EXHIBIT 99(k)(2)
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AUCTION AGENT AGREEMENT
between
MUNIHOLDINGS NEW JERSEY INSURED FUND III, INC.
and
IBJ WHITEHALL BANK & TRUST COMPANY
Dated as of , 199
Relating to
AUCTION MARKET PREFERRED STOCK(R)
("AMPS"(R)),
Series A
of
MUNIHOLDINGS NEW JERSEY INSURED FUND III, INC.
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(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
THIS AUCTION AGENT AGREEMENT, dated as of , 199 , is between
MUNIHOLDINGS NEW JERSEY INSURED FUND III, INC., a Maryland corporation (the
"Company"), and IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking
corporation.
The Company proposes to duly authorize and issue shares of
Auction Market Preferred Stock(R), Series A ("Series A AMPS"), with a par value
of $.10 per share and a liquidation preference of $25,000 per share plus an
amount equal to accumulated but unpaid dividends (whether or not earned or
declared), pursuant to the Company's Articles Supplementary (as defined below).
The Series A AMPS are sometimes herein referred to as the "AMPS." A separate
Auction (as defined below) will be conducted for the AMPS. The Company desires
that IBJ Whitehall Bank & Trust Company perform certain duties as agent in
connection with each Auction of shares of AMPS (in such capacity, the "Auction
Agent"), and as the transfer agent, registrar, dividend disbursing agent and
redemption agent with respect to the shares of AMPS (in such capacity, the
"Paying Agent"), upon the terms and conditions of this Agreement, and the
Company hereby appoints IBJ Whitehall Bank & Trust Company as said Auction Agent
and Paying Agent in accordance with those terms and conditions (hereinafter
generally referred to as the "Auction Agent," except in Sections 3 and 4 below).
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.
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1.1. Terms Defined by Reference to Articles Supplementary.
Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.
(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
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1.2. Terms Defined Herein.
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As used herein and in the Settlement Procedures (as defined below), the
following terms shall have the following meanings, unless the context otherwise
requires:
(a) "Affiliate" shall mean any Person, other ▇▇▇▇ ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, made known to the Auction Agent to be
controlled by, in control of, or under common control with, the Company or
its successors.
(b) "Agent Member" of any Person shall mean such Person's agent member of
the Securities Depository that will act on behalf of a Bidder.
(c) "Articles Supplementary" shall mean the Articles Supplementary of the
Company, establishing the powers, preferences and rights of the AMPS, filed
on , 1998 with the State Department of Assessments and
Taxation of the State of Maryland.
(d) "Auction" shall have the meaning specified in Section 2.1 hereof.
(e) "Auction Procedures" shall mean the Auction Procedures that are set
forth in Paragraph 10 of the Articles Supplementary.
(f) "Authorized Officer" shall mean each Senior Vice President, Vice
President, Assistant Vice President, Trust Officer, and Assistant Secretary
and Assistant Treasurer of the Auction Agent assigned to its Corporate
Trust and Agency Group and every other officer or employee of the Auction
Agent designated as an "Authorized Officer" for purposes hereof in a
communication to the Company.
(g) "Broker-Dealer Agreement" shall mean each agreement between the Auction
Agent and a Broker-Dealer substantially in the form attached hereto as
Exhibit A.
(h) "Company 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 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.
(i) "Holder" shall be a holder of record of one or more shares of AMPS,
listed as such in the stock register maintained by the Paying Agent
pursuant to Section 4.6 hereof.
(j) "Settlement Procedures" shall mean the Settlement Procedures attached
as Exhibit A to the Broker-Dealer Agreement.
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1.3. Rules of Construction.
Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural number and
vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of similar
import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New York
City time.
II. THE AUCTION.
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2.1. Purpose; Incorporation by Reference of Auction
Procedures and Settlement Procedures.
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(a) The Articles Supplementary provide that the Applicable Rate on shares
of AMPS, as the case may be, for each Dividend Period therefor after the
Initial Dividend Period shall be the rate per annum that a commercial bank,
trust company or other financial institution appointed by the Company
advises results from implementation of the Auction Procedures. The Board of
Directors of the Company has adopted a resolution appointing IBJ Whitehall
Bank & 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 the AMPS for the next Dividend Period therefor.
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 hereof to the same extent as if
such provisions were set forth fully herein.
2.2. Preparation for Each Auction; Maintenance
of Registry of Existing Holders.
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(a) Pursuant to Section 2.5 hereof, the Company shall not designate any
Person to act as a Broker-Dealer without the prior written approval of the
Auction Agent (which approval shall not be withheld unreasonably). As of
the date hereof, the Company shall provide the Auction Agent with a list of
the Broker-
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Dealers previously approved by the Auction Agent and shall cause to be
delivered 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, or on a
separate list, the identity of each Existing Holder, if any, whose most
recent Order was submitted by a Broker-Dealer on such list and resulted in
such Existing Holder continuing to hold or purchasing shares of AMPS. 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 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 paragraph 2 of the Articles Supplementary
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) Except as otherwise provided in paragraph 2(f) of the Articles
Supplementary, whenever the Company intends to include any net capital
gains or other income subject to regular Federal income tax in any dividend
on shares of AMPS, the Company will notify the Auction Agent of the amount
to be so included at least five Business Days prior to the Auction Date on
which the Applicable Rate for such dividend is to be established. Whenever
the Auction Agent receives such notice from the Company, in turn it will
notify each Broker-Dealer, who, on or prior to such Auction Date, in
accordance with its Broker-Dealer Agreement, will notify its Beneficial
Owners and Potential Beneficial Owners believed to be interested in
submitting an Order in the Auction to be held on such Auction Date.
Whenever the Company includes any additional amounts in a dividend as
provided in paragraph 2(f) of the Articles Supplementary, the Company will
notify the Auction Agent of such additional amounts to be so included in
such dividend at least five Business Days prior to the applicable Dividend
Payment Date. Whenever the Auction Agent receives such notice from the
Company, in turn it will notify the Securities Depository and each Broker-
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Dealer, who, on or prior to the applicable Dividend Payment Date, in
accordance with its Broker-Dealer Agreement, will notify its Beneficial
Owners.
(ii) If the Company makes a Retroactive Taxable Allocation, the
Company, within 90 days (and generally within 60 days) after the end of its
fiscal year for which a Retroactive Taxable Allocation is made, will
provide notice thereof to the Auction Agent and to each Holder (initially
the Securities Depository) during such fiscal year at such Holder's address
as the same appears or last appeared on the stock books of the Company. The
Company, within 30 days after such notice is given to the Auction Agent,
will pay to the Auction Agent (who then will distribute to such Holders),
out of funds legally available therefor, a cash amount equal to the
aggregate Additional Dividend with respect to all Retroactive Taxable
Allocations made to such Holders during the fiscal year in question.
(e) On each Auction Date, the Auction Agent shall determine the Reference
Rate and the Maximum Applicable Rate. If the Reference Rate is not quoted
on an interest basis but is quoted on a discount basis, the Auction Agent
shall convert the quoted rate to an Interest Equivalent, as set forth in
paragraph 1 of the Articles Supplementary; or, if the rate obtained by the
Auction Agent is not quoted on an interest or discount basis, the Auction
Agent shall convert the quoted rate to an interest rate after consultation
with the Company as to the method of such conversion. Not later than 9:30
A.M. on each Auction Date, the Auction Agent shall notify the Company and
the Broker-Dealers of the Reference Rate so determined and of the Maximum
Applicable Rate.
(ii) 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 Auction Agent immediately shall notify the
Company so that the Company 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 Company promptly shall advise the
Auction Agent of any such selection. If the Company does not select any
such Substitute Commercial Paper Dealer or Substitute Commercial Paper
Dealers, then the rates shall be supplied by the remaining Commercial Paper
Dealer or Commercial Paper Dealers.
