KAYNE ANDERSON ENERGY TOTAL RETURN FUND, INC. AUCTION AGENCY AGREEMENT dated as of December __, 2005 relating to the AUCTION RATE PREFERRED STOCK SERIES A, SERIES B AND SERIES C The Bank of New York as Auction Agent
EXHIBIT 2(k)(5)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY TOTAL RETURN FUND, INC.
dated as of December __, 2005
relating to the
AUCTION RATE PREFERRED STOCK
SERIES A, SERIES B AND SERIES C
The Bank of New York
as Auction Agent
This Auction Agency Agreement (this “Agreement”), dated as of December ___, 2005, is between
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy Total Return Fund, Inc. (the “Company”) and The Bank of New York.
The Company proposes to issue an aggregate amount of 4,000 shares of its Series A Auction Rate
Preferred Stock, $0.001 par value per share, liquidation preference of $25,000 per share (the
“Series A Shares”), 4,000 shares of its Series B Auction Rate Preferred Stock, $0.001 par value per
share, liquidation preference of $25,000 per share (the “Series B Shares”) and 4,000 shares of its
Series C Auction Rate Preferred Stock, $0.001 par value per share, liquidation preference of
$25,000 per share (the “Series C Shares,” and together with the Series A Shares and the Series B
Shares, the “ARP Shares”), authorized by, and subject to the terms and conditions of, the Company’s
charter, including the Articles Supplementary for the ARP Shares (the “Charter”).
The Company desires that The Bank of New York, a New York banking corporation, perform certain
duties as agent in connection with each Auction of ARP Shares (in such capacity, the “Auction
Agent”), and as the transfer agent, registrar, dividend paying agent and redemption agent with
respect to the ARP Shares (in such capacity, the “Paying Agent”), upon the terms and conditions set
forth in this Agreement, and the Company hereby appoints The Bank of New York as said Auction Agent
and Paying Agent in accordance with those terms and conditions.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,
the Company and the Auction Agent agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Statement.
Capitalized terms used herein but not defined herein shall have the respective meanings
specified in the Statement.
1.2 Certain Defined Terms.
As used herein and in the Settlement Procedures, the following terms shall have the following
meanings, unless the context otherwise requires:
(a) “Agent Member” shall mean a member of, or participant in, the Securities Depository that
will act on behalf of a Beneficial Owner of one or more ARP Shares or on behalf of a Potential
Beneficial Owner.
(b) “Auction” shall have the meaning specified in Section 2.1 hereof.
(c) “Auction Procedures” shall mean the procedures as from time to time in effect for
conducting Auctions that are set forth in Part II of the Statement.
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(d) “Authorized Officer” shall mean each Vice President, Assistant Vice President and
Assistant Treasurer of the Auction Agent assigned to the Dealing & Trading Group of its Corporate
Trust Division and every other officer or employee of the Auction Agent designated as an
“Authorized Officer” for purposes hereof in a written communication delivered to the Company.
(e) “Broker-Dealer Agreement” shall mean each agreement between the Auction Agent and a
broker-dealer substantially in the form attached hereto as Exhibit A.
(f) “Closing” shall mean the date the Company consummates the transactions for the issuance
and sale of the ARP Shares.
(g) “Company Officer” shall mean 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 Secretary and each Assistant Treasurer of the Company and every other
officer or employee of the Company designated as a “Company Officer” for purposes hereof in a
notice from the Company to the Auction Agent.
(h) “Holder” means, with respect to ARP Shares, the registered holder of ARP Shares as the
same appears on the share ledger or share records of the Company.
(i) “Rate Multiple” shall have the meaning assigned to it in Section 2.8.
(j) “Statement” shall mean the Articles Supplementary for the ARP Shares of the Company in
effect at the time the Registration Statement relating to the ARP Shares is declared effective by
the Securities and Exchange Commission, specifying the powers, preferences and rights of the ARP
Shares.
(k) “Settlement Procedures” shall mean the Settlement Procedures attached as Exhibit A to the
Broker-Dealer Agreement.
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.
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II. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement
Procedures.
