Exhibit 13(b)
--------------------------------------------------------------------------------
AUCTION AGENCY AGREEMENT
Between
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
and
BANKERS TRUST COMPANY
Dated as of November 18, 1992
Relating to
Auction Preferred Shares
of
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
Section 1. Definitions and Rules of Construction..................................................1
1.1 Terms Defined by Reference to APS Provisions...........................................1
1.2 Terms Defined Herein...................................................................1
1.3 Rules of Construction..................................................................2
Section 2. The Auction............................................................................3
2.1 Purpose; Incorporation b Reference of Auction Procedures
and Settlement Procedures..............................................................3
2.2 Preparation of Each Auction; Maintenance of Registry of Beneficial Owners..............3
2.3 Information Concerning Rates...........................................................5
2.4 Auction Schedule.......................................................................7
2.5 Destination of Special Dividend Period.................................................7
2.6 [Reserved].............................................................................8
2.7 Failure to Deposit.....................................................................9
2.8 Broker-Dealers........................................................................10
2.9 Ownership of Shares of APS............................................................11
2.10 Access to and Maintenance of Auction Records..........................................11
2.11 Dividend and Redemption Price Deposit.................................................11
Section 3. The Auction Agent as Dividend and Redemption Price Disbursing Agent...................11
Section 4. The Auction Agent as Transfer Agent and Registrar.....................................12
4.1 Issue of Share Certificates...........................................................12
4.2 Registration of Transfer of Shares....................................................12
4.3 Removal of Legend on Restricted Shares................................................12
4.4 Lost Share Certificates...............................................................12
4.5 Disposition of Cancelled Certificates; Record Retention...............................12
4.6 Share Transfer Books..................................................................13
4.7 Return of Funds.......................................................................13
Section 5. Representations and Warranties of the Fund............................................13
Section 6. The Auction Agent.....................................................................14
6.1 Duties and Responsibilities...........................................................14
6.2 Rights of the Auction Agent...........................................................14
6.3 Auction Agent's Disclaimer............................................................15
6.4 Compensation, Expenses and Indemnification............................................15
Section 7. Miscellaneous.........................................................................16
7.1 Term of Agreement.....................................................................16
7.2 Communications........................................................................16
7.3 Entire Agreement......................................................................17
i
7.4 Benefits..............................................................................17
7.5 Amendment; Waiver.....................................................................17
7.6 Successors and Assigns................................................................17
7.7 Limitation of Liability...............................................................17
7.8 Severability..........................................................................18
7.9 Execution in Counterparts.............................................................18
7.10 Governing Law.........................................................................18
EXHIBITS
EXHIBIT A - Form of Broker-Dealer Agreement
EXHIBIT B - Form of Master Purchaser's Letter
EXHIBIT C - Settlement Procedures
EXHIBIT D - Form of APS Provisions
EXHIBIT E - Form of Notice of Auction Dates
EXHIBIT F - Form of Notice of Proposed Change of Length of Rate Period
EXHIBIT G - Form of Notice of Change of Length of Rate Period
EXHIBIT H - Form of Notice of Determination Not to Change Length of Rate Period
EXHIBIT I - Form of Notice of Cure of Failure to Deposit
EXHIBIT J - Form of Notice of Subsequent Cure of Failure to Deposit
ii
AUCTION AGENCY AGREEMENT dated as of November 18, 1992 between VAN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST, a Massachusetts business trust
(the "Fund"), and BANKERS TRUST COMPANY, a
New York banking corporation (the
"Auction Agent").
WHEREAS, the Fund proposes to issue preferred shares of beneficial
interest, par value $.01 per share, liquidation preference $50,000 per share,
designated Auction Preferred Shares (the "APS") pursuant to the APS Provisions
(as hereinafter defined) and desires that the Auction Agent perform certain
duties in connection with the APS upon the terms and subject to the conditions
of this Agreement, and hereby appoints the Auction Agent to act in the
capacities set forth in this Agreement.
NOW, THEREFORE,. in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to APS Provisions. Capitalized terms not
defined herein shall have the respective meanings specified in the APS
Provisions.
1.2 Terms Defined Herein. As used herein and in the Settlement
Procedures, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository that will act on behalf of a Bidder
and is identified as such in such Bidder's Master Purchaser's Letter.
(b) "APS Provisions" shall mean the Certificate of Vote of the
Fund's Board of Trustees establishing the APS pursuant to the Declaration of
Trust of the Fund and attached hereto as Exhibit D.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Procedures" shall mean the auction procedures
constituting Part II of the form of APS Provisions.
(e) "Authorized officer" shall mean each Senior Vice President,
Vice President, Assistant Vice President, Assistant Treasurer and Assistant
Secretary of the Auction Agent and every other officer or employee of the
Auction Agent designated as an "Authorized Officer" for purposes hereof in a
communication to the Fund.
(f) "Broker-Dealer" shall mean any broker-dealer, commercial bank
or other entity permitted by law to perform the functions of a Broker-Dealer
that is a member of, or a participant in, the Securities Depository or is an
affiliate of such member or participant, has been selected by the Fund and has
entered into a Broker-Dealer Agreement that remains effective.
