Exhibit (k)(2)
FORM OF
BROKER-DEALER AGREEMENT
between
BANKERS TRUST COMPANY
and
[NAME OF BROKER-DEALER]
Dated as of June [___], 2001
Relating to
AUCTION PREFERRED SHARES
SERIES A AND SERIES B
of
XXXXX XXXXX SENIOR INCOME TRUST
BROKER-DEALER AGREEMENT dated as of June [__], 2001, between BANKERS TRUST
COMPANY, a New York banking corporation (the "Auction Agent") (not in its
individual capacity, but solely as agent of Xxxxx Xxxxx Senior Income Trust, a
Massachusetts business trust (the "Trust"), pursuant to authority granted to it
in the Auction Agency Agreement dated as of June [__], 2001, between the Trust
and the Auction Agent (the "Auction Agency Agreement")) and [NAME OF
BROKER-DEALER] (together with its successors and assigns, "BD").
The Trust proposes to issue 2,200 preferred shares of beneficial interest,
par value $.01 per share, liquidation preference $25,000 per share, designated
Series A Auction Preferred Shares and 2,200 preferred shares of beneficial
interest, par value $.01 per share, liquidation preference $25,000 per share,
designated Series B Auction Preferred Shares (collectively with the Series A
Auction Preferred Shares, the "APS"), pursuant to the Trust's Amended By-laws
(as defined below).
The Trust's Amended By-laws provide that the dividend rate on each Series
of APS for each Dividend Period after the Initial Dividend Period shall be the
Applicable Rate. In each case, in general, shall be the rate per annum that a
commercial bank, trust company or other financial institution appointed by the
Trust advises results from implementation of the Auction Procedures (as defined
below). The Board of Trustees of the Trust has adopted a resolution appointing
Bankers Trust Company as Auction Agent for purposes of the Auction Procedures,
and pursuant to Section 2.5 of the Auction Agency Agreement, the Trust has
requested and directed the Auction Agent to execute and deliver this Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Auction Agent and BD agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1. Terms Defined by Reference to the Amended By-laws.
Capitalized terms not defined herein shall have the respective meanings
specified in the Amended By-laws of the Trust.
1.2. Terms Defined Herein. As used herein and in the Settlement Procedures
(as defined below), the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Amended By-laws" shall mean the By-laws of the Trust, as amended
through the date hereof, establishing the powers, preferences and rights of the
APS.
(b) "Auction" shall have the meaning specified in Section 3.1 hereof.
(c) "Auction Procedures" shall mean the Auction Procedures that are set
forth in Part I, Section 19 of Article VII of the Amended By-laws.
(d) "Authorized Officer" shall mean each Managing Director, Vice President,
Assistant Vice President, Assistant Treasurer and Assistant Secretary of the
Auction Agent and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes of this Agreement in a
communication to BD.
(e) "BD Officer" shall mean each officer or employee of BD designated as a
"BD Officer" for purposes of this Agreement in a communication to the Auction
Agent.
(f) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.
(g) "Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit A.
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.
II. NOTIFICATION OF DIVIDEND PERIOD AND ADVANCE NOTICE OF ALLOCATION OF TAXABLE
INCOME.
2.1. The provisions contained in Part I, Section 4 of Article VII of the
Amended By-laws concerning the notification of a Special Rate Period will be
followed by the Auction Agent and BD, and the provisions contained therein 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 set forth
fully herein.
III. THE AUCTION.
3.1. 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 of APS, for the next Dividend Period therefore. Each periodic operation
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 set forth fully 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 Part I, Section 19 of Article VII of the Amended
By-laws may execute a Broker-Dealer Agreement and participate as Broker-Dealers
in Auctions.
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(d) BD and other Broker-Dealers may participate in Auctions for their own
accounts. However, the Trust, by notice to BD and all other Broker-Dealers, may
prohibit all Broker-Dealers from submitting Bids in Auctions for their own
accounts, provided that Broker-Dealers may continue to submit Hold Orders and
Sell Orders.
3.2. Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the APS, the Auction
Agent shall advise BD by telephone of the Reference Rate and the Maximum Rate in
effect on such Auction Date.
(b) The Auction Agent from time to time may request BD to provide it with a
list of the respective customers BD believes are Beneficial Owners of shares of
each series of APS. BD shall comply with any such request, and 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 Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of shares of APS and information related thereto only to its
officers, employees, agents or representatives who need to know such information
for the purposes of acting in accordance with this Agreement, and the Auction
Agent shall prevent the transmission of such information to others and shall
cause its officers, employees, agents and representatives to abide by the
foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.
3.3. Auction Schedule; Method of Submission of Orders.
(a) The Trust and the Auction Agent shall conduct Auctions for APS 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 Trust, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice of any such
change to BD. Such notice shall be received prior to the first Auction Date on
which any such change shall be effective.