(a) The Board of Directors of the Company has adopted a resolution appointing The Bank of New
York 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 (i) the procedures set
forth in this Section 2 and (ii) the Auction Procedures for the purpose of determining the
Applicable Rate for the ARP Shares for the next 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 and in the Settlement Procedures
are incorporated herein by reference in their entirety and shall be deemed to be a part of this
Agreement to the same extent as if such provisions were set forth fully herein. In the case of any
conflict between the terms of any document incorporated herein by reference and the terms hereof,
the terms in this agreement shall control.
2.2 Preparation for Each Auction; Maintenance of Registry of Existing Holders.
(a) As of the date hereof, the Company shall provide the Auction Agent with a list of the
Broker-Dealers and shall deliver to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by each such Broker-Dealer. The Auction Agent shall keep such list
current and accurate and shall indicate thereon the identity of each Existing Holder, if any, whose
most recent Order was submitted and resulted in such Existing Holder continuing to hold or purchase
ARP Shares. Not later than five Business Days prior to any Auction Date for which any change in
such list of Broker-Dealers is to be effective, the Company shall notify the Auction Agent in
writing of such change and, if any such change is the addition of a Broker-Dealer to such list, the
Company shall cause to be delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by such Broker-Dealer. The Auction Agent 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 the Auction Date for any Auction shall be changed after the Auction
Agent shall have given the notice referred to in clause (vii) of paragraph (a) of the Settlement
Procedures, the Auction Agent, by such means as the Auction Agent reasonably deems practicable,
shall give notice of such change to the Broker-Dealers 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) The provisions contained in Section 4(b) of Part I of the Statement concerning Special
Dividend Periods and the notification of a Special Dividend Period will be followed by the Company
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.
(d) (i) On each Auction Date, the Auction Agent shall determine the Maximum Rate. Not later
than 9:30 a.m. on each Auction Date, the Auction Agent shall notify the Company and the
Broker-Dealers of the Maximum Rate.
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(i) If the Reference Rate is the applicable “AA” Composite Commercial Paper Rate and such 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 the applicable “AA” Composite
Commercial Paper Rate, the rate shall be determined on the basis of the quotations (or quotation)
furnished by the remaining Commercial Paper Dealer(s), if any, or, if there are no such Commercial
Paper Dealers, by a nationally recognized dealer in commercial paper of such issuers then making
such quotations selected by the Company.
(e) (i) The Auction Agent shall maintain a current registry of the Existing Holders of the
ARP Shares for purposes of each individual Auction based on the information provided to it from
time to time by the Broker-Dealers. The Company shall use commercially reasonable efforts to
provide or cause to be provided to the Auction Agent within ten Business Days following the date of
the Closing a list of the initial Existing Holders of ARP Shares and the number of shares purchased
by each such Existing Holder. The Auction Agent may rely upon, as conclusive evidence of the
identities of the Existing Holders, such list, the results of each Auction and notices from any
Existing Holder or the Agent Member of any Existing Holder with respect to such Existing Holder’s
transfer of any ARP Shares to another Person.
(ii) In the event of any partial redemption of ARP Shares, upon notice by the Company to the
Auction Agent of such partial redemption, the Auction Agent promptly shall request the Securities
Depository to notify the Auction Agent of the identities of the Agent Members (and the respective
numbers of ARP Shares) from the accounts of which ARP Shares have been called for redemption and
the person or department at such Agent Member to contact regarding such redemption. At least two
Business Days prior to the Auction preceding the date of redemption, the Auction Agent shall
request each Agent Member so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose ARP Shares are to be redeemed) the number of ARP Shares
of each such Existing Holder, if any, to be redeemed by the Company, provided that the Auction
Agent has been furnished with the name and telephone number of a person or department at such Agent
Member from which it is to request such information. In the absence of receiving any such
information with respect to an Existing Holder, from such Existing Holder’s Agent Member or
otherwise, the Auction Agent may continue to treat such Existing Holder as having ownership of the
number of ARP Shares shown in the Auction Agent’s registry of Existing Holders.