(g) "Broker-Dealer Agreement" shall mean each agreement among the
Fund, the Auction Agent and a Broker-Dealer substantially in the form attached
hereto as Exhibit A.]
(h) "Existing Holder," when used with respect to the APS, shall
mean a Person who has signed a Master Purchaser's Letter and is listed as the
beneficial owner of such APS in the records of the Auction Agent.
(i) "Fund Officer" shall mean the Chairman of the Board of
Trustees of the Fund, 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 Fund and every other officer or employee of the Fund
designated as a "Fund Officer" for purposes hereof in a notice to the Auction
Agent.
(j) "Master Purchaser's Letter" shall mean a letter addressed to
the Fund, the Auction Agent, a Broker-Dealer and an Agent Member, substantially
in the form attached hereto as Exhibit B.
(k) "Potential Holder," when used with respect to the APS, shall
mean any Person, including any Existing Holder of APS, (i) who shall have
executed a Master Purchaser's Letter and (ii) who may be interested in acquiring
APS (or, in the case of an Existing Holder of APS, additional APS).
(l) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit C.
(m) "Underwriters" shall mean ▇▇▇▇▇▇▇, Sachs & Co. and PaineWebber
Incorporated and any other person named as an underwriter of the APS in the
Underwriting Agreement or any schedule thereto.
(n) "Underwriting Agreement" shall mean the Underwriting Agreement
dated November 12, 1992 among the Fund and the Underwriters.
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.
2
(d) All references herein to a particular time of day shall be to
New York City time.
Section 2. The Auction.
2.1 Purpose; Incorporation b Reference of Auction Procedures and
Settlement Procedures. (a) The APS Provisions provide that the Applicable Rate
per annum for the APS for each Subsequent Dividend Period after the Initial
Dividend Period with respect to the APS shall, except under certain conditions,
be equal to the rate per annum that a bank or trust company appointed by the
Fund advises has resulted on the Business Day preceding the first day of such
Subsequent Dividend Period from implementation of the Auction Procedures for
such APS. Each periodic implementation of the Auction Procedures is hereinafter
referred to as an "Auction." The Board of Trustees has adopted a resolution
appointing Bankers Trust Company as Auction Agent for purposes of the Auction
Procedures for the APS. The Auction Agent accepts such appointment and agrees to
follow the procedures set forth in this Section 2 and the Auction Procedures for
the purpose of determining the Applicable Rate for the APS for each Subsequent
Dividend Period thereof for which the Applicable Rate is to be determined by an
Auction.
(b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their entirety
and shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
2.2 Preparation of Each Auction; Maintenance of Registry of Beneficial
Owners. (a) Not later than seven days prior to the first Auction Date for the
APS, the Fund shall provide the Auction Agent with a list of the Broker-Dealers
and a manually signed copy of each Broker-Dealer Agreement for execution by the
Auction Agent. Not later than seven days prior to any Auction Date for the APS
for which any change in such list of Broker-Dealers is to be effective, the Fund
will notify the Auction Agent in writing of such change and, if any such change
involves the addition of a Broker-Dealer to such list, shall cause to be
delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by such Broker-Dealer; provided, however, that if
the Fund proposes to designate any Special Dividend Period of the APS pursuant
to Section 4 of Part I of the APS Provisions, not later than 11:00 A.M.,
New
York City time, on the Business Day next preceding the Auction next preceding
the first day of such Special Dividend Period, the Fund shall provide the
Auction Agent with a list of the Broker-Dealers for such APS and a manually
signed copy of each Broker-Dealer Agreement or a new Schedule A to the
Broker-Dealer Agreement (which Schedule A shall replace and supersede any
previous Schedule A to such Broker-Dealer Agreement) with each Broker-Dealer for
such APS. The Auction Agent and the Fund shall have entered into a Broker-Dealer
Agreement with each Broker-Dealer prior to the participation of any such
Broker-Dealer in any Auction.
(b) In the event that any Auction Date for the APS shall be
changed after the Auction Agent shall have given the notice referred to in
clause (vi) of
3
paragraph (a) of the Settlement Procedures, or after the notice referred to in
Section 2.5(a) hereof, if applicable, the Auction Agent, by such means as the
Auction Agent deems practicable, shall give notice of such change to the
Broker-Dealers for such APS not later than the earlier of 9:15 A.M. on the new
Auction Date or 9:15 A.M. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a registry of the
beneficial owners of the APS who shall constitute Existing Holders of such APS
for purposes of Auctions and shall indicate thereon the identity of the
respective Broker-Dealer of each Existing Holder, if any, on whose behalf such
Broker-Dealer submitted the most recent Order in any Auction which resulted in
such Existing Holder continuing to hold or purchasing such APS. The Auction
Agent shall keep such registry current and accurate. The Fund shall provide or
cause to be provided to the Auction Agent at or prior to the Date of Original
Issue of the APS a list of the initial Existing Holders of the APS, the number
of APS purchased by each such Existing Holder and the respective Broker-Dealer
of each such Existing Holder or the affiliate thereof through which each such
Existing Holder purchased such APS. The Auction Agent shall advise the Fund in
writing whenever the number of Existing Holders is 500 or more. The Auction
Agent may rely upon, as conclusive evidence of the identities of the Existing
Holders of APS, (A) such list, (B) the results of Auctions and (C) notices from
any Existing Holder, the Agent Member of any Existing Holder or the
Broker-Dealer of any Existing Holder as described in the first sentence of
Section 2.2(c)(iii) hereof.
