Exhibit k.3
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TRAVELERS CORPORATE LOAN FUND INC.
BANKERS TRUST COMPANY,
as Auction Agent
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FORM OF BROKER-DEALER AGREEMENT
dated as of March ___, 2002
Relating to
Auction Rate Cumulative Preferred Stock
of
Travelers Corporate Loan Fund Inc.
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XXXXXXX XXXXX XXXXXX INC.
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Broker-Dealer Agreement dated as of March __, 2002, among Travelers
Corporate Loan Fund Inc., a Maryland Corporation (the "Fund"), Bankers Trust
Company, a New York corporation (the "Auction Agent") (not in its individual
capacity, but solely as agent of the Fund, pursuant to authority granted to it
in the Auction Agency Agreement (as defined below) and Xxxxxxx Xxxxx Barney Inc.
(together with its successors and assigns, "SSB").
Whereas the Fund proposes to issue two series of preferred shares of
beneficial interest (1,700 shares of Series A and 1,700 shares of Series B, par
value $.001 per share, liquidation preference $25,000 per share, designated
Series A and Series B Auction Rate Cumulative Preferred Stock (cumulatively, the
"Preferred Shares"), pursuant to the Fund's Articles of Incorporation and the
Articles Supplementary (as defined below).
The Fund's Articles Supplementary provide that the Applicable Rate on
shares of each series of Preferred Shares for each Dividend Period after the
initial Dividend Period shall be equal to the rate per annum that results from
an Auction for Outstanding shares of each Series on the respective Auction Date
therefor next preceding the period from and after the Date of Original Issue to
and including the last day of the initial Dividend Period. The Board of
Directors of the Fund has adopted a resolution appointing Bankers Trust Company
as Auction Agent for purposes of the Auction Procedures.
The Auction Procedures require the participation of one or more
Broker-Dealers for Preferred Shares.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and
SSB agree as follows:
1. Definitions and Rules Of Construction.
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1.1. Terms Defined By Reference to the Articles Supplementary.
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Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.
1.2. Terms Defined Herein.
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As used herein, the following terms shall have the following
meanings, unless the context otherwise requires:
(a) "Articles Supplementary" shall mean the Articles
Supplementary by which the Fund's Board of Directors will reclassify 1,700
series A and 1,700 series B shares of authorized and unissued common stock,
$.001 par value, as preferred stock, $.001 par value, and authorize the
issuance of such preferred stock designated as Auction Rate Cumulative
Preferred Stock, as such Articles Supplementary, were filed by the Company on
March __, 2002 with the State Department of Assessments and Taxation of the
State of Maryland, and as may be amended from time to time.
(b) "Auction" shall have the meaning specified in Section 2.1
of the Auction Agency Agreement.
(c) "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Article Supplementary. (d) "Authorized Officer"
shall mean each Managing Director, Vice President, Assistant Vice President and
Associate 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 SSB.
(e) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.
(f) "SSB Officer" shall mean each officer or employee of SSB
designated as a "SSB Officer" for purposes of this Agreement in a communication
to the Auction Agent.
1.3. Rules of Construction.
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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.
2. Notification of Dividend.
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The provisions contained in Section 4 of Part I of the Articles
Supplementary concerning the notification of a Special Rate Period will be
followed by the Auction Agent and SSB, 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.
3. The Auction.
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3.1. Purpose; Incorporation by Reference of Auction Procedures.
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(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
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Preferred Shares, for each Dividend Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction 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) SSB agrees to act as, and assumes the obligations of and limitations
and restrictions placed upon, a Broker-Dealer under this Agreement. SSB
understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the Articles
Supplementary may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.
(d) SSB and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Fund, by notice to SSB 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.
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(a) Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise SSB 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 SSB to provide it
with a list of the respective customers SSB believes are Beneficial Owners
of Preferred Shares. SSB 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 Fund; 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 SSB
believes are Beneficial Owners of Preferred Shares 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.
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(a) Auction Agent shall conduct Auctions for Preferred Shares 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 Fund, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice of any such
change to SSB. Such notice shall be received prior to the first Auction Date on
which any such change shall be effective.
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Time Event
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By 9:30 A.M. Auction Agent shall advise
the Fund and the Broker-Dealers of
the `AA' Financial Composite
Commercial Paper Rate or the
Treasury Index Rate, as the case
may be, and the Maximum Rate
as set forth in Section 3.2(a)
hereof.
9:30 A.M. - 1:30 P.M. Auction Agent shall assemble
information communicated to it
by Broker-Dealers as provided
in Section 2(a) of Part II of
the Articles Supplementary.
Submission Deadline is 1:00 P.M.
Not earlier than 1:30 P.M. Auction Agent shall make
determinations pursuant to
Section 4(a) of Part II of
the Articles Supplementary.
By approximately 3:00 P.M. Auction Agent shall advise the
Fund of the results of the
Auction as provided in
Section 4(b) of Part II of
the Articles Supplementary.
Submitted Bids and Submitted Sell
Orders will be accepted and
rejected in whole or in part and
Preferred Shares will be allocated
as provided in Section 5 of
Part II of the Articles
Supplementary. Auction Agent
shall give notice of the Auction
results as set forth in
Section 3.4(a) hereof.
(b) SSB 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 Section 2 of Part II of the Articles
Supplementary.
(c) SSB shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. SSB shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf SSB is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
SSB is submitting Orders.
(d) SSB shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
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Preferred Shares, made through SSB 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 C, of the failure of Preferred Shares to be
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transferred to or by any Person that purchased or sold Preferred Shares through
SSB pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered
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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.