(iii) The Auction Agent shall register a transfer of the ownership of ARP Shares from an
Existing Holder to another Existing Holder only if (A) such transfer is made pursuant to an Auction
or (B) if such transfer is made other than pursuant to an Auction, the Auction Agent has been
notified of such transfer in writing, in a notice substantially in the form of Exhibit C to the
Broker-Dealer Agreement, by such Existing Holder or by the Agent Member of such Existing Holder
only to or through a Broker-Dealer that has entered into a Broker-Dealer Agreement with the Auction
Agent and the Company. The Auction Agent is not required to accept any notice of transfer
delivered for an Auction unless it is received by the Auction Agent by 3:00 p.m. on the Business
Day preceding the Auction. The Auction Agent shall rescind a transfer made on the registry of the
Existing Holders of any ARP Shares if the Auction Agent has been notified in writing, in a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreement, by the Agent Member or the
Broker-Dealer of any Person that (i) purchased any ARP Shares and the seller failed to deliver such
ARP Shares or (ii) sold any ARP Shares and
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the purchaser failed to make payment to such Person upon delivery to the purchaser of such ARP
Shares.
(f) The Auction Agent may, but shall have no obligation to, request that the Broker-Dealers,
as set forth in Section 3.2(c) of the Broker-Dealer Agreements, provide the Auction Agent with a
list of their respective customers that such Broker-Dealers believe are Beneficial Owners of ARP
Shares. The Auction Agent shall keep confidential any such information and shall not disclose any
such information so provided to any Person other than the relevant Broker-Dealer and the Company,
provided that the Auction Agent reserves the right 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 in writing that its failure to do so would be unlawful.
2.3 Auction Schedule.
The Auction Agent shall conduct Auctions on the Business Day immediately prior to the start of
each Dividend Period in accordance with the schedule set forth below. Such schedule may be changed
by the Auction Agent with the consent of the Company, which consent shall not be withheld
unreasonably. The Auction Agent shall give notice of any such change to each Broker-Dealer. 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.
|
The Auction Agent shall advise the Company and the Broker-Dealers of the Reference Rate and the Maximum Rate as set forth in Section 2.2(d)(i) hereof. | |
9:30 a.m. — 1:00 p.m.
|
The Auction Agent shall assemble information communicated to it by Broker-Dealers as provided in Section 2 of Part II of the Statement. Submission deadline is 1:00 p.m. | |
Not earlier than 1:00 p.m.
|
The Auction Agent shall make determinations pursuant to Section 3 of Part II of the Statement. | |
By approximately 3:00 p.m.
|
The Auction Agent shall advise the Company of the results of the Auction as provided in Section 3(b) of Part II of the Statement. Submitted Bid Orders and Submitted Sell Orders will be accepted and rejected in whole or in part and ARP Shares will be allocated as provided in Section 4 of |
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| Time | Event | |
| Part II of the Statement. | ||
| The Auction Agent shall give notice of the Auction results as set forth in Section 2.4 hereof. |
The Auction Agent will follow the Bond Market Association’s Market Practice U.S. Holiday
Recommendations for shortened trading days for the bond markets (the “BMA Recommendation”) unless
the Auction Agent is instructed otherwise. In the event of a BMA Recommendation on an Auction
Date, the Submission Deadline will be 11:30 a.m., instead of 1:00 p.m., and as a result the notice
set forth in Section 2.4 will occur earlier.
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 ARP Shares by telephone or other
electronic means acceptable to the parties. The Auction Agent, unless instructed otherwise in
writing by the Company, is authorized to release the Winning Bid Rate after each auction for public
dissemination.
2.5 Broker-Dealers.
(a) Not later than 3:00 p.m. on each Dividend Payment Date, the Auction Agent after each
Auction will pay to each Broker-Dealer, from funds provided by the Company, a service charge in the
amount equal to: (i) in the case of any Auction immediately preceding a Dividend Period of less
than one year, the product of (A) a fraction, the numerator of which is the number of days in the
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 (B) 1/4 of 1%, times (C) $25,000 times
(D) the sum of the aggregate number of ARP Shares placed by such Broker-Dealer, or (ii) the amount
mutually agreed upon by the Company and the Broker-Dealers in the case of any Auction immediately
preceding a Dividend Period of one year or longer. For the purposes of the preceding sentence, the
ARP Shares shall be placed by a Broker-Dealer if such shares were (1) the subject of Hold Orders
deemed to have been submitted to the Auction Agent by the Broker-Dealer and were acquired by the
Broker-Dealer for its own account or were acquired by the Broker-Dealer for its customers who are
Beneficial Owners or (2) the subject of an order submitted by the Broker-Dealer that is (a) a
Submitted Bid of an Existing Holder that resulted in the Existing Holder continuing to hold the
shares as a result of the Auction or (b) a Submitted Bid of a Potential Holder that resulted in the
Potential Holder purchasing the shares as a result of the Auction or (3) the subject of a valid
Hold Order. For the avoidance of doubt, only one Broker-Dealer shall be considered to have placed
a particular ARP Share at any particular Auction for purposes of this Section 2.5(a).
(b) The Company shall not designate any Person to act as a Broker-Dealer, or permit an
Existing Holder or a Potential Beneficial Owner to participate in Auctions through any Person other
than a Broker-Dealer, without the prior written approval of the Auction Agent, which approval shall
not be withheld unreasonably. Notwithstanding the foregoing, the
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Company may designate an Affiliate, ▇▇▇▇▇▇ Brothers Inc., Citigroup Global Markets Inc. or UBS
Securities LLC to act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as set forth therein if so
directed by the Company.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from time to time shall enter into
such Broker-Dealer Agreements as the Company shall request in writing.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6 Ownership of ARP Shares and Submission of Bids by the Company and Its Affiliates.
Neither the Company nor any Affiliate of the Company may submit an Order in any Auction,
except that an Affiliate of the Company that is a Broker-Dealer may submit an Order. The Company
shall notify the Auction Agent if the Company or, to the best of the Company’s knowledge, any
Affiliate of the Company becomes a Beneficial Owner of any ARP Shares. The restrictions in this
Section 2.6 shall in no way limit the activities of the Auction Agent. The Auction Agent shall
have no duty or liability with respect to enforcement of this Section 2.6.
2.7 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Company, its agents, independent public accountants and
counsel, at reasonable times during normal business hours, to review and make extracts or copies of
(at the Company’s sole cost and expense), access to all books, records, documents and other
information concerning the conduct and results of Auctions, provided that any such agent,
accountant or counsel shall furnish the Auction Agent with a letter from the Company requesting
that the Auction Agent afford such person access. The Auction Agent shall maintain records
relating to any Auction for a period of at least six years after such Auction, and such records, in
reasonable detail, shall reflect accurately and fairly the actions taken by the Auction Agent
hereunder. The Company agrees to keep confidential any information regarding the customers of any
Broker-Dealer received from the Auction Agent in connection with this Agreement or any Auction, and
shall not disclose such information or permit the disclosure of such information without the prior
written consent of the applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section 2.7. The Company
reserves the right to disclose any such information if it is ordered to do so by a court of
competent jurisdiction or a regulatory body, judicial or quasi-judicial agency or authority having
authority to compel such disclosure, or if it is advised by its counsel that its failure to do so
would be unlawful. Any such agent, accountant or counsel, before having access to such
information, shall agree to keep such information confidential and not to disclose such information
or permit disclosure of such information without the prior written consent of the applicable
Broker-Dealer, provided that such agent, accountant or counsel may reserve the right to disclose
any such information if it is ordered to do so by a court of competent jurisdiction or a regulatory
body, judicial or quasi-judicial agency or authority having authority to compel such disclosure, or
if it is advised by its counsel that its failure to do so would be unlawful.
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2.8 Information Concerning Rates.
If there is any change in the credit rating of ARP Shares by a rating agency (or substitute or
successor rating agencies) then rating the ARP Shares that results in any change in the Maximum
Rate for ARP Shares (the “Rate Multiple”), the Company shall notify the Auction Agent of such
change in the Rate Multiple prior to the Auction Date. In determining the Maximum Rate on any
Auction Date, the Auction Agent shall be entitled to rely on the last Rate Multiple for ARP Shares
of which it has most recently received notice from the Company .
III. THE AUCTION AGENT AS PAYING AGENT.
3.1 The Paying Agent.
The Board of Directors of the Company has adopted a resolution appointing The Bank of New York
as Paying Agent. The Paying Agent hereby accepts such appointment and agrees to act in accordance
with its standard procedures and the provisions of the Statement which are specified herein with
respect to the ARP Shares and as set forth in this Section 3.
3.2 The Company’s Notices to the Paying Agent.
Whenever any ARP Shares are to be redeemed, the Company shall deliver to the Paying Agent
a Notice of Redemption, which will be mailed by the Paying Agent, by first-class mail, postage
prepaid, to each Holder of ARP Shares being redeemed pursuant to Section 3(b) of Part I of the
Statement.