(ii) In the event of any partial redemption of the APS, the
Auction Agent shall, at least two Business Days prior to the next
Auction for such APS, request the Agent Member of each Existing Holder
of APS to disclose to the Auction Agent (upon selection by such Agent
Member of the Existing Holders whose APS are to be redeemed) the number
of APS, if any, of such Existing Holder which are subject to such
redemption, provided the Auction Agent has been furnished with the name
and telephone number of a person or department at such Agent Member
from which it shall request such information. Upon any refusal of an
Agent Member to release such information, the Auction Agent shall
deliver to such Agent Member a facsimile copy of the Existing Holder's
Master Purchaser's Letter, which authorizes and instructs such Agent
Member to release such information to the Auction Agent. 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 the beneficial
owner of the number of APS shown in the Auction Agent's registry.
(iii) The Auction Agent shall be required to register a
transfer of APS from an Existing Holder of such APS to another Person
only if such transfer is made to a Person that has delivered, or on
whose behalf has been delivered, a signed Master Purchaser's Letter to
the Auction Agent and if (A) such transfer is pursuant to an Auction or
(B) the Auction Agent has been notified in writing (I) in a notice
substantially in
4
the form of Exhibit D to the Broker-Dealer Agreements by such Existing
Holder, the Agent Member of such Existing Holder or the Broker-Dealer
of such Existing Holder of such transfer or (II) in a notice
substantially in the form of Exhibit E to the Broker-Dealer Agreements
by the Broker-Dealer of any Person that purchased or sold such APS in
an Auction of the failure of such APS to be transferred as a result of
such Auction. The Auction Agent is not required to accept any such
notice for an Auction unless it is received by the Auction Agent by
3:00 P.M. on the Business Day preceding such Auction.
(iv) The Auction Agent is not required to accept the Master
Purchaser's Letter of any Potential Holder who wishes to submit a Bid
for the first time in an Auction or of any Potential Holder or Existing
Holder who wishes to amend its Master Purchaser's Letter unless such
letter or amendment is received by the Auction Agent by 3:00 P.M. on
the Business Day preceding such Auction.
(d) The Auction Agent may request the Broker-Dealers, as set forth
in the Broker-Dealer Agreements, to provide the Auction Agent with a list of
their respective customers that such Broker-Dealers believe are Existing Holders
of APS. The Auction Agent shall keep confidential such registry of Existing
Holders and shall not disclose the identities of the Existing Holders of such
APS to any Person other than the Fund and the Broker-Dealer that provided such
information.
2.3 Information Concerning Rates. (a) The Applicable Percentage on the
date of this Agreement for APS is 150%. If there is any change in the credit
rating of APS by either of the rating agencies (or substitute or successor
rating agencies) referred to in the definition of "Applicable Percentage"
resulting in any change in the Applicable Percentage for the APS after the date
of this Agreement, the Fund shall notify the Auction Agent in writing of such
change in the Applicable Percentage prior to 12:00 Noon on the Business Day
prior to the next Auction Date for the APS succeeding such change. In
determining the Maximum Rate for the APS on any Auction Date as set forth in
Section 2.3(b)(i) hereof, the Auction Agent shall be entitled to rely on the
last Applicable Percentage for the APS of which it has most recently received
notice from the Fund (or, in the absence of such notice, the percentage set
forth in the first sentence of this paragraph (a)).
(b) (i) on each Auction Date for the APS, the Auction Agent shall
determine the Maximum Rate for such APS. The Maximum Rate for the APS on any
Auction Date shall be the Product of (A) the highest of (1) the "AA" Composite
Commercial Rate, (2) the Treasury Rate, (3) the Ten Year Constant Maturity Rate
and (4) the Thirty Year Constant Maturity Rate on such Auction Date for the next
Rate Period and (B) the Applicable Percentage on such Auction Date.
Not later than 9:30 A.M. on each Auction Date, the Auction Agent shall
notify the Fund and the Broker-Dealers of the Maximum Rate so determined and the
"AA" Composite Commercial Paper Rate(s), Treasury Rate(s), Ten Year Constant
5
Maturity Rate(s) and Thirty Year Constant Maturity Rate(s), as the case may be,
used to make such determination.
(ii) From and after a Failure to Deposit by the Fund during
any Rate Period of the APS, until such failure is cured and a late
charge, if applicable, is paid, in accordance with subparagraph (c)(i)
of Section 2 of Part I of the APS Provisions, on the first day of each
Rate Period of such APS the Auction Agent shall determine the Treasury
Rate for such Rate Period, if such Rate Period is one year or greater,
and the "AA" Composite Commercial Paper Rate for Minimum Dividend
Periods and Rate Periods that are less than one year. Not later than
9:30 A.M. on each such first day, the Auction Agent shall notify the
Fund of the applicable "AA" Composite Commercial Paper Rate and
Treasury Rate.
