Title:
Exhibit C
To BROKER-DEALER
AGREEMENT
(To be used only for failures to deliver
Preferred Shares sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
THE GABELLI EQUITY TRUST INC.
Series C Auction Rate Cumulative Preferred Stock ("Preferred Shares")
Complete either I. or II.
I. We are a Broker-Dealer for ______________ (the "Purchaser"), which
purchased ____ Preferred Shares in the Auction held on ______________
from the seller of such Preferred Shares.
II. We are a Broker-Dealer for _____________ (the "Seller"), which sold
____ Preferred Shares in the Auction held on ____________________ to
the purchaser of such Preferred Shares.
We hereby notify you that (check one):
__________ the Seller failed to deliver such Preferred Shares to the
Purchaser; or
__________ the Purchaser failed to make payment to the Seller upon
delivery of such Preferred Shares.
Name: ________________________________
(Name of Broker-Dealer)
______________________________________ _______________________________________
______________________________________ _______________________________________
By: __________________________________
Printed Name:
Title:
Capitalized terms used in this letter, unless otherwise defined
herein, shall have the meanings set forth in the Articles Supplementary
Creating and Fixing the Rights of the Series C Auction Rate Cumulative
Preferred Stock, as the same may be amended, supplemented or modified from
time to time.
(Name of Purchaser)
By: __________________________________
Name:
Title:
Address: _____________________________
______________________________________
______________________________________
Dated:
