SUBSCRIPTION AGENT AGREEMENT
Exhibit (k)(ii)
This Subscription Agent Agreement (the “Agreement”) is made as of January 20, 2011 by and
among The GDL Fund (the “ Company”), Computershare Inc., a Delaware corporation and its fully owned
subsidiary Computershare Trust Company, N.A., a national banking (collectively, the “Agent” or
individually “Computershare” and the “Trust Company”, respectively). All terms not defined herein
shall have the meaning given in the prospectus (the “Prospectus”) included in the (Registration
Statement on Form N-2 Securities Act, File No. 333-149864 filed by the Company with the Securities
and Exchange Commission on January 21, 2011, as amended by any amendment filed with respect thereto
(the “Registration Statement”).
WHEREAS, the Company proposes to make a subscription offer by issuing certificates or other
evidences of subscription rights, in the form designated by the Company (the “Subscription
Certificates”) to shareholders of record (the “Shareholders”) of its Series A Cumulative Callable
Preferred Shares (“Series A Preferred Shares”), as of a record date specified by the Company (the
“Record Date”), pursuant to which each Shareholder will have certain rights (the “Rights”) to
subscribe for Series B Cumulative Callable and Puttable Preferred Shares (“Series B Preferred
Shares”), as described in and upon such terms as are set forth in the Prospectus, a final copy of
which has been or, upon availability will promptly be, delivered to the Agent; and
WHEREAS, the Company wishes the Agent to perform certain acts on behalf of the Company, and
the Agent is willing to so act, in connection with the distribution of the Subscription
Certificates and the issuance and exercise of the Rights to subscribe therein set forth, all upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements set forth
herein, the parties agree as follows:
1. Appointment.
The Company hereby appoints the Agent to act as subscription agent in connection with the
distribution of Subscription Certificates and the issuance and exercise of the Rights in accordance
with the terms set forth in this Agreement and the Agent hereby accepts such appointment.
2. Form and Execution of Subscription Certificates.
A. Each Subscription Certificate shall be irrevocable. The Agent shall, maintain a register
of Subscription Certificates and the holders of record thereof (each of whom shall be deemed a
“Shareholder” hereunder for purposes of determining the rights of holders of Subscription
Certificates).
3. Rights and Issuance of Subscription Certificates.
A. Each Subscription Certificate shall evidence the Rights of the Shareholder therein named
to purchase Series B Preferred Shares upon the terms and conditions therein and herein set forth.
B. Upon the written advice of the Company, signed by any of its duly authorized officers, as
to the Record Date, the Agent shall, from a list of the Company Shareholders as of the Record Date
to be obtained from American Stock Transfer and Trust Company, LLC the “Transfer Agent” of the
Company, prepare and record Subscription Certificates in the names of the Shareholders, setting
forth the number of Rights to subscribe for the Company’s Series B Preferred Shares calculated on
the basis of three Rights for one share of Series A Preferred Shares recorded on the books in the
name of each such Shareholder as of the Record Date. Each Subscription Certificate shall be dated
as of the Record Date and shall be executed manually or by facsimile signature of a duly authorized
officer of the Rights Agent. Upon the written advice, signed as aforesaid, as to the effective
date of the Registration Statement, the Agent shall promptly countersign and deliver the
Subscription Certificates, together with a copy of the Prospectus, instruction letter and any other
document as the Company deems necessary or appropriate, to all Shareholders with record addresses
in the United States (including its territories and possessions and the District of Columbia).
Delivery shall be by first class mail (without registration or insurance), except for those
Shareholders having a registered address outside the United States (who will only receive copies of
the Prospectus, instruction letter and other documents as the Company deems necessary or
appropriate, if any), delivery shall be by air mail (without registration or insurance) and by
first class mail (without registration or insurance) to those Shareholders having APO or FPO
addresses. No Subscription Certificate shall be valid for any purpose unless so executed.
C. The Agent will mail a copy of the Prospectus, instruction letter, a special notice and
other documents as the Company deems necessary or appropriate, if any, but not Subscription
Certificates to Record Date Shareholders whose record addresses are outside the United States
(including its territories and possessions and the District of Columbia) (“Foreign Record Date
Shareholders”). The Rights to which such Subscription Certificates relate will be held by the
Agent for such Foreign Record Date Shareholders’ accounts until instructions are received to
exercise, sell or transfer the Rights.
4. Exercise.
A. Record Date Shareholders may acquire shares of Series B Preferred Shares on Primary
Subscription and pursuant to the Over-Subscription Privilege by delivery to the Agent as specified
in the Prospectus of (i) the Subscription Certificate with respect thereto, duly executed by such
Shareholder in accordance with and as provided by the terms and conditions of the Subscription
Certificate, together with (ii) the Subscription Price, as disclosed in the Prospectus, for each
share of Series B Preferred Share subscribed for by exercise of such Rights, in U.S. dollars by
money order or check drawn on a bank in the United States, in each case payable to the order of the
Company or Computershare.
B. Rights may be exercised at any time after the date of issuance of the Subscription
Certificates with respect thereto but no later than 5:00 P.M. Eastern Time on such date as the
Company shall designate to the Agent in writing (the “Expiration Date”). For the purpose of
determining the time of the exercise of any Rights, delivery of any material to the Agent shall be
deemed to occur when such materials are received at the Shareholder Services Division of the Agent
specified in the Prospectus.
C. Notwithstanding the provisions of Section 4 (a) and 4 (b) regarding delivery of an
executed Subscription Certificate to the Agent prior to 5:00 P.M. Eastern Time on the Expiration
Date, if prior to such time the Agent receives a Notice of Guaranteed Delivery by facsimile
(telecopy) or otherwise from a bank, a trust company or a New York Stock Exchange member
guaranteeing delivery of (i) payment of the full Subscription Price for Series B Preferred Shares
subscribed for on Primary Subscription and any additional Series B Prefferred Shares subscribed for
pursuant to the Over-Subscription Privilege, and (ii) a properly completed and executed
Subscription Certificate, then such exercise of Primary Subscription Rights and Over-Subscription
Rights shall be regarded as timely, subject, however, to receipt of the duly executed Subscription
Certificate and full payment for the Series B Preferred Shares by the Agent within three Business
Days (as defined below) after the Expiration Date (the “Protect Period”). For the purposes of the
Prospectus and this Agreement, “Business Day” shall mean any day on which trading is conducted on
the New York Stock Exchange.
D. A holder of Rights may purchase one Series B Preferred Share for every two Rights
excercised. Rights may be exercised at a price of $50.00 per Series B Preferred Share (the
‘Subscription Price’). As soon as practicable after the Expiration Date, COMPUTERSHARE shall send
to each exercising shareholder (or, Series A Preferred Shares on the Record Date are held by Cede &
Co. or any other depository or nominee, to Cede & Co. or such other depository or nominee) a
confirmation showing the number of Series B Preferred Shares acquired pursuant to the Primary
Subscription, and, if applicable, the Over-Subscription Privilege, the per share and total purchase
price for such shares, and any additional amount payable to the Company by such shareholder or any
excess to be refunded by the Company to such shareholder in the form of a check and stub, along
with a letter explaining the allocation of Series B Preferred Shares pursuant to the
Over-Subscription Privilege.
E. Any additional payment required from a shareholder must be received by Computershare
within ten Business Days after the Expiration Date and any excess payment to be refunded by the
Company to a shareholder will be mailed by Computershare within ten Business Days after the
Confirmation Date. If a shareholder does not make timely payment of any additional amounts due in
accordance with Section 4(D), Computershare will consult with the Company in accordance with
Section 5 as to the appropriate action to be taken. Computershare will not instruct issuance to
the Transfer Agent for shares subscribed for until payment in full therefore has been received,
including collection of checks and payment pursuant to notices of guaranteed delivery.
5. Validity of Subscriptions.
Irregular subscriptions not otherwise covered by specific instructions herein shall be
submitted to an appropriate officer of the Company and handled in accordance with his or her
instructions. Such instructions will be documented by the Agent indicating the instructing officer
and the date thereof.
6. Over-Subscription.
If, after allocation of Series B Preferred Shares to Record Date Shareholders, there remain
unexercised Rights, then the Agent shall allot the shares issuable upon exercise of such
unexercised Rights (the “Remaining Shares”) to Shareholders who have exercised all the Rights
initially issued to them and who wish to acquire more than the number of shares for which the
Rights issued to them are exercisable. Shares subscribed for pursuant to the Over-Subscription
Privilege will be allocated in the amounts of such over-subscriptions. If the number of shares for
which the Over-Subscription Privilege has been exercised is greater than the Remaining Shares,
the Agent shall allocate the Remaining Shares to Record Date Shareholders subscribing pursuant to
the Over-Subscription Privilege based on the number of shares of Series A Cumulative Callable
Preferred Stock owned by them on the Record Date. Rights acquired in the secondary market may not
participate in the over subscription privilege. The Agent shall advise the Company immediately
upon the completion of the allocation set forth above as to the total number of Series B Preferred
Shares subscribed and distributable.