(iii) If any "AA" Composite Commercial Paper Rate, Treasury
Rate, Ten Year Constant Maturity Rate or Thirty Year Constant Maturity
Rate, as the case may be, is not quoted on an interest basis, the
Auction Agent shall convert the quoted rate to the interest equivalent
thereof as set forth in the definition of such rate in the APS
Provisions if the rate obtained by the Auction Agent is quoted on a
discount basis, or if such rate is quoted on a basis other than an
interest or discount basis the Auction Agent shall convert the quoted
rate to an interest rate after consultation with the Fund as to the
method of such conversion.
(iv) If any "AA" Composite Commercial Paper Rate is to be
based on rates supplied by Commercial Paper Dealers and one or more of
the Commercial Paper Dealers shall not provide a quotation for the
determination of such "AA" Composite Commercial Paper Rate, the Auction
Agent shall immediately notify the Fund so that the Fund can determine
whether to select a Substitute Commercial Paper Dealer or Substitute
Commercial Paper Dealers to provide the quotation or quotations not
being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers. The Fund shall promptly advise the Auction Agent of any such
selection.
(v) If any Treasury Rate, Ten Year Constant Maturity Rate or
Thirty Year Constant Maturity Rate is to be based on rates supplied by
U.S. Government Securities Dealers and one or more of the U.S.
Government Securities Dealers shall not provide a quotation for the
determination of such Treasury Rate, the Auction Agent shall
immediately notify the Fund so that the Fund can determine whether to
select a Substitute U.S. Government Securities Dealer or Substitute
U.S. Government Securities Dealers to provide the quotation or
quotations not being supplied by any U.S. Government Securities Dealer
or U.S. Government Securities Dealers. The Fund shall promptly advise
the Auction Agent of any such selection.
6
2.4 Auction Schedule. The Auction Agent shall conduct Auctions in
accordance with the schedule set forth below. Such schedule may be changed by
the Auction Agent with the consent of the Fund, which consent shall not be
unreasonably withheld. The Auction Agent shall give written notice of any such
change to each Broker-Dealer. Such notice shall be given prior to the close of
business on the Business Day next preceding the first Auction Date on which any
such change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Fund and
Broker-Dealers of the applicable Maximum
Rate and the "AA" Composite Commercial Paper
Rate(s), Treasury Rate(s), Ten Year Constant
Maturity Rate(s) and Thirty Year Constant
Maturity Rate(s), as the case may be, used
in determining such Maximum Rate as set
forth in Section 2.3(b)(i) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in Section 3(a) of the Auction
Procedures. Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant
to Section 4(a) of the Auction Procedures.
By approximately 3:00 P.M. Auction Agent advises Fund of results of
Auction as provided in Section 4(b) of the
Auction Procedures. Submitted Bids and
Submitted Sell Orders are accepted and
rejected and shares of APS allocated as
provided in Section 5 of the Auction
Procedures. Auction Agent gives notice of
Auction results as set forth in paragraph
(a) of the Settlement Procedures.
2.5 Destination of Special Dividend Period. (a) The APS Provisions will
provide that, subject to the Fund's option to designate a Special Dividend
Period as referred to in paragraph (b) of this Section 2.5, (i) each Rate Period
will consist of 28 days for the APS and (ii) each Rate Period following a Rate
Period of the APS that is other than a Minimum Dividend Period will be 28 days
for the APS. Not less than 10 nor more than 20 days prior to the last day of any
such Rate Period that is not a Minimum Dividend Period, (i) the Fund shall
deliver to the Auction Agent a notice of the Auction Date of the next succeeding
Auction for such APS in the form of Exhibit E hereto and (ii) the Auction Agent
shall deliver such notice by first-class mail, postage prepaid, to each
7
Existing Holder of such APS at the address specified in such Existing Holder's
Master Purchaser's Letter and to the Broker-Dealers for such APS as promptly as
practicable after its receipt of such notice from the Fund.
(b) Pursuant to the APS Provisions, the Fund may, at its option,
designate a Special Dividend Period for the APS in the manner described in
Section 4 of Part I of the APS Provisions.
(i) If the Fund proposes to designate any succeeding
Subsequent Dividend Period of the APS as a Special Dividend Period of
more than 28 Rate Period Days, (A) the Fund shall deliver to the
Auction Agent a notice of such proposed Special Dividend Period in the
form of Exhibit F hereto not less than 20 nor more than 30 days prior
to the first day of such proposed Special Dividend Period and (B) the
Auction Agent on behalf of the Fund shall deliver such notice by
first-class mail, postage prepaid, to each Existing Holder of APS at
the address specified in such Existing Holder's Master Purchaser's
Letter and to the Broker-Dealers for such series as promptly as
practicable after its receipt of such notice from the Fund.