(iii) If, after the date of this Agreement, there is any change in the
prevailing rating of AMPS by either of the rating agencies (or substitute
or successor rating agencies) referred to in the definition of the Maximum
Applicable Rate, thereby resulting in any change in the corresponding
applicable percentage for the AMPS, as set forth in said definition (the
"Percentage"), the Company shall notify the Auction Agent in writing of
such change in the Percentage prior to 9:00 A.M. on the Auction Date for
AMPS next succeeding such change. The Percentage for the AMPS on the date
of this Agreement is as specified in paragraph 10(a)(vii) of the Articles
Supplementary. The Auction Agent shall be entitled to rely on the last
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Percentage of which it has received notice from the Company (or, in the
absence of such notice, the Percentage set forth in the preceding sentence)
in determining the Maximum Applicable Rate as set forth in Section
2.2(e)(i) hereof.
(f) The Auction Agent shall maintain a current registry of the Existing
Holders of the shares of AMPS for purposes of each Auction. The Company
shall use its best 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 AMPS, and the Broker-Dealer of each
such Existing Holder through which such Existing Holder purchased such
shares. The Auction Agent may rely upon, as evidence of the identities of
the Existing Holders, such list, the results of each Auction and notices
from any Existing Holder, the Agent Member of any Existing Holder or the
Broker-Dealer of any Existing Holder with respect to such Existing Holder's
transfer of any shares of AMPS to another Person.
(ii) In the event of any partial redemption of AMPS, 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 shares) from the accounts of which shares have been called for
redemption and the person or department at such Agent Member to contact
regarding such redemption, and at least two Business Days prior to the
Auction preceding the date of redemption with respect to shares of the
series being partially redeemed, 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 shares are to be redeemed)
the number of shares of AMPS 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
shares of AMPS shown in the Auction Agent's registry of Existing Holders.
(iii) The Auction Agent shall register a transfer of the ownership of
shares of AMPS from an Existing Holder to another Existing Holder, or to
another Person if permitted by the Company, 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 Agreements, by such Existing Holder or by the Agent
Member of such Existing Holder. 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 next preceding the
applicable Auction Date. The Auction Agent shall rescind a transfer made on
the registry of the Existing Holders of any shares of AMPS 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-
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Dealer of any Person that (i) purchased any shares of AMPS and the seller
failed to deliver such shares or (ii) sold any shares of AMPS and the
purchaser failed to make payment to such Person upon delivery to the
purchaser of such shares.
(g) The Auction Agent may 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 shares of AMPS. 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 it is advised by its counsel that its
failure to do so would be unlawful.
2.3. Auction Schedule.
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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 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
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By 9:30 A.M. Auction Agent advises the Company and the
Broker-Dealers of the Reference Rate and the
Maximum Applicable Rate as set forth in Section
2.2(e)(i) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Paragraph
10(c)(i) of the Articles Supplementary.
Submission deadline is 1:00 P.M.
Not earlier than Auction Agent makes determinations
1:00 P.M. pursuant to Paragraph 10(d)(i) of the Articles
Supplementary.
By approximately Auction Agent advises the Company
3:00 P.M. of the results of the Auction as provided in
Paragraph 10(d)(ii) of the Articles
Supplementary.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part and
shares of AMPS allocated as provided in
Paragraph 10(e) of the Articles Supplementary.
Auction Agent gives notice of
the Auction results as set
forth in Section 2.4 hereof.
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2.4. Notice of Auction Results.
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On each Auction Date, the Auction Agent shall notify Broker-Dealers of the
results of the Auction held on such date by telephone or through the Auction
Agent's Auction Processing System as set forth in Paragraph (a) of the
Settlement Procedures.