7. Holding Proceeds of Rights Offering.
A. All proceeds received by Computershare from Shareholders in respect of the exercise of
Rights shall be held by Computershare, on behalf of the Company, in a segregated account (the
“Account”). No interest shall accrue to the Company or shareholders on funds held in the Account
pending disbursement in the manner described in Section 4(E) above.
B. Computershare shall deliver all proceeds received in respect of the exercise of Rights to
the Company as promptly as practicable, but in no event later than four business days after the
Expiration Date.
C. The Company acknowledges that the bank accounts maintained by Computershare in connection
with the services provided under this Agreement will be in its name and that Computershare may
receive investment earnings in connection with the investment at Computershare’s risk and for its
benefit of funds held in those accounts from time to time.
8. Reports.
Daily, during the period of the offer until termination of the Subscription Period, the Agent
will report by telephone or telecopier, confirmed by letter, to an officer of the Company, data
regarding Rights exercised, the total number of Series B Preferred Shares subscribed for, and
payments received therefor, bringing forward the figures from the previous day’s report in each
case so as to show the cumulative totals and any such other information as may be mutually
determined by the Company and the Agent.
9. Loss or Mutilation.
If any Subscription Certificate is lost, stolen, mutilated or destroyed, the Agent may, on
such terms which will indemnify and protect the Company and the Agent as the Agent may in its
discretion impose (which shall, in the case of a mutilated Subscription Certificate include the
surrender and cancellation thereof), issue a new Subscription Certificate of like denomination in
substitution for the Subscription Certificate so lost, stolen, mutilated or destroyed.
10. Compensation for Services.
The Company agrees to pay to the Agent compensation for its services hereunder in accordance
with its Fee Schedule to act as Agent attached hereto as Exhibit A. The Company further agrees
that it will reimburse the Agent for its reasonable out-of-pocket expenses incurred in the
performance of its duties as such.
11. Instructions, Indemnification and Limitation of Liability.
11.1 Company Indemnity. The Company covenants and agrees to
indemnify and to hold the Agent harmless against any costs, expenses
(including reasonable fees of its legal counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become
subject, arising from or out of, directly or indirectly, any claims or liability resulting from its
actions as Agent (including as Agent the provision of any services set forth in the Fee and Service
Schedule attached hereto) pursuant to the terms set forth in this Agreement; provided, that such
covenant and agreement does not extend to, and the Agent shall not be indemnified with respect to,
such costs, expenses, losses and damages incurred or suffered by the Agent as a result of, or
arising out of, its gross negligence, bad faith, or willful misconduct.
In addition to the foregoing, the Agent:
A. Shall have no duties or obligations other than those specifically set forth herein or as
may subsequently be requested of the Agent by the Company with respect to the Subscription Offer
and agreed upon by the Agent;
B. May rely on and shall be indemnified and held harmless by the Company in acting upon any
certificate, instrument, opinion, notice, letter, facsimile transmission, telegram or other
document, or any security delivered to it, and reasonably believed by it to be genuine and to have
been signed by the proper party or parties;
C. May consult with counsel satisfactory to it (including counsel for the Company) and shall
be held harmless in relying on the written advice or opinion of such counsel in respect of any
action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice
or opinion of such counsel.
11.2 Instructions. From time to time, Agent may apply to any officer of the Company for
instruction and Company shall provide Agent with such instructions concerning the Services. In
addition, Agent may consult with legal counsel for the Agent or the Company with respect to any
matter arising in connection with the services to be performed by the Agent under this Agreement,
and Agent and its agents and subcontractors shall not be liable and shall be indemnified by the
Company for any action taken or omitted by it in reliance upon any Company instructions or upon the
advice or opinion of such counsel. The Agent shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from the Company.
11.3 Agent Indemnification/Limitation of Liability. Agent shall be responsible for and
shall indemnify and hold the Company harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a)
Agent’s refusal or failure to comply with the terms of this Agreement, (b) Agent’s gross negligence
or willful misconduct, or (c) Agent’s breach of any representation or warranty hereunder, for which
Agent is not entitled to indemnification under this Agreement; provided, however, that Agent’s
aggregate liability during any term of this Agreement with respect to, arising from, or arising in
connection with this Agreement, or from all Services provided or omitted to be provided under this
Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the
amounts paid hereunder by the Company to Agent as fees and charges, but not including reimbursable
expenses.