3.3 The Company to Provide Funds for Dividends and Redemptions.
(a) Not later than 3:00 p.m. on the Business Day preceding each Dividend Payment Date, the
Company shall deposit with the Paying Agent an aggregate amount of Federal funds or similar
same-day funds equal to the declared dividends to be paid to Holders on such Dividend Payment Date
and shall give the Paying Agent irrevocable instructions to apply such funds to the payment of such
dividends on such Dividend Payment Date.
(b) If the Company shall give a Notice of Redemption, then by 12:00 noon on the date fixed for
redemption, the Company shall deposit in trust with the Paying Agent an aggregate amount of Federal
funds or similar same-day funds sufficient to redeem such ARP Shares called for redemption and
shall give the Paying Agent irrevocable instructions and authority to pay the redemption price to
the Holders of ARP Shares called for redemption upon surrender of the certificate or certificates
therefor.
3.4 Disbursing Dividends and Redemption Price.
After receipt of the Federal Funds or similar same-day funds and instructions from the Company
described in Section 3.3 above, the Paying Agent shall pay to the Holders (or former Holders)
entitled thereto (i) on each corresponding Dividend Payment Date, dividends on the ARP Shares, and
(ii) on any date fixed for redemption, the redemption price of any ARP Shares called for
redemption. The amount of dividends for any Dividend Period to be paid by the Paying Agent to
Holders will be determined by the Company as set forth in Section 2 of Part I of
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the Statement. The redemption price to be paid by the Paying Agent to the Holders of any ARP
Shares called for redemption will be determined as set forth in Section 3 of Part I of the
Statement. The Paying Agent shall have no duty to determine the redemption price and may rely
conclusively on the amount thereof set forth in the Notice of Redemption.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Original Issue of ARP Share Certificates.
On the Original Issue Date for any ARP Share, one certificate for ARP Shares shall be issued
by the Company and registered in the name of Cede & Co., as nominee of the Securities Depository,
and countersigned by the Paying Agent.
4.2 Registration of Transfer or Exchange of ARP Shares.
Except as provided in this Section 4.2, the ARP Shares shall be registered solely in the name
of the Securities Depository or its nominee. If the Securities Depository shall give notice of its
intention to resign as such, and if the Company shall not have selected a substitute Securities
Depository acceptable to the Paying Agent prior to such resignation, then, upon such resignation of
the Securities Depository, the ARP Shares, at the Company’s request and expense, may be registered
for transfer or exchange, and new certificates thereupon shall be issued in the name of the
designated transferee or transferees, upon surrender of the old certificate in form deemed by the
Paying Agent to be endorsed properly for transfer with (a) all necessary endorsers’ signatures
guaranteed in such manner and form and by such guarantor as the Paying Agent may reasonably
require, (b) such assurances as the Paying Agent shall deem necessary or appropriate to evidence
the genuineness and effectiveness of each necessary endorsement and (c) satisfactory evidence of
compliance with all applicable laws relating to the collection of taxes in connection with any
registration of transfer or exchange or funds necessary for the payment of such taxes. If there is
no Securities Depository, at the Company’s option and upon its receipt of such documents as it
deems appropriate, any ARP Shares may be registered in the 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 thereof upon transfer or exchange
thereof at the Company’s expense.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on transfer from a certificate
evidencing ARP Shares shall be accompanied by an opinion of counsel stating that such legend may be
removed and such ARP Shares may be transferred free of the restriction described in such legend,
said opinion to be delivered under cover of a letter from a Company Officer authorizing the Paying
Agent to remove the legend on the basis of said opinion.
4.4 Lost, Stolen or Destroyed ARP Share Certificates.
The Paying Agent shall, at the Holder’s expense, 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 Company and by the Paying Agent, subject at all
times to provisions of law, the Statement governing such matters and resolutions
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adopted by the Company with respect to lost, stolen or destroyed securities. The Paying Agent
may issue new certificates in exchange for and upon the cancellation of mutilated certificates.
Any request by the Company to the Paying 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 Company to the
Paying Agent that such issuance will comply with provisions of applicable law and the Statement and
resolutions of the Company.
