Exhibit (k)(4)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/CLAYMORE TOTAL RETURN FUND INCORPORATED
------------------------------
AUCTION AGENCY AGREEMENT
dated as of _____, 2003
Relating to
Auction Market Preferred Shares ("AMPS")
Series __ and Series __
of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/CLAYMORE TOTAL RETURN FUND INCORPORATED
------------------------------
WILMINGTON TRUST COMPANY
as Auction Agent
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of _______,
2003, is by and between ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/Claymore Total Return Fund
Incorporated (the "Fund") and Wilmington Trust Company, a Delaware banking
corporation.
The Fund proposes to issue an aggregate of ____ preferred shares, par
value $.01 per share, liquidation preference $25,000 per share, designated as
Auction Market Preferred Shares, Series __ and Series __ (collectively, the
"AMPS"), pursuant to the Articles Supplementary (as defined below).
The Fund desires that Wilmington Trust Company perform certain duties
as agent in connection with each Auction (as defined below) (in such capacity,
the "Auction Agent"), and as the transfer agent, registrar, dividend paying
agent and redemption agent with respect to the AMPS (in such capacity, the
"Paying Agent"), upon the terms and conditions of this Agreement, and the Fund
hereby appoints Wilmington Trust Company as said Auction Agent and Paying Agent
in accordance with such terms and conditions.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined By Reference to the Articles Supplementary.
Capitalized terms used herein, but not defined herein shall have the
respective meanings specified in the Articles Supplementary.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of,
or participant in, the Securities Depository that will act on behalf of a
Bidder.
(b) "Agreement" shall mean this Agreement.
(c) "Articles Supplementary" shall mean the Articles
Supplementary Establishing and Fixing the Rights and Preferences of Auction
Market Preferred Shares of the Fund dated ____, 2003 specifying the powers,
preferences and rights of the AMPS.
(d) "Auction" shall have the meaning specified in Section
2.1 hereof.
(e) "Auction Procedures" shall mean the auction procedures
constituting Part II of the Articles Supplementary as of the filing thereof.
(f) "Authorized Officer" of the Auction Agent shall mean
each Vice President, Assistant Vice President and Assistant Secretary of the
Auction Agent's Corporate Trust Department and every other officer or employee
of the Auction Agent designated as an "Authorized Officer" for purposes hereof
in a communication to the Fund.
(g) "Broker-Dealer Agreement" shall mean each agreement
among the Fund, the Auction Agent and a Broker-Dealer substantially in the form
attached hereto as Exhibit A.
(h) "Fund Officer" shall mean the Chairman and Chief
Executive Officer, the President, each Vice President (whether or not designated
by a number or word or words added before or after the title "Vice President"),
the Secretary, the Treasurer, each Assistant Vice President, each Assistant
Secretary and each Assistant Treasurer of the Fund and every other officer or
employee of the Fund designated as a "Fund Officer" for purposes hereof in a
notice to the Auction Agent.
(i) "Settlement Procedures" shall mean the Settlement
Procedures attached to the Broker-Dealer Agreement as Exhibit B.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of the 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 the Agreement nor
shall they affect its meaning, construction or effect.
(c) the words "hereof", "herein", "hereto" and other words
of similar import refer to the Agreement as a whole.
(d) all references herein to a particular time of day shall
be to New York City time.
2. The Auction.
2
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Board of Directors of the Fund has adopted a
resolution appointing Wilmington Trust Company as Auction Agent for purposes of
the Auction Procedures. The Auction Agent hereby accepts such appointment and
agrees that, on each Auction Date, it shall follow the procedures set forth in
this Section 2 and the Auction Procedures for the purpose of determining the
Applicable Rate for any Subsequent Rate Period of any series of AMPS for which
the Applicable Rate is to be determined by auction. 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 hereof to the same extent as if
such provisions were fully set forth herein.
2.2 Preparation for Each Auction; Maintenance of Registry of
Beneficial Owners.