(ii) If the Board of Trustees determines to designate such
succeeding Subsequent Dividend Period as a Special Dividend Period, (A)
the Fund shall deliver to the Auction Agent a notice of such
determination in the form of Exhibit G hereto not later than 11:00 A.M.
on the second Business Day next preceding the first day of such
proposed Special Dividend Period and (B) the Auction Agent shall
deliver such notice to the Broker-Dealers for such APS not later than
3:00 P.M. on such second Business Day.
(iii) If the Fund shall deliver to the Auction Agent a notice
stating that the Fund has determined not to exercise its option to
designate such succeeding Subsequent Dividend Period as a Special
Dividend Period with respect to which it has delivered a notice in the
form of Exhibit F hereto not later than 11:00 A.M. on the second
Business Day next preceding the first day of such proposed Special
Dividend Period, or shall fail to timely deliver either such notice or
a notice in the form of Exhibit G hereto, the Auction Agent shall
deliver a notice in the form of Exhibit H hereto to the Broker-Dealers
for such APS not later than 3:00 P.M. on such second Business Day.
A change in the length of a Rate Period to a Rate Period of more than 28 Rate
Period Days shall not occur if (a) on the Auction Date next preceding the first
day of such Special Dividend Period Sufficient Clearing Bids shall not exist or
(b) a Failure to Deposit shall have occurred prior to such change with respect
to such APS and shall not have been cured in accordance with the APS Provisions.
2.6 [Reserved]
8
2.7 Failure to Deposit. (a) If:
(i) any Failure to Deposit shall have occurred with respect to
the APS during any Rate Period thereof (other than any Special Dividend
Period, if such Special Dividend Period is one year or greater, or any
Rate Period succeeding any Special Dividend Period, if such Special
Dividend Period is one year or greater, during which a Failure to
Deposit occurred that has not been cured); and
(ii) prior to 12:00 Noon,
New York City time, on the third
Business Day next succeeding the date on which such Failure to Deposit
occurred, such Failure to Deposit shall have been cured in accordance
with the next succeeding sentence and the Fund shall have paid to the
Auction Agent a late charge equal to the sum of (A) if such Failure to
Deposit consisted of the failure timely to pay to the Auction Agent the
full amount of dividends with respect to any Dividend Period on such
APS, an amount computed by multiplying (1) 200% of the "AA" Composite
Commercial Paper Rate (or Treasury Rate, if applicable) for the Rate
Period during which such Failure to Deposit occurs on the Dividend
Payment Date for such Dividend Period by (2) a fraction, the numerator
of which shall be the number of days for which such Failure to Deposit
has not been cured in accordance with the next succeeding sentence
(including the day such Failure to Deposit occurs and excluding the day
such Failure to Deposit is cured) and the denominator of which shall be
365, and applying the rate obtained against the aggregate liquidation
preference of the outstanding APS and (B) if such Failure to Deposit
consisted of the failure timely to pay to the Auction Agent the
Optional Redemption Price or Mandatory Redemption Price, as the case
may be, of the APS, if any, for which Notice of Redemption has been
given by the Fund pursuant to paragraph (b) of Section 3 of Part I of
the APS Provisions, an amount computed by multiplying (x) 200% of the
"AA" Composite Commercial Paper Rate (or Treasury Rate, if applicable)
for the Rate Period during which such Failure to Deposit occurs on the
redemption date by (y) a fraction, the numerator of which shall be the
number of days for which such Failure to Deposit was not cured in
accordance with the next succeeding sentence (including the day such
Failure to Deposit occurs and excluding the day such Failure to Deposit
was cured) and the denominator of which shall be 365, and applying the
rate obtained against the aggregate liquidation preference of the
outstanding APS to be redeemed,
then the Auction Agent shall deliver a notice in the form of Exhibit I hereto by
first-class mail, postage prepaid, to the Broker-Dealers for such APS not later
than one Business Day after its receipt of the payment from the Fund curing such
Failure to Deposit and such late charge. A Failure to Deposit with respect to
the APS shall have been cured (if such Failure to Deposit is not solely due to
the willful failure of the Fund to make the required payment to the Auction
Agent) with respect to any Rate Period thereof if, not
9
later than 12:00 Noon,
New York City time, on the fourth Business Day preceding
the Auction Date for the Rate Period subsequent to such Rate Period, the Fund
shall have paid to the Auction Agent (A) all accumulated and unpaid dividends on
the APS and (B) without duplication, the Optional Redemption Price or Mandatory
Redemption Price, as the case may be, for the APS, if any, for which Notice of
Redemption has been given by the Fund pursuant to paragraph (b) of Section 3 of
Part I of the APS Provisions.