4.5 Disposition of Canceled Certificates; Record Retention.
The Paying Agent shall retain share certificates which have been canceled and any accompanying
documentation thereto in accordance with applicable rules and regulations of the Securities and
Exchange Commission (the “Commission”) for at least six calendar years from the date of such
cancellation. The Paying Agent, upon written request by the Company, shall afford to the Company,
its agents and counsel access at reasonable times during normal business hours to review and make
extracts or copies (at the Company’s sole cost and expense) of such certificates and accompanying
documentation. Upon the expiration of this six-year period, the Paying Agent, upon written request
by the Company, shall deliver to the Company the canceled certificates and any accompanying
documentation. In the event that the Commission requests that any or all such records be furnished
to it, the Paying Agent shall provide the Company with prompt written notice of such request so
that the Company may appeal such request and the Paying Agent shall cooperate with the Company in
any such appeal. In the event that such appeal is unsuccessful, the Paying Agent shall be
permitted to furnish to the Commission, either at its principal office or at any regional office,
complete, correct and current hard copies of any and all records that were requested by the
Commission provided that the Paying Agent shall exercise reasonable efforts to obtain assurance
that confidential treatment will be accorded to such records. Thereafter, such records shall not
be destroyed by the Company without the approval of the Paying Agent, which approval shall not be
withheld unreasonably, but will be safely stored for possible future reference.
4.6 Share Register.
The Paying Agent, in its capacity as Transfer Agent, shall maintain the share register, which
shall contain a list of the Holders, the number of ARP Shares held by each Holder and the address
of each Holder. The Paying Agent shall record in the share register any change of address of a
Holder upon notice by such Holder. In case of any written request or demand for the inspection of
the share register or any other books of the Company in the possession of the Paying Agent, the
Paying Agent will notify the Company and secure instructions as to permitting or refusing such
inspection. The Paying Agent reserves the right, however, to exhibit the share register or other
records to any person in case it is (a) 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) advised by its counsel that its failure to do so would be unlawful.
4.7 Return of Funds.
Any funds paid to the Paying Agent for the paying of dividends but not applied to the payment
of dividends, including interest earned on such moneys, will, to the extent permitted by
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law, be repaid to the Company at the end of 90 days from the date on which such moneys were to
have been so applied. Upon written request, the Company shall be entitled to receive from the
Paying Agent, promptly after the date fixed for redemption, any cash deposited with the Paying
Agent in excess of (i) the aggregate redemption price of the ARP Shares called for redemption on
such date and (ii) such other amounts, if any, to which Holders of ARP Shares called for redemption
may be entitled. Any funds so deposited that are unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be paid to the Company upon its written
request. Funds, while deposited with the Auction Agent, will be held in trust for the payment of
the applicable dividend, redemption price or, as may be applicable under the Statement, other
charges.
V. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Company.
The Company represents and warrants to the Auction Agent that:
(i) the Company has been duly organized and is validly existing as a corporation under the
laws of the State of Maryland, and has full power to execute and deliver this Agreement and to
authorize, create and issue the ARP Shares;
(ii) the Company is registered with the Commission under the 1940 Act as a closed-end,
non-diversified, management investment company;
(iii) this Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company, enforceable against
the Company 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;
(iv) the form of the certificate evidencing the ARP Shares complies with all applicable state
and federal laws;
(v) the ARP Shares have been duly and validly authorized by the Company and, upon completion
of the initial sale of the ARP Shares and receipt of payment therefor, will be validly issued by
the Company, fully paid and nonassessable;
(vi) at the time of the offering of the ARP Shares, the ARP Shares offered will be registered
under the Securities Act 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 this Agreement or will be required in connection with the issuance of the ARP Shares, except
such action as required by applicable state securities laws;
(vii) the execution and delivery of this Agreement and the issuance and delivery of the ARP
Shares 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 Charter or Bylaws, any order or decree of any
court or public authority having jurisdiction over the Company or any mortgage, indenture,
contract, agreement or undertaking to which the Company is a party or by which it is
11
bound the effect of which conflict, violation, breach or default would be material to the
Company; and
(viii) no taxes are payable upon or in respect of the execution of this Agreement or will be
payable upon or in respect of the issuance of the ARP Shares.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Company that:
(i) the Auction Agent is duly organized and is validly existing as a banking corporation in
good standing under the laws of the State of New York and has the corporate power to enter into and
perform its obligations under this Agreement; and
(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 only to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to or affecting
creditors’ rights and to general equitable principles.