11.4 Notice. In order that the indemnification provisions contained in this Section
shall apply, upon the assertion of a claim for which one party may be required to indemnify the
other, the party seeking indemnification shall promptly notify the other party of such assertion,
and shall
keep the other party advised with respect to all developments concerning such claim. The
indemnifying party shall have the option to participate with the indemnified party in the defense
of such claim or to defend against said claim in its own name or the name of the indemnified party.
The indemnified party shall in no case confess any claim or make any compromise in any case in
which the indemnifying party may be required to indemnify it except with the indemnifying party’s
prior written consent.
12. Changes in Subscription Certificate.
The Agent may, without the consent or concurrence of the Shareholders in whose names
Subscription Certificates are registered, by supplemental agreement or otherwise, concur with the
Company in making any changes or corrections in a Subscription Certificate that it shall have been
advised by counsel (who may be counsel for the Company) is appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or clerical omission or mistake or manifest error
therein or herein contained, and which shall not be inconsistent with the provision of the
Subscription Certificate except insofar as any such change may confer additional rights upon the
Shareholders.
13. Assignment/Delegation.
A. Except as provided in Section 13(B) below, neither this Agreement nor any rights or
obligations hereunder may be assigned or delegated by either party without the written consent of
the other party.
B. The Agent may, without further consent on the part of the Company, subcontract with other
subcontractors for systems, processing, telephone and mailing services, and post-exchange
activities, as may be required from time to time; provided, however, that the Agent shall be as
fully responsible to the Company for the acts and omissions of any subcontractor as it is for its
own acts and omissions.
14. Third Party Beneficiaries. Except as explicitly stated elsewhere in this Agreement,
nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to
anyone other than the Agent and the Company and the duties and responsibilities undertaken pursuant
to this Agreement shall be for the sole and exclusive benefit of the Agent and the Company.
Neither party shall make any commitments with third parties that are binding on the other party
without the other party’s prior written consent.
15. Governing Law.
The validity, interpretation and performance of this Agreement shall be governed by the law of
the Commonwealth of Massachusetts.
16. Partnership.
This Agreement does not constitute an agreement for a partnership or joint venture between the
Agent and the Company.
17. Force Majeure.
In the event either party is unable to perform its obligations under the terms of this
Agreement because of acts of God, strikes, terrorist acts, equipment or transmission failure or
damage reasonably beyond its control, or other cause reasonably beyond its control, such party
shall not be liabile for damages to the other for any damages resulting from such failure to
perform or otherwise from such causes. Performance under this Agreement shall resume when the
affected party or parties are able to perform substantially that party’s duties.
18. Consequential Damages.
Neither party to this Agreement shall be liable to the other party for any consequential,
indirect, special or incidental damages under any provisions of this Agreement or for any
consequential, indirect, penal, special or incidential damages arising out of any act or failure to
act hereunder even if that party has been advised of or has foreseen the possibility of such
damages.
19. Severability.
If any provision of this Agreement shall be held invalid, unlawful, or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired.
20. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall be considered one and the same agreement.
21. Captions.
The captions and descriptive headings herein are for the convenience of the parties only.
They do not in any way modify, amplify, alter or give full notice of the provisions hereof.
22. Confidentiality.
22.1 Definition. Each party acknowledges and understands that any and all technical,
trade secret, or business information, including, without limitation, financial information,
business or marketing strategies or plans, product development, Company information, Shareholder
information (including any non-public information of such Shareholder), proprietary information, or
proprietary software (including methods or concepts used therein, sources code, object code, or
related technical information) which has been or is disclosed to the other or has been or is
otherwise obtained by the other, its affiliates, agents or representatives before or during the
term of this Agreement (the “Confidential Information”) is confidential and proprietary,
constitutes trade secrets of the owner (or its affiliates), and is of great value and importance to
the success of the owner’s (or its affiliates’) business. The parties shall treat the terms and
conditions (but not the existence) of this Agreement as the Confidential Information of the other
party. Confidential Information shall not include any information that is: (a) already known to
the other party or its affiliates at the time of the disclosure; (b) publicly known at the time of
the disclosure or becomes publicly known through no wrongful act or failure of the other party; (c)
subsequently disclosed to the other party or its affiliates on a non-confidential basis by a third
party not having a confidential relationship with the owner and which rightfully acquired such
information; or (d) independently developed by one party without access to the Confidential
Information of the other.