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(a) On each Auction Date, the Auction Agent shall
notify SSB by telephone. By approximately 11:30 A.M. on the Business Day next
succeeding such Auction Date, the Auction Agent shall notify SSB in writing of
the disposition of all Orders submitted by SSB in the Auction held on such
Auction Date.
(b) SSB shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf SSB has submitted
an Order, and take such other action as is required of SSB.
If any Beneficial Owner or Existing Holder selling Preferred
Shares in an Auction fails to deliver such shares, the Broker-Dealer of any
Person that was to have purchased Preferred Shares in such Auction may deliver
to such Person a number of whole shares of Preferred Shares that is less than
the number of shares that otherwise was to be purchased by such Person. In such
event, the number of Preferred Shares to be so delivered shall be determined by
such Broker-Dealer. Delivery of such lesser number of shares shall constitute
good delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer 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 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 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 SSB.
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On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to SSB from moneys received from the Fund an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, 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 Preferred Shares placed by SSB in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by SSB 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 SSB
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Articles Supplementary) submitted to the Auction
Agent by SSB plus (C) the number of Preferred Shares deemed to be subject to
Hold Orders by Beneficial Owners pursuant to Section 2 of Part II of the
Articles Supplementary that were acquired by SSB for its own account or were
acquired by such Beneficial Owners through SSB; and (b) in the case
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of any Auction Date immediately preceding a Special Rate Period of one year or
longer, that amount as mutually agreed upon by the Fund and SSB, 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 Preferred Shares through SSB 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 SSB, provided,
however, that if the transfer was effected by, or if the transferee is, a
Broker-Dealer other than SSB, then such Broker-Dealer shall be the Broker-Dealer
for such shares.
4. The Auction Agent.
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4.1. Duties and Responsibilities.
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(a) The Auction Agent is acting solely as agent for the Fund
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.
4.2. Rights of the Auction Agent.
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(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
reasonably 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 reasonably believes in good faith to have been given by the
Fund or by SSB. The Auction Agent may record telephone communications with SSB.
(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.
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4.3. Auction Agent's Disclaimer.
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The Auction Agent makes no representation as to the validity or adequacy
of this Agreement or the Preferred Shares.
5. Miscellaneous.
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5.1. Termination.
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Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Xxxxxxx Xxxxx Xxxxxx Inc. neither Xxxxxxx Xxxxx Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Fund to such termination, which consent shall not be withheld
unreasonably.
5.2. Participant in Securities Depository; Payment of Dividends in
Same-Day Funds.
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(a) SSB 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) SSB represents that it (or if SSB 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 SSB (or its affiliate) as Agent Member.
5.3. Agent Member.
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At the date hereof, SSB is a participant of the Securities Depository.
5.4. Communications.
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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:
If to the Company,
addressed to:
Travelers Corporate Loan Fund Inc.
c/o Xxxxx Xxxxxx Fund Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Telecopier No.:
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Telephone No.:
If to the Auction Agent,
addressed to:
Bankers Trust Company
Corporate Trust and Agency Group
000 Xxxxx Xxx, 0xx Xxxxx
Xxxxxx Xxxx, XX, 00000
Attention: Xxxx Xxxx-XxXxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the SSB,
addressed to:
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx, Xxxx, XX 00000
Attention: __________________
Telecopier No.: (212) ___-____
Telephone No.: (212) ___-____
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 SSB by a SSB Officer and on
behalf of the Auction Agent by an Authorized Officer. SSB may record telephone
communications with the Auction Agent.
5.5. Entire Agreement.
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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 implied,
between the parties relating to the subject matter hereof.
5.6. Benefits.
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Nothing in this Agreement, express or implied, shall give to any person,
other than the Fund, the Auction Agent and SSB and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.
5.7. Amendment; Waiver.
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(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.
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(a) This Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the respective successors and permitted assigns of each of
SSB 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 Fund without the consent of SSB.
5.9. Severability.
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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.
5.10.Execution in Counterparts.
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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.
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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.
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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.
TRAVELERS CORPORATE LOAN FUND INC.
___________________________________
By:
Title:
BANKERS TRUST COMPANY
___________________________________
By:
Title:
XXXXXXX XXXXX BARNEY INC.
___________________________________
By:
Title:
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EXHIBIT A
BANKERS TRUST COMPANY
AUCTION BID FORM
Submit To: Issue:
Bankers Trust Company Auction Rate Cumulative
Travelers Corporate Loan Fund Inc. Corporate Trust and Preferred Shares ("Preferred
Agency Group Shares")
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New York, NY ______
Attention: Auction Rate Securities
Telecopier No.: (212) ___-____
Telephone No.: (212) ___-____
The undersigned Broker-Dealer submits the following Order on behalf
of the Bidder listed below:
Name of Bidder: _______________________________
BENEFICIAL OWNER Shares of Series ___ now held
HOLD___________________________________________
BID at rate of_________________________________
SELL __________________________________________
POTENTIAL BENEFICIAL OWNER
# of shares of Series ___
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.
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(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_________________________________
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EXHIBIT B
(Note: To be used only for transfers made other than pursuant to an Auction)
TRANSFER FORM
Re: Travelers Corporate Loan Fund Inc.
Auction Rate Cumulative Preferred Shares ("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 shares
of Series ___ Preferred Shares to
_________________________________.
________________________________________
(Name of Existing Holder)
________________________________________
(Name of Broker-Dealer)
________________________________________
(Name of Agent Member)
By:
________________________________________
Printed Name:
Title:
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EXHIBIT C
(Note: To be used only for failures to deliver or to pay for
Preferred Shares sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
We are a Broker-Dealer for ___________________ (the
"Purchaser"), which purchased ________ shares of Series ___ Preferred Shares of
Travelers Corporate Loan Fund Inc. in the Auction held on ____________________
from the seller 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:
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