Time Event
By 9:30 A.M. Auction Agent advises the Trust and Broker-Dealers of the
Reference Rate and the Maximum Rate as set forth in Section
3.2(a) hereof.
9:30 A.M. -
1:30 P.M. Auction Agent assembles information communicated to it by
Broker-Dealers as provided in Part II, Section 3(a) of
Article VII of the Amended By-laws. Submission Deadline is
1:00 P.M.
Not earlier
than 1:30 P.M. Auction Agent makes determinations pursuant to Part II,
Sections 3-5 of Article VII of the Amended By-laws.
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By approximately
3:00 P.M. Auction Agent advises the Trust of the results of the
Auction as provided in Part II, Section 4(b) of Article VII
of the Amended By-laws. Submitted Bids and Submitted Sell
Orders are accepted and rejected in whole or in part and
shares of APS are allocated as provided in Part II, Section
5 of Article VII of the Amended By-laws. Auction Agent gives
notice of the Auction results as set forth in Section 3.4(a)
hereof.
(b) BD agrees to maintain a list of Potential Beneficial Owners and to
contact the Potential Beneficial Owners on such list on or prior to each Auction
Date for the purposes set forth in Part II, Section 2(c)(ii) of Article VII of
the Amended By-laws.
(c) BD shall submit Orders to the Auction Agent in writing in substantially
the form attached hereto as Exhibit B. BD shall submit separate Orders to the
Auction Agent for each Potential Beneficial Owner or Beneficial Owner on whose
behalf BD is submitting an Order and shall not net or aggregate the Orders of
Potential Beneficial Owners or Beneficial Owners on whose behalf BD is
submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit C, of transfers of shares
of APS, made through BD by an Existing Holder to another Person other than
pursuant to an Auction, and (ii) a written notice, substantially in the form
attached hereto as Exhibit D, of the failure of shares of APS to be transferred
to or by any Person that purchased or sold shares of APS 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.
3.4. Notice of Auction Results.
(a) On each Auction Date, the Auction Agent shall notify BD by telephone as
set forth in paragraph (a) of the Settlement Procedures. 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 Beneficial Owner, Potential Beneficial Owner,
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.
If any Beneficial Owner or Existing Holder selling shares of APS in an
Auction fails to deliver such shares, the BD of any Person that was to have
purchased shares of APS in such Auction may deliver to such Person a number of
whole shares of APS that is less than the number of shares that otherwise was to
be purchased by such Person. In such event, the number of shares of APS to be so
delivered shall be determined by such BD. Delivery of such lesser number of
shares shall constitute good delivery. Upon the occurrence of any such failure
to deliver shares, such BD shall deliver to the Auction Agent the notice
required by Section 3.3(d)(ii) hereof. Notwithstanding the foregoing terms of
this Section 3.4(b), any delivery or non-delivery of shares of APS 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
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have been notified of such delivery or non-delivery in accordance with the terms
of Section 3.3(d) hereof. The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 3.4(b).
3.5. Service Charge to Be Paid to BD.
On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of 7 days
or less, the product of (i) a fraction the numerator of which is the number of
days in such Dividend Period (calculated by counting the first day of such
Dividend Period but excluding the last day thereof) and the denominator of which
is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of (A) the
aggregate number of APS placed by BD in the applicable Auction that were (x) the
subject of a Submitted Bid of a Beneficial Owner submitted by BD and continued
to be held as a result of such submission and (y) the subject of a Submitted Bid
of a Potential Beneficial Owner submitted by BD and were purchased as a result
of such submission plus (B) the aggregate number of APS subject to valid Hold
Orders (determined in accordance with Part II, Section 3 of Article VII of the
Amended By-laws) submitted to the Auction Agent by BD plus (C) the number of APS
deemed to be subject to Hold Orders by Beneficial Owners pursuant to Part II,
Section 3 of Article VII of the Amended By-laws that were acquired by such
Beneficial Owners through BD; and (b) in the case of any Auction Date
immediately preceding a Special Rate Period, that amount as mutually agreed upon
by the Trust and BD, based on the 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, at the commencement of such Special
Rate Period.
For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired shares of APS through BD transfers those shares to
another Person other than pursuant to an Auction, then the Broker-Dealer for the
shares so transferred shall continue to be BD, provided, however, that if the
transfer was effected by, or if the transferee is, a Broker-Dealer other than
BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.
IV. THE AUCTION AGENT.
4.1. Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust hereunder and
owes no fiduciary duties to any other Person by reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered or omitted by it, or
for any error of judgment made by it in the performance of its duties under this
Agreement. The Auction Agent shall not be liable for any error of judgment made
in good faith unless the Auction Agent shall have been negligent in ascertaining
(or failing to ascertain) the pertinent facts.
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4.2. Rights of the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in acting or
refraining from acting upon, any communication authorized by this Agreement and
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
telephone communication authorized by this Agreement which the Auction Agent
believes in good faith to have been given by the Trust 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.