2.5. Broker-Dealers.
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(a) Not later than 12:00 noon on each Auction Date, the Company shall
pay to the Auction Agent in Federal Funds or similar same-day funds
an amount in cash equal to (i) in the case of any Auction Date
immediately preceding a 7-Day Dividend Period or 28-Day Dividend
Period, the product of (A) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the
first day of such Dividend Period but excluding the last day thereof)
and the denominator of which is 360, times (B) 1/4 of 1%, times (C)
$25,000 times (D) the sum of the aggregate number of Outstanding
shares of AMPS for which the Auction is conducted and (ii) in the
case of any Special Dividend Period, the amount determined by mutual
consent of the Company and the Broker-Dealers pursuant to Section 3.5
of the Broker-Dealer Agreements. The Auction Agent shall apply such
moneys as set forth in Section 3.5 of the Broker-Dealer Agreements
and shall thereafter remit to the Company any remaining funds paid to
the Auction Agent pursuant to this Section 2.5(a).
(b) The Company shall not designate any Person to act as a Broker-
Dealer, or permit a 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. The Company may
designate an Affiliate or ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated 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.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6. Ownership of Shares of AMPS and Submission of Bids
by the Company and its Affiliates.
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Neither the Company nor any Affiliate of the Company may submit any Sell
Order or Bid, directly or indirectly, in any Auction, except that an Affiliate
of the Company that is a Broker-Dealer may submit a Sell Order or Bid on behalf
of a Beneficial Owner or a Potential Beneficial Owner. 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 shares of AMPS. Any
shares of AMPS redeemed, purchased or otherwise acquired (i) by the Company
shall not be reissued, except in accordance with the requirements of the
Securities Act
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of 1933, as amended, or (ii) by its Affiliates shall not be transferred (other
than to the Company). 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.
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The Auction Agent shall afford to the Company, its agents, independent
public accountants 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 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 two years after
such Auction (unless requested by the Company to maintain such records for such
longer period not in excess of four years, then for such longer period), and
such records, in reasonable detail, shall accurately and fairly reflect 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, provided that
the Company reserves the right to disclose any such information if it is advised
by its counsel that its failure to do so would (i) be unlawful or (ii) expose it
to liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to the Company. 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 advised by its counsel that its failure
to do so would (i) be unlawful or (ii) expose it to liability, unless the
Broker-Dealer shall have offered indemnification satisfactory to such agent,
accountant or counsel.
III. THE AUCTION AGENT AS PAYING AGENT.
---------------------------------
3.1. The Paying Agent.
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The Board of Directors of the Company has adopted a resolution appointing
IBJ Whitehall Bank & Trust Company as transfer agent, registrar, dividend
disbursing agent and redemption agent for the Company in connection with any
shares of AMPS (in such capacity, the "Paying Agent"). The Paying Agent hereby
accepts such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Articles Supplementary which are specified
herein with respect to the shares of AMPS and as set forth in this Section 3.
3.2. The Company's Notices to the Paying Agent.
-----------------------------------------
Whenever any shares of AMPS are to be redeemed, the Company promptly shall
deliver to the Paying Agent a Notice of Redemption, which will be mailed by the
Company to each Holder at least five Business Days prior to the date such Notice
of Redemption is required to be
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mailed pursuant to the Articles Supplementary. The Paying Agent shall have no
responsibility to confirm or verify the accuracy of any such Notice.
3.3. The Company to Provide Funds for Dividends,
Redemptions and Additional Dividends.
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(a) Not later than noon on 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 noon of
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 shares of AMPS called for
redemption and shall give the Paying Agent irrevocable instructions
and authority to pay the redemption price to the Holders of shares of
AMPS called for redemption upon surrender of the certificate or
certificates therefor.
(c) If the Company provides notice to the Auction Agent of a
Retroactive Taxable Allocation, the Company, within 30 days after
such notice is given and by noon of the date fixed for payment of an
Additional Dividend, shall deposit in trust with the Paying Agent an
aggregate amount of Federal Funds or similar same-day funds equal to
such Additional Dividend and shall give the Paying Agent irrevocable
instructions and authority to pay the Additional Dividend to Holders
(or former Holders) entitled thereto.
3.4. Disbursing Dividends, Redemption Price
and Additional Dividends.