VI. THE AUCTION AGENT.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as non-fiduciary agent for the Company hereunder and
owes no duties, fiduciary or otherwise, to any Person by reason of this Agreement and no implied
duties shall be read into this Agreement against the Auction Agent.
(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.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely conclusively upon, and shall be fully protected in acting or
refraining from acting in accordance with, any communication authorized by this Agreement and any
proper written instruction, notice, request, direction, consent, report, certificate, share
certificate or other instrument, paper or document reasonably believed by it to be genuine and
appropriately authorized. 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, after reasonable inquiry, to have been given by the Company
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or by a Broker-Dealer. The Auction Agent may record telephone communications with the Company
or with the Broker-Dealers or with both.
(b) The Auction Agent may consult with counsel of its 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 the Auction Agent hereunder in good faith and in reasonable 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. Unless otherwise instructed by the Company in writing, the Auction Agent (i) shall not
be obligated to invest any money received by it hereunder and (ii) shall be under no liability for
interest on any money received by it hereunder.
(d) The Auction Agent may perform its duties and exercise its rights hereunder either directly
or by or through agents or attorneys and shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed by it with due care hereunder.
(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, including, without limitation, acts of
God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
acts of terrorism; interruptions, loss or malfunctions of utilities, computer (hardware or
software) or communications services; accidents; labor disputes; acts of civil or military
authority or governmental actions; 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.
(f) The Auction Agent shall not be required to, and does not, make any representations as to
the validity, accuracy, value or genuineness of any signatures or endorsements, other than its own
and those of its authorized officers.
(g) Any corporation into which the Auction Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which the Auction Agent shall be a party, or any corporation succeeding to the Dealing and Trading
business of the Auction Agent shall be the successor of the Auction Agent hereunder, with the
consent of the Company but without the execution or filing of any paper with any party hereto or
any further act on the part of any of the parties hereto, except where any instrument of transfer
or assignment may be required by law to effect such succession, anything herein to the contrary
notwithstanding.
(h) All the rights, privileges, immunities and protections granted to the Auction Agent herein
are deemed granted to the Paying Agent and The Bank of New York in any of the capacities it
undertakes in connection with this Agreement.
(i) Whenever in the administration of the provisions of this Agreement, the Auction Agent
shall deem it necessary or desirable that a matter be proved or established prior to
13
taking or suffering any action to be taken hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Auction Agent, be deemed to be conclusively proved and established by a
certificate describing such action as requested by the Company or the Broker Dealer, signed by the
Company or the Broker Dealer, respectively, and delivered to the Auction Agent. The Auction Agent
shall not be liable and shall be held harmless for any action or omission undertaken in reliance
upon any such certificate, provided that such undertaking is without negligence or bad faith on the
part of the Auction Agent. Upon receipt of any such certificate signed by the Company or the
Broker-Dealer, the Auction Agent shall promptly provide a copy of said certificate to the
Broker-Dealer or the Company, respectively. The Auction Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, entitlement, order, approval or other paper
or document furnished by the Company or the Broker-Dealer, except to the extent that such failure
to investigate would be deemed negligent.
6.3 Compensation, Expenses and Indemnification.
(a) The Company shall pay to the Auction Agent from time to time reasonable compensation for
all services rendered by it under this Agreement and under the Broker-Dealer Agreements as shall be
set forth in a separate writing signed by the Company and the Auction Agent, subject to adjustments
if the ARP Shares no longer are held of record by the Securities Depository or its nominee or if
there shall be such other change as shall increase or decrease materially the Auction Agent’s
obligations hereunder or under the Broker-Dealer Agreements.
(b) The Company shall reimburse the Auction Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Auction Agent in accordance with any
provision of this Agreement and of the Broker-Dealer Agreements (including the reasonable
compensation, expenses and disbursements of its agents and counsel), except any expense,
disbursement or advance attributable to the Auction Agent’s negligence or bad faith, upon
submission to the Company of reasonable documentation thereof. In no event shall the Auction Agent
be responsible or liable for special, indirect or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit), even if the Auction Agent has been
advised of the likelihood of such loss or damage and regardless of the form of action.