(b) If:
(i) any Failure to Deposit shall have occurred with respect to
the APS during a Rate Period thereof (other than any Special Dividend
Period, if such Special Dividend Period is one year or greater, or any
Rate Period succeeding any Special Dividend Period, if such Special
Dividend Period is one year or greater, during which a Failure to
Deposit occurred that has not been cured), and, prior to 12:00 Noon on
the third Business Day next succeeding the date on which such Failure
to Deposit occurred, such Failure to Deposit shall not have been cured
within the meaning of the last sentence of Section 2.7(a) hereof and
the Fund shall not have paid to the Auction Agent the late charge
described in such Section 2.7(a), but such Failure to Deposit shall
subsequently be so cured; or
(ii) any Failure to Deposit shall have occurred with respect
to the APS during a Special Dividend Period, if such Special Dividend
Period is one year or greater, or during any Rate Period succeeding any
Special Dividend Period, if such Special Dividend Period is one year or
greater, during which a Failure to Deposit occurred, and such Failure
to Deposit shall subsequently have been cured within the meaning of the
last sentence of Section 2.7(a) hereof,
then the Auction Agent shall deliver a notice in the form of Exhibit J hereto to
the Broker-Dealers for such APS not later than one Business Day after the
receipt of the payment from the Fund during such Failure to Deposit.
Notwithstanding the foregoing, the Auction Agent shall conduct an Auction on an
Auction Date which occurs simultaneously with the date of commencement of a
Failure to Deposit.
2.8 Broker-Dealers. (a) Not later than 12:00 Noon on each Auction Date
for the APS, the Fund shall pay to the Auction Agent an amount in cash equal to
the aggregate fees payable to the Broker-Dealers for such APS pursuant to
Section 2.8 of the Broker-Dealer Agreements for such series. The Auction Agent
shall apply such moneys as set forth in Section 2.8 of each such Broker-Dealer
Agreement.
(b) The Fund shall obtain the consent of the Auction Agent prior
to selecting any Person to act as a Broker-Dealer, which consent shall not be
unreasonably withheld.
10
(c) The Auction Agent shall terminate any Broker-Dealer Agreement
as set forth therein if so directed by the Fund, provided that at least one
Broker-Dealer Agreement would be in effect for the APS after such termination.
(d) Subject to the Auction Agent's having consented to the
selection of the relevant Broker-Dealer pursuant to Section 2.8(b) hereof, the
Auction Agent shall from time to time enter into such Broker-Dealer Agreements
with one or more Broker-Dealers as the Fund shall request, and shall enter into
such schedules to any such Broker-Dealer Agreements as the Fund shall request,
which schedules, among other things, shall set forth the APS to which such
Broker-Dealer Agreement relates.
2.9 Ownership of Shares of APS. The Fund shall notify the Auction Agent
if the Fund or any affiliate of the Fund acquires any APS. Neither the Fund nor
any affiliate of the Fund shall submit any order in any Auction for APS, except
as set forth in the next sentence. Any Broker-Dealer that is an affiliate of the
Fund may submit Orders in Auctions, but only if such Orders are not for its own
account. For purposes of this Section 2.9, a Broker-Dealer shall not be deemed
to be an affiliate of the Fund solely because one or more of the directors or
executive officers of such Broker-Dealer or of any Person controlled by, in
control of or under common control with such Broker-Dealer is also a trustee of
the Fund. The Auction Agent shall have no duty or liability with respect to
enforcement of this Section 2.9.
2.10 Access to and Maintenance of Auction Records. The Auction Agent
shall, upon the receipt of prior written notice from the Fund, afford to the
Fund access at reasonable times during normal business hours to all books,
records, documents and other information concerning the conduct and results of
Auctions. The Auction Agent shall maintain records relating to any Auction for a
period of six years after such Auction, and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder.
2.11 Dividend and Redemption Price Deposit. The Fund shall pay to the
Auction Agent, not later than 12:00 noon,
New York City time, (A) on the
Business Day next preceding any Dividend Payment Date for such APS, in funds
available on such Dividend Payment Date in The City of
New York,
New York, the
full amount of any dividend (whether or not earned or declared) to be paid on
such Dividend Payment Date on the APS (B) on the Business Day next preceding any
redemption date in funds available on such redemption date for such APS in The
City of
New York,
New York, the Redemption Price to be paid on such redemption
date for the APS after notice of redemption is given as set forth in the
Certificate of Vote.
Section 3. The Auction Agent as Dividend and Redemption Price Disbursing Agent.
The Auction Agent, as dividend and redemption price disbursing agent,
shall pay to the Holders of APS (i) on each Dividend Payment Date for such APS,
dividends on the APS, (ii) on any date fixed for redemption of APS, the
Redemption Price of any such APS called for redemption and (iii) any late charge
related to any payment of dividends or Redemption Price, in each case after
receipt of the necessary
11
funds from the Fund with which to pay such dividends, Redemption Price or late
charge. The amount of dividends for any Rate Period for the APS to be paid by
the Auction Agent to the Holders of such APS will be determined by the Fund as
set forth in Section 2 of Part I of the APS Provisions with respect to such APS.
The Redemption Price of any shares to be paid by the Auction Agent to the
Holders will be determined by the Fund as set forth in Section 3 of Part I of
the APS Provisions with respect to such APS. The Fund shall notify the Auction
Agent in writing of a decision to redeem the APS at least five days prior to the
date a notice of redemption is required to be mailed to the Holders of the
shares to be redeemed by paragraph (b) of Section 3 of Part I of the APS
Provisions. Such notice by the Fund to the Auction Agent shall contain the
information required by paragraph (b) of Section 3 of Part I of the APS
Provisions to be stated in the notice of redemption required to be mailed by the
Auction Agent to such Holders.