4.3. Auction Agent's Disclaimer. The Auction Agent makes no representation
as to the validity or adequacy of this Agreement or the APS.
V. MISCELLANEOUS.
5.1. Termination. Any party may terminate this Agreement at any time upon
five days' prior written notice to the other party; provided, however, that if
BD is [UBS WARBURG LLC], neither BD nor the Auction Agent may terminate this
Agreement without first obtaining the prior written consent of the Trust to such
termination, which consent shall not be withheld unreasonably.
5.2. Participant in Securities Depository; Payment of Dividends in Same-Day
Funds.
(a) BD is, and shall remain for the term of this Agreement, a member of, or
a participant in, the Securities Depository (or an affiliate of such a member or
participant).
(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 APS available in
same-day funds on each Dividend Payment Date to customers that use BD (or its
affiliate) as Agent Member.
5.3. Agent Member. At the date hereof, BD is a participant of the
Securities Depository.
5.4. Communications. Except for (i) communications authorized to be made 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 (including telecopy or similar writing)
and shall be given to such party at its address or telecopier number set forth
below:
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If to BD, [_____________________]
addressed to: [_____________________]
[_____________________]
Attention: [____________________]
Telecopier No.: [________________]
Telephone No.: [________________]
If to the Auction Bankers Trust Company
Agent, addressed to: Corporate Trust and Agency Group
Four Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Auction Rate Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. 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 and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
5.5. 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.
5.6. Benefits. Nothing in this Agreement, express or implied, shall give to
any person, other than the Trust, the Auction Agent and BD and their respective
successors and assigns, any benefit of any legal or equitable right, remedy or
claim under this Agreement.
5.7. Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.
(b) Failure of either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other party
shall not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
5.8. 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 BD and the Auction Agent. This Agreement may not be assigned
by either party hereto absent the prior written consent of the other party;
provided, however, that this Agreement may be assigned by the Auction Agent to a
successor Auction Agent selected by the Trust without the consent of BD.
5.9. 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.
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5.10. 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.
5.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said state.
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.
BANKERS TRUST COMPANY
By:
Title:
[NAME OF BROKER-DEALER]
By:
Title:
8
EXHIBIT A
SETTLEMENT PROCEDURES
[Included as Appendix C to the Statement of Additional Information of the Trust]
A-1
EXHIBIT B
BANKERS TRUST COMPANY
AUCTION BID FORM
Submit To: Bankers Trust Company Issue: Xxxxx Xxxxx Senior
Four Albany Street Income Trust
Xxx Xxxx, XX 00000
Attention: Auction Rate Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder: ____________________________________________
BENEFICIAL OWNER
Shares now held _______________ HOLD _____________
BID at rate of _____________
SELL _____________
POTENTIAL BENEFICIAL OWNER
# of shares bid _____________
BID at rate of _____________ Notes:
(1) If submitting more than one Bid for one Bidder, use additional Auction Bid
Forms.
(2) If one or more Bids covering in the aggregate more than the number of
outstanding shares held by any Beneficial Owner are submitted, such bid shall be
considered valid in the order of priority set forth in the Auction Procedures on
the above issue.
(3) A Hold or Sell Order may be placed only by a Beneficial Owner covering a
number of shares not greater than the number of shares currently held.
(4) Potential Beneficial Owners may make only Bids, each of which must specify a
rate. If more than one Bid is submitted on behalf of any Potential Beneficial
Owner, 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%). Fractions will not be accepted.
NAME OF BROKER-DEALER ____________________________________________
Authorized Signature ____________________________________________
B-1
EXHIBIT C
(Note: To be used only for transfers made
other than pursuant to an Auction)
TRANSFER FORM
Re: Xxxxx Xxxxx Senior Income Trust Auction Preferred Shares
We are (check one):
[ ] the Existing Holder named below;
[ ] the Broker-Dealer for such Existing Holder; or
[ ] the Agent Member for such Existing Holder.
We hereby notify you that such Beneficial Owner has transferred _____ APS
to __________________________.
______________________________
(Name of Existing Holder)
______________________________
(Name of Broker-Dealer)
______________________________
(Name of Agent Member)
By: __________________________________
Printed Name:
Title:
C-1
EXHIBIT D
(Note: To be used only for failures to deliver
APS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for ____________________ (the "Purchaser"), which
purchased _____________ shares of APS of Xxxxx Xxxxx Senior Income Trust in the
Auction held on _________________________________from the seller of such shares.
II. We are a Broker-Dealer for _____________________ (the "Seller"), which
sold ___________________shares of APS of Xxxxx Xxxxx Senior Income Trust, in the
Auction held on _______________________________ to the Purchaser of such shares.
We hereby notify you that (check one):
[ ] the Seller failed to deliver such shares to the Purchaser
[ ] the Purchaser failed to make payment to the Seller upon delivery of
such shares
Name: ________________________________
(Name of Broker-Dealer)
By: ________________________________
Printed Name:
Title:
D-1