(a) Not later than seven days prior to the first Auction
Date for the first series of AMPS subject to an Auction, the Fund shall provide
the Auction Agent with a list of the Broker-Dealers. Not later than seven days
prior to any Auction Date for any series of AMPS for which any change in such
list of Broker-Dealers is to be effective, the Fund will notify the Auction
Agent in writing of such change and, if any such change involves the addition of
a Broker-Dealer to such list, shall cause to be delivered to the Auction Agent
for execution by the Auction Agent a Broker-Dealer Agreement signed by such
Broker-Dealer; provided, however, that if the Fund proposes to designate any
Special Rate Period of any series of AMPS pursuant to Section 3 of Part I of the
Articles Supplementary, not later than 11:00 A.M. on the Business Day next
preceding the Auction next preceding the first day of such Rate Period or by
such later time or date, or both, as may be agreed to by the Auction Agent, the
Fund shall provide the Auction Agent with a list of the Broker-Dealers for such
series and a manually signed copy of each Broker-Dealer Agreement or a new
Schedule A to a Broker-Dealer Agreement (which Schedule A shall replace and
supersede any previous Schedule A to such Broker-Dealer Agreement) with each
Broker-Dealer for such series. The Auction Agent and the Fund shall have entered
into a Broker-Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.
(b) In the event that any Auction Date for any series of
AMPS shall be changed after the Auction Agent shall have given the notice
referred to in the Settlement Procedures, or after the notice referred to in
Section 2.3 hereof, if applicable, the Auction Agent, by such means as the
Auction Agent reasonably deems practicable, shall give notice of such change to
the Broker-Dealers for such series not later than the earlier of 9:15 A.M. on
the new Auction Date or 9:15 A.M. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a current
registry of the Beneficial Owners of the AMPS of each series who shall
constitute Existing Holders of AMPS of such series for purposes of Auctions and
shall indicate thereon the identity of the respective Broker-Dealer of each
Existing Holder, if any, on whose behalf such Broker-Dealer submitted the most
recent Order in any Auction which resulted in such Existing Holder continuing to
hold or purchasing AMPS of such series. The Auction Agent shall keep such
registry current and accurate based on the information provided to it from time
to time by the Broker-Dealer. The Fund shall provide or cause to be provided to
the Auction Agent at or prior to the Date of Original Issue of the AMPS of each
series a list of the initial Existing Holders of the shares of each such series
of AMPS, the number of shares purchased by each such Existing Holder and the
respective Broker-Dealer of each such Existing Holder or the affiliate thereof
through which each such Existing Holder purchased such shares. The Auction Agent
may rely upon, as conclusive evidence of the identities of the Existing Holders
of AMPS of any series (A) such list, (B) the results of Auctions, (C) notices
from any Broker-Dealer as described in the first sentence of Section 2.2(c)(iii)
hereof and (D) the results of any procedures approved by the Fund that have been
devised for the purpose of determining
3
the identities of Existing Holders in situations where AMPS may have been
transferred without compliance with any restriction on the transfer thereof set
forth in the Auction Procedures.
(ii) In the event of any partial redemption of any
series of AMPS, the Auction Agent shall, at least two Business Days prior to the
next Auction for such series, request each Broker-Dealer to provide the Auction
Agent with a list of Persons who such Broker-Dealer believes should remain
Existing Holders after such redemption based upon inquiries of those Persons
such Broker-Dealer believes are Beneficial Owners as a result of the most recent
Auction and with respect to each such Person, the number of AMPS of such series
such Broker-Dealer believes are owned by such Person after such redemption. In
the absence of receiving any such information from any Broker-Dealer, the
Auction Agent may continue to treat the Persons listed in its registry of
Existing Holders as the beneficial owner of the number of AMPS of such series
shown in such registry.
(iii) The Auction Agent shall be required to register
a transfer of AMPS of any series from an Existing Holder of such AMPS only if
such transfer is to another Existing Holder, or other Person if permitted by the
Fund, and only if such transfer is made (A) pursuant to an Auction, (B) if such
transfer is made other than pursuant to an Auction, the Auction Agent has been
notified in writing (I) in a notice substantially in the form of Exhibit B to
the Broker-Dealer Agreements by a Broker-Dealer of such transfer or (II) in a
notice substantially in the form of Exhibit C to the Broker-Dealer Agreements by
the Broker-Dealer of any Existing Holder, or other Person if permitted by the
Fund, that purchased or sold such AMPS in an Auction of the failure of such AMPS
to be transferred as a result of such Auction or (C) pursuant to procedures
approved by the Fund that have been devised for the purpose of determining the
identities of Existing Holders in situations where AMPS may have been
transferred without compliance with any restriction on the transfer thereof set
forth in the Auction Procedures. The Auction Agent is not required to accept any
such notice for an Auction unless it is received by the Auction Agent by 1:00
P.M. on the Business Day preceding such Auction. The Auction Agent shall rescind
a transfer made on the registry of the Existing Holders of the AMPS if the
Auction Agent has been notified in writing by the Broker-Dealer of any Person
that (i) purchased any AMPS and the seller failed to deliver such shares or (ii)
sold any AMPS and the purchaser failed to make payment to such Person upon
delivery to the purchaser of such shares.