--------------------------------------
After receipt of the Federal Funds or similar same-day funds and
instructions from the Company described in Sections 3.3(a), (b) and (c) above,
the Paying Agent shall pay to the Holders (or former Holders) entitled thereto
(i) on each corresponding Dividend Payment Date, dividends on the shares of
AMPS, (ii) on any date fixed for redemption, the redemption price of any shares
of AMPS called for redemption and (iii) on the date fixed for payment of an
Additional Dividend, such Additional Dividend. 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 Paragraph 2 of the Articles Supplementary. The
redemption price to be paid by the Paying Agent to the Holders of any shares of
AMPS called for redemption will be determined as set forth in Paragraph 4 of the
Articles Supplementary. The amount of Additional Dividends to be paid by the
Paying Agent in the event of a Retroactive Taxable Allocation to Holders will be
determined by the Company pursuant to paragraph 2(e) of the Articles
Supplementary. The Company shall notify the Paying Agent in writing of a
decision to redeem any shares of AMPS on or prior to the date specified in
Section 3.2 above, and such notice by the Company to the Paying Agent shall
contain the information required to be stated in a Notice of Redemption
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required to be mailed by the Company to such Holders. The Paying Agent shall
have no duty to determine the redemption price and may rely on the amount
thereof set forth in a Notice of Redemption.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
------------------------------------------------
4.1. Original Issue of Stock Certificates.
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On the Date of Original Issue for any share of AMPS, one certificate for
the AMPS 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. The Company will give the Auction Agent prior written notice and
instruction as to the issuance and redemption of AMPS.
4.2. Registration of Transfer or Exchange of Shares.
----------------------------------------------
Except as provided in this Section 4.2, the shares of AMPS 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, the shares of AMPS, at the Company's request, 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 properly endorsed for transfer
with (a) all necessary endorsers' signatures guaranteed in such manner and form
as the Paying Agent may require by a guarantor reasonably believed by the Paying
Agent to be responsible, (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 the certificate or certificates for shares of AMPS are not held by
the Securities Depository or its nominee, payments upon transfer of shares in an
Auction shall be made in Federal Funds or similar same-day funds to the Auction
Agent against delivery of certificates therefor.
4.3. Removal of Legend.
-----------------
Any request for removal of a legend indicating a restriction on transfer
from a certificate evidencing shares of AMPS shall be accompanied by an opinion
of counsel stating that such legend may be removed and such 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 Stock Certificates.
--------------------------------------------
The Paying 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 Company
and by the Paying Agent, subject at all times to provisions of law, the By-Laws
of the Company governing such matters and resolutions adopted by the Company
with respect to lost, stolen or destroyed securities. The Paying Agent may
issue
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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 By-Laws and
resolutions of the Company.
4.5. Disposition of Canceled Certificates;
Record Retention.
-------------------------------------
The Paying Agent shall retain stock certificates which have been canceled
in transfer or in exchange and accompanying documentation in accordance with
applicable rules and regulations of the Securities and Exchange Commission for
two 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 request by the Company at any
time after the expiration of this two-year period, the Paying Agent shall
deliver to the Company the canceled certificates and accompanying documentation.
The Company, at its expense, shall retain such records for a minimum additional
period of four calendar years from the date of delivery of the records to the
Company and shall make such records available during this period at any time, or
from time to time, for reasonable periodic, special, or other examinations by
representatives of the Securities and Exchange Commission. The Company also
shall undertake to furnish to the Securities and Exchange Commission, upon
demand, either at their 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 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. Stock Register.
--------------
The Paying Agent shall maintain the stock register, which shall contain a
list of the Holders, the number of shares held by each Holder and the address of
each Holder. The Paying Agent shall record in the stock 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 stock 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 stock register or
other records to any person in case it is advised by its counsel that its
failure to do so would (i) be unlawful or (ii) expose it to liability, unless
the Company shall have offered indemnification satisfactory to the Paying Agent.