Section 4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Share Certificates. Upon the Date of Original Issue of the
APS, one certificate representing all of the APS issued on such date shall be
issued by the Fund and, at the request of the Fund, registered in the name of
Cede & Co. and countersigned by the Auction. Agent.
4.2 Registration of Transfer of Shares. The APS shall be registered
soley in the name of the Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares. All requests for removal of
legends on the APS indicating restrictions on transfer shall be accompanied by
an opinion of counsel stating that such legends may be removed and such APS
freely transferred, such opinion to be delivered under cover of a letter from a
Fund Officer authorizing the Auction Agent to remove the legend on the basis of
said opinion.
4.4 Lost Share Certificates. The Auction Agent shall issue and register
replacement certificates for certificates represented to have been lost, stolen
or destroyed upon the fulfillment of such requirements as shall be deemed
appropriate by the Fund and the Auction Agent, subject at all times to
provisions of law, the By-Laws of the Fund governing such matters and
resolutions adopted by the Fund with respect to lost securities. The Auction
Agent may issue new certificates in exchange for and upon the cancellation of
mutilated certificates. Any request by the Fund to the Auction Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall be deemed to
be a representation and warranty by the Fund to the Auction Agent that such
issuance will comply with such provisions of law and the By-Laws and resolutions
of the Fund.
4.5 Disposition of Cancelled Certificates; Record Retention. The
Auction Agent shall retain all share certificates which have been cancelled in
transfer or exchange and all accompanying documentation in accordance with
applicable rules and regulations of the Securities and Exchange Commission for
two calendar years. Upon the expiration of this two-year period, the Auction
Agent shall deliver to the Fund the cancelled certificates and accompanying
documentation. The Fund also shall undertake to furnish to the Securities and
Exchange Commission and to the Board of Governors of the
12
Federal Reserve System, upon demand, at either the principal office or at any
regional office, complete, correct and current hard copies of any and all such
records. Thereafter such records shall not be destroyed by the Fund without the
concurrence of the Auction Agent.
4.6 Share Transfer Books. For so long as the Auction Agent, Bankers
Trust Company, is acting as the transfer agent for the APS pursuant to this
Agreement, it shall maintain a share transfer book containing a list of the
Holders of the APS, the number of APS held by such Holders and the address of
each Holder. The Auction Agent shall record in such share transfer books any
change of address of a Holder upon notice by such Holder. In case of any request
or demand for the inspection of the share transfer books of the Fund or any
other books in the possession of the Auction Agent, the Auction Agent will
notify the Fund and secure instructions as to permitting or refusing such
inspection. The Auction Agent reserves the right, however, to exhibit the share
transfer books or other books to any Person in case it is advised by its counsel
that its failure to do so would be unlawful.
4.7 Return of Funds. Any funds deposited with the Auction Agent
hereunder by the Fund for any reason, including but not limited to redemption of
the APS, that remain unpaid after ninety days shall be repaid to the Fund upon
the written request of the Fund, together with interest, if any, earned thereon.
Section 5. Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(a) the Fund has been duly organized and is subsisting as a
voluntary association with transferable shares (commonly referred to as a
business trust) under the laws of The Commonwealth of Massachusetts and has all
necessary power and authority to execute and deliver this Agreement and to
authorize, create and issue the APS;
(b) this Agreement has been duly and validly authorized, executed
and delivered by the Fund and, assuming due authorization, execution and
delivery by the Auction Agent, constitutes the legal, valid and binding
obligation of the Fund subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium, receivership or similar laws, whether statutory or
decisional, relating to or affecting creditors' rights and to general equitable
principles (regardless of whether enforcement is sought in equity or at law);
(c) the form of the certificate evidencing the APS complies with
all applicable laws of The Commonwealth of Massachusetts;
(d) the APS, when issued, delivered and paid for on the Date of
Original Issue as contemplated by the Underwriting Agreement, will have been
duly authorized, validly issued, fully paid and nonassessable, except as
provided under Massachusetts law;
13
(e) assuming the Underwriters comply with their obligations under
the Underwriting Agreement and that the purchasers of the APS comply with their
obligations in the Master Purchaser's Letter, no consent, authorization or order
of, or filing or registration with, any court, governmental agency or official
(except such as have been obtained and such as may be required under the
Securities Act of 1933, as amended, or the Investment Company Act of 1940, as
amended, or under the blue sky or state securities laws) is required in
connection with the execution and delivery of this Agreement or the issuance of
the APS; and
(f) the issuance and sale of the APS, the execution, delivery and
performance of this Agreement, compliance by the Fund with all provisions
hereof, and the consummation of the transactions contemplated hereby or by the
Underwriting Agreement or the Broker-Dealer Agreements, will not conflict with,
constitute a breach of any of the terms or provisions of, or a default under, or
result in the creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Fund pursuant to the terms of any agreement,
indenture or instrument to which the Fund is a party or by which the Fund is
bound, or result in a violation of the Declaration of Trust, APS Provisions or
By-Laws of the Fund or of any order, rule or regulation of any court or
governmental agency having jurisdiction over the Fund or its property which
conflict, breach, default, lien or violation, individually or in the aggregate,
would have a material adverse effect on the business, financial position or
results of operations of the Fund.