(d) The Auction Agent may request the Broker-Dealers, as
set forth in the Broker-Dealer Agreements, to provide the Auction Agent with a
list of Persons who such Broker-Dealer believes are Beneficial Owners based upon
inquiries of those Persons such Broker-Dealer believes are Beneficial Owners as
a result of the most recent Auction and with respect to each such Person, the
number of shares of such series of AMPS such Broker-Dealer believes to be owned
by such Person. The Auction Agent shall keep confidential such registry of
Existing Holders and shall not disclose the identities of the Existing Holders
of such AMPS to any Person other than the Fund and the Broker-Dealer that
provided such information; 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 or (b) it is advised by its counsel that its failure to do so
would be unlawful.
4
2.3 Auction Schedule.
The Auction Agent shall conduct Auctions in accordance with the
schedule set forth below. Such schedule may be changed by the Auction Agent with
the consent of the Fund, which consent shall not be unreasonably withheld. The
Auction Agent shall give written notice of any such change to each
Broker-Dealer. Such notice shall be given prior to the close of business on the
Business Day next preceding the first Auction Date on which any such change
shall be effective.
TIME EVENT
---- -----
By 9:30 A.M. Auction Agent advises the Fund and
Broker-Dealers of the applicable Maximum Rate
and the Reference Rate(s), as the case may
be, used in determining such Maximum Rate and
Reference Rate as set forth in Section 2.7
hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in Section 2(a) of the Auction
Procedures. Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant
to Section 3(a) of the Auction Procedures.
By approximately 3:00 P.M. Auction Agent advises Fund of results of
Auction as provided in Section 3(b) of the
Auction Procedures.
Submitted Bids and Submitted Sell Orders are
accepted and rejected and AMPS allocated as
provided in Section 4 of the Auction
Procedures.
Auction Agent gives notice of Auction results
as set forth in Section 2.4 hereof.
The Auction Agent shall follow the notification procedures set forth in the
Settlement Procedures.
2.4 Notice of Auction Results.
The Auction Agent will advise each Broker-Dealer who submitted a Bid
or Sell Order in an Auction whether such Bid or Sell Order was accepted or
rejected in whole or in part and of the Applicable Rate for the next Dividend
Period for the related AMPS by telephone or through its auction processing
system as set forth in the Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 12:00 Noon on the Business Day next
succeeding each Auction Date for any series of AMPS, the Fund shall pay to the
Auction Agent an amount in cash equal to the aggregate fees payable to the
Broker-Dealers for such series pursuant to Section 3.6 of the Broker-Dealer
Agreements for such series. The Auction Agent shall apply such moneys as set
forth in Section 3.6 of each such Broker-Dealer Agreement.
5
(b) The Fund shall obtain the consent of the Auction Agent
prior to selecting any Person to act as a Broker-Dealer, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, the Fund may designate
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated as Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed by the Fund, provided that at
least one Broker-Dealer Agreement would be in effect for each series of AMPS
after such termination.
(d) Subject to the Auction Agent's having consented to the
selection of the relevant Broker-Dealer pursuant to Section 2.5(b) hereof, the
Auction Agent shall from time to time enter into such Broker-Dealer Agreements
with one or more Broker-Dealers as the Fund shall request, and shall enter into
such schedules to any such Broker-Dealer Agreements as the Fund shall request,
which schedules, among other things, shall set forth the series of AMPS to which
such Broker-Dealer Agreement relates.
2.6 Special Rate Periods.
The provisions contained in Section 3 of Part I of the Articles
Supplementary concerning Special Rate Periods and the notification of a Special
Rate Period will be followed by the Fund and, to the extent applicable, the
Auction Agent, 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.
