XXXXXXXXX XXXXXX NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
THE BANK OF NEW YORK,
as Auction Agent
_______________________
FORM OF BROKER-DEALER AGREEMENT
dated as of December 13, 2002
Relating to
Auction Market Preferred Shares ("AMPS")
Series A and Series B
of
XXXXXXXXX XXXXXX NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
___________________________
XXXXXXX XXXXX, XXXXXX XXXXXX & XXXXX INCORPORATED
BROKER-DEALER AGREEMENT
This Broker-Dealer Agreement dated as of December 13, 2002, is between The
Bank of New York, a New York banking corporation (the "Auction Agent") (not in
its individual capacity, but solely as agent of XXXXXXXXX XXXXXX NEW YORK
INTERMEDIATE MUNICIPAL FUND INC. (the "Fund"), pursuant to authority granted to
it in the Auction Agency Agreement dated as of December 13, 2002, between the
Fund and the Auction Agent (the "Auction Agency Agreement") and XXXXXXX XXXXX,
XXXXXX XXXXXX & XXXXX INCORPORATED (together with its successors and assigns,
"BD").
The Fund proposes to issue two series of auction market preferred shares,
par value $.0001 per share, designated Series A Preferred Shares, liquidation
preference $25,000 per share and Series B Preferred Shares, liquidation
preference $25,000 per share (collectively, the "AMPS"), pursuant to the Fund's
Articles Supplementary (as defined below).
The Fund's Articles Supplementary provide that for each subsequent
Dividend Period of AMPS then outstanding, the Applicable Rate for each series of
AMPS for each subsequent 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
The Bank of New York as Auction Agent for purposes of the Auction Procedures,
and pursuant to Section 2.5 of the Auction Agency Agreement, the Fund 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 premises and 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 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, the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Articles Supplementary" shall mean the Articles Supplementary
for Preferred Shares of the Fund dated as of December 11, 2002 specifying the
powers, preferences and rights of the AMPS.
(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 Articles Supplementary.
(d) "Authorized Officer" of the Auction Agent shall mean each Vice
President, Assistant Vice President and Assistant Treasurer of the Dealing and
Trading Group of the Corporate Trust Department 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 written communication to BD.
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(e) "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of this Agreement in a written 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.
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.
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 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. In the case of any conflict between the terms of any document
incorporated herein by reference and the terms hereof, the Auction Agent shall
not be liable for its actions or inaction in accordance with the terms of this
Agreement, provided it shall have complied with the standards of conduct in the
Auction Agency Agreement.
In addition to the provisions contained in Section 4 of Part I of the
Articles Supplementary concerning the notification of a Special Rate Period, a
requested special rate period will not be effective if the Fund has received
confirmation from Moody's or Fitch or any substitute rating agency that the
proposed special rate period would not adversely affect such rating agency's
then-current rating on the AMPS, or the lead broker-dealers designated by the
Fund, initially Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, have
objected to the declaration of a special rate period.
III. THE AUCTION.
3.1 Purpose; Incorporation by Reference of Auction 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 AMPS, 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. In the case of any conflict between the terms of any document
incorporated herein by reference and the terms hereof, the Auction Agent shall
not be liable for its actions or inaction in accordance with the terms of this
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Agreement, provided it shall have complied with the standards of conduct in the
Auction Agency Agreement.
(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 19 of Part I of the Articles
Supplementary may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Fund, 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. At the request of the Fund, the Auction Agent will seek written
certification from the Broker-Dealer that none of its orders are for its own
account, other than Hold Orders or Sell Orders and will provide to the Fund such
written certifications as it receives. The Auction Agent shall have no other
responsibility for and shall have no liability with respect to the enforcement
of this Section 3.1(d).
3.2 Preparation for Each Auction.
----------------------------
(a) Not later than 9:30 A.M. on each Auction Date for the AMPS, the
Auction Agent shall advise BD by telephone or other electronic means of
communication acceptable to the parties of the Maximum Rate in effect on such
Auction Date.
(b) The Auction Agent from time to time may, but shall not be
obligated to, request BD to provide it with a list of the respective customers
BD believes are Beneficial Owners of AMPS. 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
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 or in the Auction Agency Agreement; provided,
however, that the Auction Agent reserves the right and is authorized to disclose
any such information if (a) it is ordered to do so by a court of competent
jurisdiction or a regulatory body, judicial or quasi-judicial agency or
authority having the authority to compel such disclosure, (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 or security satisfactory to it. In the event
that the Auction Agent is required to disclose information in accordance with
the foregoing sentence, it shall provide written notice of such requirement to
BD as promptly as practicable. The Auction Agent shall, subject to the terms of
the Auction Agency Agreement, transmit any list of customers BD believes are
Beneficial Owners of AMPS 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 use commercially reasonable efforts to 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 Fund and the Auction Agent shall conduct Auctions for AMPS 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
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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 shall advise the Fund and
the Broker-Dealers of the Maximum Rate
as set forth in Section 3.2(a) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent shall assemble
information communicated to it by
Broker-Dealers as provided in Section
3(a) of Part II of the Articles
Supplementary. Submission Deadline is
1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent shall make determinations
pursuant to Section 3(a) of Part II of
the Articles Supplementary.
By approximately 3:30 P.M. (and Auction Agent shall advise the Fund of
not later than the close of the results of the Auction as provided
business) in Section 3(b) of Part II of the
Articles Supplementary.
Submitted Bid Orders and Submitted Sell
Orders will be accepted and rejected in
whole or in part and AMPS will be
allocated as provided in Section 4 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) 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 Section 2 of Part II of the Articles
Supplementary.