22.2 Use and Disclosure. All Confidential Information relating to a party will be held in
confidence by the other party to the same extent and with at least the same degree of care as such
party protects its own confidential or proprietary information of like kind and import, but in no
event using less than a reasonable degree of care. Neither party will disclose, duplicate,
publish, release, transfer or otherwise make available Confidential Information of the other party
in any
form to, or for the use or benefit of, any person or entity without the other party’s consent.
Each party will, however, be permitted to disclose relevant aspects of the other party’s
Confidential Information to its officers, affiliates, agents, subcontractors and employees to the
extent that such disclosure is reasonably necessary for the performance of its duties and
obligations under this Agreement and such disclosure is not prohibited by the Xxxxx-Xxxxx-Xxxxxx
Act of 1999 (15 U.S.C. 6801 et seq.), as it may be amended from time to time (the “GLB Act”), the
regulations promulgated thereunder or other applicable law. Each party will establish commercially
reasonable controls to ensure that the confidentiality of the Confidential Information and to
ensure that the Confidential Information is not disclosed contrary to the provisions of this
Agreement, the GLB Act or any other applicable privacy law. Without limiting the foregoing, each
party will implement such physical and other security measures as are necessary to (a) ensure the
security and confidentiality of the Confidential Information; (b) protect against any threats or
hazards to the security and integrity of the Confidential Information; and (c) protect against any
unauthorized access to or use of the Confidential Information. To the extent that any duties and
responsibilities under this Agreement are delegated to an agent or other subcontractor, the party
ensures that such agent and subcontractor are contractually bound to confidentiality terms
consistent with the terms of this Section 23.
22.3 Required or Permitted Disclosure. In the event that any requests or demands are made
for the disclosure of Confidential Information, other than requests to Agent for records of
Shareholders pursuant to standard subpoenas from state or federal government authorities (e.g., in
divorce and criminal actions), the party will notify the other party to secure instructions from an
authorized officer of such party as to request and to enable the other party the opportunity to
obtain a protective order or other confidential treatment. Each party expressly reserves the
right, however, to disclose the Confidential Information to any person whenever it is advised by
counsel that it may be held liable for the failure to disclose such Confidential Information or if
required by law or court order.
22.4 Unauthorized Disclosure. As may be required by law and without limiting either
party’s rights in respect of a breach of this Section, each party will:
| (a) | promptly notify the other party in writing of any unauthorized possession, use or disclosure of the other party’s Confidential Information by any person or entity that may become known to such party; | ||
| (b) | promptly furnish to the other party full details of the unauthorized possession, use or disclosure; and | ||
| (c) | promptly use commercially reasonable efforts to prevent a recurrence of any such unauthorized possession, use or disclosure of Confidential Information. |
22.5 Costs. Each party will bear the costs it incurs as a result of compliance with this
Section
23. Term and Termination.
This Agreement shall remain in effect until the earlier of (a) thirty (30) days after the
Expiration Date; (b) it is terminated by either party upon a material breach of this Agreement
which remains uncured for 30 days after written notice of such breach has been provided; or (c) 30
days’ written notice has been provided by either party to the other.
24. Notices.
Until further notice in writing by either party hereto to the other party, all written
reports, notices and other communications between the Agent and the Company required or permitted
hereunder shall be delivered or mailed by first class mail, postage prepaid, telecopier or
overnight courier guaranteeing next day delivery,addressed as follows:
If to the Company, to:
The GDL Fund
Attention Xxxxx X. Xxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000-0000
Tel: 000.000.0000
Fax: 000.000.0000
Attention Xxxxx X. Xxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000-0000
Tel: 000.000.0000
Fax: 000.000.0000
If to the Agent, to:
Computershare Trust Company, N.A.
c/o Computershare Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Reorganization Department
c/o Computershare Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Reorganization Department
25. Survival.
The provisions of Paragraphs 11, 15, 17-19, 22, and 24-26 shall survive any termination, for
any reason, of this Agreement.
26. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties hereto and supercedes any
prior agreement with respect to the subject matter hereof whether oral or written.
27. Priorities.
In the event of any conflict, discrepancy, or ambiguity between the terms and conditions
contained in this Agreement and any schedules or attachments hereto, the terms and conditions
contained in this Agreement shall take precedence.
28. Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the
Transfer Agent shall bind and inure to the benefit of their respective successors and assigns
hereunder.
29. No Strict Construction.
The parties hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event any ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by all parties hereto, and not presumption or
burden or proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
30. Descriptive Headings.
Descriptive headings contained in this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers, hereunto duly authorized, as of the day and year first above written.
| COMPUTERSHARE TRUST COMPANY, NA. | The GDL Fund | |||||||||
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