2.7 Determination of Maximum Rate.
(a) (i) On each Auction Date, the Auction Agent shall
determine the Reference Rate and the Maximum Rate. If any "AA" Financial
Composite Commercial Paper Rate, Treasury Index Rate or Reference Rate, as the
case may be, is not quoted on an interest or bond equivalent, as the case may
be, basis, the Auction Agent shall convert the quoted rate to the interest or
bond equivalent thereof as set forth in the definition of such rate in the
Articles Supplementary if the rate obtained by the Auction Agent is quoted on a
discount basis, or if such rate is quoted on a basis other than an interest or
bond equivalent or discount basis the Auction Agent shall convert the quoted
rate to an interest or bond equivalent rate after consultation with the Fund as
to the method of such conversion.
(ii) If any "AA" Financial Composite Commercial Paper
Rate is to be based on rates supplied by Commercial Paper Dealers and one or
more of the Commercial Paper Dealers shall not provide a quotation for the
determination of such "AA" Financial Composite Commercial Paper Rate, the
Auction Agent shall immediately notify the Fund so that the Fund can determine
whether to select a substitute Commercial Paper Dealer or substitute Commercial
Paper Dealers to provide the quotation or quotations not being supplied by any
Commercial Paper Dealer or Commercial Paper Dealers. The Fund shall promptly
advise the Auction Agent of any such selection.
(iii) If any Treasury Index Rate is to be based on
rates supplied by U.S. Government Securities Dealers and one or more of the U.S.
Government Securities Dealers shall not provide a quotation for the
determination of such Treasury Rate, the Auction Agent shall immediately notify
the Fund so that the Fund can determine whether to select a substitute U.S.
Government Securities Dealer or substitute U.S. Government Securities Dealers to
provide the quotation or quotations not being supplied by any U.S. Government
Securities Dealer or U.S. Government Securities Dealers. The Fund shall promptly
advise the Auction Agent of any such selection.
2.8 Ownership of Shares of AMPS.
6
The Fund shall notify the Auction Agent if the Fund or any affiliate
of the Fund acquires any AMPS of any series. Neither the Fund nor any affiliate
of the Fund shall submit any Order in any Auction for AMPS, except as set forth
in the next sentence. Any Broker-Dealer that is an affiliate of the Fund may
submit Orders in Auctions, but only if such Orders are not for its own account.
For purposes of this Section 2.8, a Broker-Dealer shall not be deemed to be an
affiliate of the Fund solely because one or more of the directors or executive
officers of such Broker-Dealer or of any Person controlled by, in control of or
under common control with such Broker-Dealer is also a director of the Fund. The
Auction Agent shall have no duty or liability with respect to enforcement of
this Section 2.8.
2.9 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Fund, its agents, independent
public accountants and counsel and the Broker-Dealers, access at reasonable
times during normal business hours to review and make extracts or copies of all
books, records, documents and other information concerning the conduct and
results of Auctions (at no cost to the Auction Agent), provided that any such
agent, accountant, counsel or Broker-Dealer shall furnish the Auction Agent with
a letter from the Fund requesting that the Auction Agent afford such person
access. The Auction Agent shall maintain records relating to any Auction for a
period of six years after such Auction, and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder. Upon the expiration of this six-year period, the Auction Agent shall,
upon the written request of the Fund, deliver to the Fund all such records. The
Auction Agent also shall undertake to furnish to the Securities and Exchange
Commission, upon demand, either at its principal office or at any regional
office, complete, correct and current hard copies of any and all such records.
Thereafter, such records shall not be destroyed by the Fund without the approval
of the Auction Agent, which approval shall not be withheld unreasonably, but
will be safely stored for possible future reference. The Auction Agent agrees
that all such records prepared or maintained by it relating to the services
performed hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with the requirements of applicable
law, and will be surrendered promptly to the Fund on and in accordance with its
request.
3. The Auction Agent as Dividend and Redemption Price Disbursing Agent.
The Auction Agent, as dividend and redemption price disbursing agent,
shall pay to the Holders of AMPS of any series (i) on each Dividend Payment Date
for such series, dividends on the AMPS of such series, (ii) on any date fixed
for redemption of AMPS of any series, the Redemption Price of any shares of such
series called for redemption and (iii) any Late Charge related to any payment of
dividends or Redemption Price, in each case after receipt of the necessary funds
from the Fund with which to pay such dividends, Redemption Price or Late Charge.
The amount of dividends for any Rate Period for any series of AMPS to be paid by
the Auction Agent to the Holders of such shares of such series will be
determined by the Fund as set forth in Section 2 of Part I of the Articles
Supplementary with respect to such series. The Redemption Price of any shares to
be paid by the Auction Agent to the Holders will be determined by the Fund as
set forth in Section 8 of Part I of the Articles Supplementary with respect to
such series. The Fund shall notify the Auction Agent in writing of a decision to
redeem shares of any series of AMPS at least five days prior to the date a
notice of redemption is required to be mailed to the Holders of the shares to be
redeemed by paragraph (c) of Section 8 of Part I of the Articles Supplementary.