4.7. Return of Funds.
---------------
Any funds deposited with the Paying Agent by the Company for any reason
under this Agreement, including for the payment of dividends or the redemption
of shares of AMPS, that remain with the Paying Agent after 12 months shall be
repaid to the Company upon written request by the Company.
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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 is duly organized and is validly existing as a
corporation in good standing 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 shares of AMPS;
(ii) the Company is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, 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 as to such enforceability to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equitable principles;
(iv) the forms of the certificates evidencing the shares of AMPS
comply with all applicable laws of the State of Maryland;
(v) the shares of AMPS have been duly and validly authorized by the
Company and, upon completion of the initial sale of the shares of AMPS and
receipt of payment therefor, will be validly issued, fully paid and
nonassessable;
(vi) at the time of the offering of the shares of AMPS, the shares
offered will be 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 this Agreement or will be required in
connection with the issuance of the shares of AMPS, except such action as
required by applicable state securities or insurance laws, all of which
action will have been taken;
(vii) the execution and delivery of this Agreement and the issuance and
delivery of the shares of AMPS 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 the By-Laws of the Company, any
law or regulation applicable to the Company, 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 bound; 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
shares of AMPS.
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5.2. Representations and Warranties of the Auction Agent.
---------------------------------------------------
The Auction Agent represents and warrants to the Company that 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.
VI. THE AUCTION AGENT.
-----------------
6.1. Duties and Responsibilities.
---------------------------
(a) The Auction Agent is acting solely as agent for the Company
hereunder and owes no fiduciary duties to any Person except as
provided by this Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no
implied covenants or obligations shall be read into this Agreement
against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or
omitted by it or for any error of judgment made by it in the
performance of its duties under this Agreement. The Auction Agent
shall not be liable for any error of judgment made in good faith
unless the Auction Agent shall have been negligent in ascertaining
(or failing to ascertain) the pertinent facts.
6.2. Rights of the Auction Agent.
---------------------------
(a) The Auction Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any communication authorized hereby
and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or
document reasonably believed by it to be genuine. The Auction Agent
shall not be liable for acting upon any telephone communication
authorized hereby which the Auction Agent believes in good faith to
have been given by the Company 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
written 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. The Auction
Agent shall be under no liability for interest on any money received
by it hereunder except as otherwise agreed in writing with the
Company.
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(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
6.3. Auction Agent's Disclaimer.
--------------------------
The Auction Agent makes no representation as to the validity or the
adequacy of this Agreement, the Broker-Dealer Agreements or the AMPS.
6.4. 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 AMPS no longer are held of
record by the Securities Depository or its nominee or if there shall
be such other change as shall increase 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
its negligence or bad faith.
(c) The Company 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 this Agreement and under the Broker-Dealer
Agreements, including the costs and expenses of defending itself
against any claim of liability in connection with its exercise or
performance of any of its duties hereunder and thereunder, except
such as may result from its negligence or bad faith.
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 AMPS remain outstanding the Company shall have
entered into an agreement in substantially the form of this Agreement
with a successor auction agent. The Auction Agent may terminate this
Agreement 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. If the Auction Agent resigns while any
shares of AMPS 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.
16
(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 and 6.4 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 request, deliver promptly to
the Company copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the 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 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:
If to the Company, MuniHoldings New Jersey Insured Fund III, Inc.
addressed to: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Auction IBJ Whitehall Bank & Trust Company
Agent, addressed to: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Auction Window Subcellar 1
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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
17
understandings, oral, written or inferred, 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 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. The Company shall notify the Auction Agent of any change in
the Articles Supplementary prior to the effective date of any such change.
If any such change in the Articles Supplementary materially increases the
Auction Agent's obligations hereunder, the Company shall obtain the written
consent to the Auction Agent prior to the effective date of such change.
(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.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
MUNIHOLDINGS NEW JERSEY INSURED
FUND III, INC.
By:
---------------------------------
Name:
Title:
IBJ WHITEHALL BANK & TRUST COMPANY
By:
---------------------------------
Name:
Title:
19