(c) The Company shall indemnify the Auction Agent and its officers, directors, employees and
agents for, and hold them harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Auction Agent arising out of or in connection with its
agency under this Agreement and under the Broker-Dealer Agreements, including the costs and
expenses of defending themselves against any claim of liability in connection with their exercise
or performance of any of their duties hereunder and thereunder, except such as may result from its
negligence or bad faith.
14
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 ARP Shares except to the extent otherwise set forth in Section 5.2
and 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.
VII. MISCELLANEOUS.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be terminated as provided in this
Section 7.1. The Company may terminate this Agreement at any time by so notifying the Auction
Agent, provided that, if any ARP Shares remain outstanding, the Company shall have entered into an
agreement with a successor auction agent. The Auction Agent may terminate this Agreement (i) upon
prior notice to the Company on the date specified in such notice, which date shall be no earlier
than 60 days after delivery of such notice or (ii) upon prior notice to the Company on the date
specified in such notice if the Company shall have failed to pay the amounts due the Auction Agent
in connection with its agency under this Agreement and under the Broker-Dealer Agreements within 30
days of invoice. If the Auction Agent terminates this Agreement while any ARP Shares remain
outstanding, the Company shall use its best efforts to enter into an agreement with a successor
auction agent containing substantially the same terms and conditions as this Agreement.
(b) Except as otherwise provided in this Section 7.1(b), the respective rights and duties of
the Company and the Auction Agent under this Agreement shall cease upon termination of this
Agreement. The Company’s representations, warranties, covenants and obligations to the Auction
Agent under Sections 5.1 and 6.3 hereof shall survive the termination hereof. The Auction Agent’s
representations, warranties, covenants and obligations under Section 5.2 hereof shall survive the
termination hereof. Upon termination of this Agreement, the Auction Agent shall (i) resign as
Auction Agent under the Broker-Dealer Agreements, (ii) at the Company’s written request, deliver
promptly to the Company or to another authorized party copies of all books and records maintained
by it in connection with its duties hereunder, and (iii) at the written request of the Company,
transfer promptly to the Company or to any successor auction agent any funds deposited by the
Company with the Auction Agent (whether in its capacity as Auction Agent or as Paying Agent)
pursuant to this Agreement which have not been distributed previously by the Auction Agent in
accordance with this Agreement.
7.2 Communications.
Except for (i) communications authorized to be made by telephone pursuant to this Agreement
(which shall be deemed to include such other electronic means acceptable to those parties using
such means) 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 at its address or telecopier number set forth below:
15
If to the Company,
addressed to:
addressed to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy Total Return Fund, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Auction Agent,
addressed to:
addressed to:
The Bank of New York
Corporate Trust Department
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ – ▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Dealing & Trading Group – Auction Desk
Corporate Trust Department
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ – ▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Dealing & Trading Group – Auction Desk
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or 3443
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or 3443
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 the Company
by a Company Officer and on behalf of the Auction Agent by an Authorized Officer.
7.3 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, except for written 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 Company, 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) 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.
16
(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.
This Agreement shall be binding upon, inure to the benefit of and be enforceable by, the
respective successors and permitted assigns of each of the Company and the Auction Agent. This
Agreement may not be assigned by either party hereto absent the prior written consent of the other
party, which consent shall not be withheld unreasonably.
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 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.
7.9 Governing Law, Jurisdiction, Waiver of Trial By Jury.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO ANY PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK). THE PARTIES AGREE HERETO THAT ALL
ACTIONS AND PROCEEDINGS ARISING OUT OF THIS AUCTION AGENCY AGREEMENT OR ANY TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW
YORK, STATE OF NEW YORK.
EACH PARTY WAIVES ANY OBJECTION THAT IT MAY HAVE THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN THE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK AND STATE OF NEW YORK WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME. 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.
7.10 Limitation of Liability.
A copy of the Charter is on file with the State Department of Assessments and Taxation of
Maryland. This Agreement has been executed on behalf of the Company by an officer of the Company in
such capacity and not individually and the obligations of the Company under this
17
Agreement are not binding upon such officer or the shareholders of the Company individually but are
binding only upon the assets and property of the Company.
[Signature page follows]
18
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.
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ENERGY TOTAL RETURN FUND, INC. |
||||
| By: | ||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||
| Title: | Secretary | |||
| THE BANK OF NEW YORK |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||