Such notice by the Fund to the Auction Agent shall contain the information
required by paragraph (c) of Section 8 of Part I of the Articles Supplementary
to be stated in the notice of redemption required to be mailed by the Fund to
such Holders.
7
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Stock or Shares Certificates.
Upon the Date of Original Issue of each series of AMPS, one or more
certificates representing all of the shares of such series issued on such date
shall be issued by the Fund and, at the request of the Fund, registered in the
name of Cede & Co. and countersigned by the Auction Agent. If there is no
Securities Depository, at the Fund's option and upon its receipt of such
documents as it deems appropriate, any AMPS may be registered in the Fund's
stock register in the name of the Beneficial Owner thereof, and such Beneficial
Owner thereupon will be entitled to receive certificates therefor and required
to deliver certificates therefor upon transfer or exchange thereof. For the
avoidance of doubt, such certificates should be provided by the Fund at its
expense. If the certificate or certificates for AMPS are not held by the
Securities Depository or its nominee, payment upon transfer or exchange will be
made in same-day funds to the Auction Agent against delivery of such
certificates.
4.2 Registration of Transfer of Shares.
Shares of each series of AMPS shall be registered solely in the name
of the Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares.
All requests for removal of legends on AMPS of any series indicating
restrictions on transfer shall be accompanied by an opinion of counsel stating
that such legends may be removed and such shares freely transferred, such
opinion to be delivered under cover of a letter from a Fund Officer authorizing
the Auction Agent to remove the legend on the basis of said opinion.
4.4 Lost Stock or Share Certificates.
The Auction Agent shall issue and register replacement certificates
for certificates represented to have been lost, stolen or destroyed upon the
fulfillment of such requirements as shall be deemed appropriate by the Fund and
the Auction Agent, subject at all times to provisions of law, the by-laws of the
Fund governing such matters and resolutions adopted by the Fund with respect to
lost securities. The Auction Agent may issue new certificates in exchange for
and upon the cancellation of mutilated certificates. Any request by the Fund to
the Auction Agent to issue a replacement or new certificate pursuant to this
Section 4.4 shall be deemed to be a representation and warranty by the Fund to
the Auction Agent that such issuance will comply with such provisions of law and
the by-laws and resolutions of the Fund.
4.5 Disposition of Cancelled Certificates; Record Retention.
The Auction Agent shall retain all stock or share certificates which
have been cancelled in transfer or exchange and all accompanying documentation
in accordance with applicable rules and regulations of the Securities and
Exchange Commission for two calendar years. The Fund shall also undertake to
furnish to the Securities and Exchange Commission and to the Board of Governors
of the Federal Reserve System, upon demand, at either the principal office or at
any regional office, complete, correct and current hard copies of any and all
such records.
8
4.6 Stock or Record Books.
For so long as the Auction Agent is acting as the transfer agent for
any series of AMPS pursuant to the Agreement, it shall maintain a stock or
record book containing a list of the Holders of the AMPS of each such series. In
case of any request or demand for the inspection of the stock or record books of
the Fund or any other books in the possession of the Auction Agent, the Auction
Agent will notify the Fund and secure instructions as to permitting or refusing
such inspection. The Auction Agent reserves the right, however, to exhibit the
stock or record books or other books to any Person 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 or (b) it is advised by its counsel that its failure to do so would
be unlawful.
4.7 Return of Funds.
Any funds deposited with the Auction Agent hereunder by the Fund for
any reason, including but not limited to redemption of AMPS of any series, that
remain unpaid after ninety days shall be repaid to the Fund upon the written
request of the Fund. Such funds, while deposited with the Auction Agent, will be
held in trust for the payment of the applicable dividend, Redemption Price or
Late Charge.