(c) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. 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 B, of transfers of AMPS,
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 C, of the failure of AMPS to be transferred to or by any Person that
purchased or sold AMPS 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 or other electronic means acceptable to the parties of the Auction
results. 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.
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(b) BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, of the Auction results and take such other action as is required of BD.
If any Beneficial Owner or Existing Holder selling AMPS in an Auction
fails to deliver such shares, the Broker-Dealer of any Person that was to have
purchased AMPS in such Auction may deliver to such Person a number of whole
shares of AMPS that is less than the number of shares that otherwise was to be
purchased by such Person. In such event, the number of AMPS 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 AMPS 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). Any delivery or non-delivery of
AMPS which represents any departure from the results of an Auction shall not
affect the results of the Auction.
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 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 AMPS 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 AMPS subject to
valid Hold Orders (determined in accordance with Section 2 of Part II of the
Articles Supplementary) submitted to the Auction Agent by BD plus (C) the number
of AMPS 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 BD for
its own account or were acquired by such Beneficial Owners through BD; and (b)
in the case 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 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 AMPS 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. MISCELLANEOUS.
4.1 Termination.
-----------
Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; PROVIDED, HOWEVER, that if the Broker-Dealer
is Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated it may not terminate this
Agreement without first obtaining the prior written consent of the Fund to such
6
termination, which consent shall not be withheld unreasonably. The Auction Agent
is without discretion to terminate this Agreement and will move to terminate it
only pursuant to written direction from the Fund. This Agreement shall
automatically terminate upon the redemption of all outstanding AMPS or upon
termination of the Auction Agent Agreement.
4.2 Force Majeure.
-------------
Neither party to this Agreement shall 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; acts of
terrorism; epidemics; riots; interruptions, loss or malfunctions or utilities;
computer (hardware or software) or communications services (provided that
Auction Agent has not been grossly negligent with respect to selection,
operation or maintenance of such utilities, computer (hardware or software) or
communications service); accidents; labor disputes; acts of civil or military
authority or governmental actions; it being understood that the parties shall
use reasonable efforts which are consistent with accepted practices in the
banking industry to resume performance as soon as practicable under the
circumstances.
4.3 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 AMPS available in
same-day funds on each Dividend Payment Date to customers that use BD (or its
affiliate) as Agent Member.
4.4 Agent Member.
------------
At the date hereof, BD is a participant of the Securities Depository.
4.5 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:
If to the Auction Agent,
addressed to: The Bank of New York
Corporate Trust Administration
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Dealing
and Trading
Group - Auction Desk
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
7
If to the BD,
addressed to: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
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.
4.6 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 implied,
between the parties relating to the subject matter hereof.
4.7 Benefits.
---------
Nothing in this Agreement, express or implied, shall give to any person,
other than the Fund, the Auction Agent and BD and their respective successors
and permitted assigns, any benefit of any legal or equitable right, remedy or
claim under this Agreement.
4.8 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.
4.9 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 and the Fund.
4.10 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.
4.11 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.
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4.12 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
wholly in said state.
4.13 Jurisdiction.
------------
The parties agree that all actions and proceedings arising out of this
Auction Agency Agreement or any of the transactions contemplated hereby shall be
brought in the County of New York, and, in connection with any such action or
proceeding, submit to the jurisdiction of, and venue in, such County. 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.
[SIGNATURE PAGES FOLLOW]
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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.
THE BANK OF NEW YORK, As Auction Agent
By:__________________________________________
Name:
Title:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:__________________________________________
Name:
Title:
10
EXHIBIT A
THE BANK OF NEW YORK
AUCTION BID FORM
Submit To: Issue:
---------- ------
The Bank of New York XXXXXXXXX XXXXXX NEW YORK INTERMEDIATE
Corporate Trust Administration MUNICIPAL FUND INC.
000 Xxxxxx Xxxxxx, 0xx Xxxxx Auction Market Preferred Shares,
Xxx Xxxx, Xxx Xxxx 00000 Series A and Series B ("AMPS")
Attention: Corporate Trust Dealing
and Trading Group - Auction Desk
Telephone No.: (000) 000-0000
Facsimile 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 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.
(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.
(6) An Order must be submitted in whole shares of AMPS with an aggregate
liquidation preference of $25,000.
A-1
XXXXXXX XXXXX, XXXXXX XXXXXX & XXXXX INCORPORATED
________________________________________________
Authorized Signature____________________________
A-2
EXHIBIT B
(Note: To be used only for transfers made other than pursuant to an Auction)
TRANSFER FORM
Re: XXXXXXXXX XXXXXX NEW YORK INTERMEDIATE MUNICIPAL FUND INC.
Auction Market Preferred Shares ("AMPS")
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 _________
Series ___ AMPS to __________________________________
---------------------------------
(Name of Existing Holder)
---------------------------------
(Name of Broker-Dealer)
---------------------------------
(Name of Agent Member)
By: ____________________________
Printed Name:
Title:
B-1
EXHIBIT C
(Note: To be used only for failures to deliver or to pay for
AMPS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
We are a Broker-Dealer for _____________________ (the "Purchaser"), which
purchased _______ Series ___ AMPS of XXXXXXXXX XXXXXX NEW YORK INTERMEDIATE
MUNICIPAL 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: _____________________________
XXXXXXX XXXXX, XXXXXX XXXXXX
& XXXXX INCORPORATED
By: _____________________________
Printed Name:
Title:
C-1