5. Representations and Warranties.
5.1 Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(a) the Fund is duly organized and is an existing
corporation in good standing under the laws of the State of its incorporation or
organization and has full corporate power or all requisite power to execute and
deliver the Agreement and to authorize, create and issue the AMPS of each
series, and the AMPS of each series when issued, will be duly authorized,
validly issued, fully paid and nonassessable;
(b) the Agreement has been duly and validly authorized,
executed and delivered by the Fund and constitutes the legal, valid and binding
obligation of the Fund;
(c) the form of the certificate evidencing the AMPS of each
series complies or will comply with all applicable laws of the State of its
incorporation or organization;
(d) when issued, the AMPS of each series will have been
duly registered under the Securities Act of 1933, as amended, and no further
action by or before any governmental body or authority of the United States or
of any state thereof is required in connection with the execution and delivery
of the Agreement or will have been required in connection with the issuance of
AMPS of each series;
(e) the execution and delivery of the Agreement and the
issuance and delivery of the AMPS of each series do not and will not conflict
with, violate or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, the Articles of Incorporation of the Fund (as
amended by one or more Articles Supplementary) or the By-Laws of the Fund, any
law or regulation, any order or decree of any court or public authority having
jurisdiction, or any mortgage, indenture, contract, agreement or undertaking to
which the Fund is a party or by which it is bound the effect of which conflict,
violation, default or breach would be material to the Fund or the Fund and its
subsidiaries taken as a whole; and
9
(f) no taxes are payable upon or in respect of the
execution of the Agreement or the issuance of the AMPS of any series.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Fund that:
(i) the Auction Agent is duly organized and is
validly existing as a banking corporation in good standing
under the laws of Delaware and has the corporate power to
enter into and perform its obligations under this Agreement;
(ii) this Agreement has been duly and validly
authorized, executed and delivered by the Auction Agent and
constitutes the legal, valid and binding obligation of the
Auction Agent, enforceable against the Auction Agent in
accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and
to general equitable principles; and
(iii) the Auction Agent has such licenses, consents,
approvals and registrations as are necessary or appropriate
to perform the services and duties set forth in this
Agreement, and will maintain them in effect for the duration
of this Agreement.
6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the
Fund hereunder and owes no duties, fiduciary or otherwise, to any Person, except
as provided by this Agreement.
(b) The Auction Agent undertakes to perform such duties and
only such duties as are specifically set forth in the Agreement or the
Broker-Dealer Agreements, and no implied covenants or obligations shall be read
into the 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
or for any error of judgment made by it in the performance of its duties under
the Agreement. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Auction Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including, but not limited to loss of
profits), even if the Auction Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.
(d) The Auction Agent shall: (i) not be required to and
shall make no representations and have no responsibilities as to the validity,
accuracy, value or genuineness of any signatures or endorsements, other than its
own; and (ii) not be responsible for or liable in any respect on account of the
identity, authority or rights of any person executing or delivering or
purporting to execute or deliver any document under this Agreement other than
its employees or agents.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely and shall be
protected in acting or refraining from acting upon any communication authorized
hereby and upon any written instruction,
10
notice, request, direction, consent, report, certificate, share certificate or
other instrument, paper or document reasonably believed in good faith by it to
be genuine. The Auction Agent shall not be liable for acting upon any telephone
communication authorized hereby which the Auction Agent reasonably believes in
good faith to have been given by the Fund or by a Broker-Dealer. The Auction
Agent may record telephone communications with the Fund or with the
Broker-Dealers or both.
(b) The Auction Agent may consult with counsel satisfactory
to the Fund 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, with the prior consent of the
Fund, perform its duties and exercise its rights hereunder either directly or,
with the consent of the Fund, by or through agents or attorneys and shall be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it.
(e) The Auction Agent shall not be responsible or liable
for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, it being understood that the Auction Agent shall
use reasonable efforts which are consistent with accepted practices in the
banking industry to resume performance as soon as practicable under the
circumstances.
6.3 Compensation, Expenses and Indemnification.
(a) The Fund shall pay the Auction Agent compensation for
all services rendered by it under the Agreement and the Broker-Dealer Agreements
as the Fund and the Auction Agent have agreed to in writing from time to time.
(b) The Fund shall reimburse the Auction Agent upon its
request for all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by the Auction Agent in accordance with any provision of the
Agreement and the Broker-Dealer Agreements (including the reasonable
compensation, expenses and disbursements of its agents and, to the extent
permitted under the indemnification provisions of this Agreement, counsel),
except any expense or disbursement attributable to its negligence or bad faith.
(c) The Fund shall indemnify the Auction Agent for and hold
it harmless against any loss, liability or expense incurred without negligence
or bad faith on its part, arising out of or in connection with its agency under
the Agreement and the Broker-Dealer Agreements, including the reasonable costs
and expenses of defending itself against any such claim or liability in
connection with its exercise or performance of any of its duties hereunder and
thereunder, except such as may result from the Auction Agent's negligence or bad
faith.
6.4 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or
adequacy of the Agreement, the Broker-Dealer Agreements or the AMPS of any
series except that the Auction Agent hereby represents that the Agreement has
been duly authorized, executed and delivered by the Auction Agent and
constitutes a legal and binding obligation of the Auction Agent and the
representations and warranties set forth in Section 5.2.
11
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of the Agreement is unlimited unless it shall
be terminated as provided in this Section 7.1. The Fund may terminate the
Agreement at any time by so notifying the Auction Agent, provided that the Fund
has entered into an agreement in substantially the form of the Agreement with a
successor Auction Agent. The Auction Agent may terminate the Agreement upon
written notice to the Fund on the date specified in such notice, which date
shall be no earlier than 60 days after the date of delivery of such notice.
(b) Except as otherwise provided in this paragraph (b), the
respective rights and duties of the Fund and the Auction Agent under the
Agreement with respect to any series of AMPS shall cease upon termination of the
Agreement with respect to such series. The Fund's representations, warranties,
covenants and obligations to the Auction Agent under Sections 5 and 6.4 hereof
shall survive the termination of the Agreement with respect to any series of
AMPS. Upon termination of the Agreement with respect to any series of AMPS, the
Auction Agent shall, at the Fund's request, promptly deliver to the Fund copies
of all books and records maintained by it with respect to AMPS in connection
with its duties hereunder, resign as the Auction Agent under the Broker-Dealer
Agreement and transfer promptly to the Fund or to any successor auction agent,
as requested by the Fund, any funds deposited by the Fund with the Auction Agent
(whether in its capacity as Auction Agent or Paying Agent) pursuant to the
Agreement which have not been distributed previously by the Auction Agent in
accordance with the Agreement.
7.2 Communications.
Except for (i) communications authorized to be by telephone pursuant
to the Agreement or the Auction Procedures and (ii) communications in connection
with 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, addressed to it, at its address or telecopy number set forth below:
If to the Fund: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/Claymore Total Return Fund
Incorporated
c/o Flaherty & ▇▇▇▇▇▇▇▇, Inc.
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
cc: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Auction Agent: Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporate Trust Administration (▇▇▇ ▇▇▇▇▇▇)
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
12
or such other address or facsimile number as such party hereafter may
specify for such purpose by written 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 the Fund by a Fund
Officer and on behalf of the Auction Agent by telephone (confirmed by telecopy
or in writing) by an Authorized Officer.
7.3 Entire Agreement.
The Agreement contains the entire agreement between the parties
relating to, and superseding any prior 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 except for agreements
relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Fund, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) The Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged.
(b) Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6 Successors and Assigns.
The Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and assigns of each of the Fund and
the Auction Agent. The Agreement may not be assigned by either party hereto
absent the prior written consent of the other party, which consent shall not be
unreasonably withheld.
7.7 Severability.
If any clause, provision or section hereof 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 of
the remaining clauses, provisions or sections hereof.
7.8 Disclosure of Information.
The Auction Agent agrees that it will not disclose or use any
"non-public personal information" about the Fund's shareholders other than such
uses or disclosures as are permitted by Regulation S-P under Section 504 of the
▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act ("Regulation S-P"). "Nonpublic personal information"
about a shareholder shall mean: (i) personally identifiable financial
information; (ii) any list, description, or other grouping of consumers that is
derived from using any personally identifiable information that is not publicly
available; and (iii) any other information that a customer or the transfer agent
is prohibited
13
from using or disclosing pursuant to Regulation S-P. The Auction Agent also
agrees to comply with all federal and state anti-money laundering laws
applicable to such party, including, to the extent applicable, the USA PATRIOT
Act of 2001 and any implementing rules, regulations and authoritative guidelines
of any applicable regulatory agency thereunder.
7.9 Governing Law.
The Agreement shall be governed by and construed in accordance with
the laws of the State of
New York.
7.10 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.
[Signature pages follow]
14
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.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/CLAYMORE TOTAL RETURN
FUND INCORPORATED
By:
--------------------------------
Name
Title
WILMINGTON TRUST COMPANY
By:
--------------------------------
Name
Title
15
EXHIBIT A
FORM OF
BROKER-DEALER AGREEMENT
I-1