Section 6. The Auction Agent.
6.1 Duties and Responsibilities. (a) The Auction Agent is acting solely
as agent for the Fund hereunder and owes no fiduciary duties to any other Person
by reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement and the
Broker-Dealer Agreements, and no implied covenants or obligations shall be read
into this Agreement against the Auction Agent.
(c) In the absence of bad faith or gross negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered, or omitted
or for any error of judgment made by it in the performance of its duties under
this Agreement except that the Auction Agent shall be liable for any error of
judgment made in good faith if the Auction Agent shall have been grossly
negligent in ascertaining the pertinent facts.
(d) Any funds deposited with the Auction Agent hereunder by the
Fund for any reason, including the payment of dividends or the redemption of the
APS, that remain with the Auction Agent after 90 days shall be repaid to the
Fund upon the written request of the Fund, together with interest, if any,
earned thereon.
6.2 Rights of the Auction Agent. (a) The Auction Agent may rely and
shall be protected in acting or refraining from acting upon any communication
authorized
14
hereby and upon any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
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 Fund or by any Broker-Dealer.
The Auction Agent may record telephone communications with the Fund or with any
Broker-Dealer.
(b) The Auction Agent may consult with counsel reasonably
acceptable to the Fund and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.
(d) The Auction Agent may 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 on the part of any agent or attorney
appointed by it with due care hereunder except as set forth above in Section
6.1(c).
6.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the validity or adequacy of this Agreement (except as to
the Auction Agent's duties hereunder and as to the due authorization, execution
and delivery of this Agreement), the Broker-Dealer Agreements (except as to the
Auction Agent's duties thereunder) or the APS.
6.4 Compensation, Expenses and Indemnification. (a) The Fund shall pay
the Auction Agent from time to time reasonable compensation for all services
rendered by it under this Agreement and the Broker-Dealer Agreements in such
amounts as may be agreed to by the Fund and the Auction Agent from time to time.
(b) The Fund 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 the
Broker-Dealer Agreements (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any expense or disbursement
attributable to its gross negligence or bad faith.
(c) The Fund shall indemnify the Auction Agent for and hold it
harmless against, any loss, liability or expense incurred without gross
negligence or bad faith on its part, arising out of or in connection with its
agency under this Agreement and the Broker-Dealer Agreements, including the
costs and expenses of defending itself against any claim or liability in
connection with its exercise or performance of its duties hereunder and
thereunder for which indemnification is provided by this subsection.
15
Section 7. 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. Fund may
terminate this Agreement any time by so notifying the Auction Agent in writing,
provided that the Fund has entered into an agreement in substantially the form
of this Agreement with a successor auction agent. The Auction Agent may
terminate this Agreement upon written notice to the Fund, such termination to be
effective on the earlier of (i) the date specified in such notice which shall
not be earlier than 90 days after the giving of such notice or (ii) the date on
which a successor trust company is appointed by the Fund pursuant to an
agreement containing substantially the same terms and conditions as this
Agreement.
(b) Except as otherwise provided in this paragraph (b), the
respective rights and duties of the Fund and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Fund's obligations
under Section 6.4 hereof and its representations and warranties contained in
Section 5 hereof and the Auction Agent's obligations and liabilities under
Sections 2.10 and 4.5 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall, at the Fund's request,
promptly deliver to the Fund copies of all books and records maintained by it in
connection with its duties hereunder.
7.2 Communications. Except for (a) communications authorized to be by
telephone pursuant to this Agreement or the Auction Procedures and (b)
communications in connection with Auctions (other than those expressly required
to be in writing) and unless otherwise specified by the terms of this Agreement
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) given to such person at its
address or telecopy number set forth below:
If to the Company, Van ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Limited Term High Income Trust
addressed: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy sent to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
16
If to the Auction Bankers Trust Company Corporate Trust and Agency
Agent, addressed: Group
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Auction Rate Securities
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom the communication is addressed
shall have previously communicated to the other party. Communications shall be
given on behalf of the Fund by a Fund officer and on behalf of the Auction Agent
by an Authorized Officer. Communications shall be effective when received at the
proper address.
7.3 Entire Agreement. This Agreement contains the entire agreement
among the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties.
7.4 Benefits. Nothing herein, express or implied, shall give any
Person, other than the Fund, the Auction Agent and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim
hereunder.
7.5 Amendment; Waiver. (a) This Agreement shall not be deemed or
construed to be modified, amended, rescinded, cancelled or waived, in whole or
in part, except by a written instrument signed by a duly authorized
representative of the party to be charged. The Fund shall notify the Auction
Agent and each Broker-Dealer of any change in the Fund's Declaration of Trust,
as amended and restated as of the date hereof, prior to the effective date of
any 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 rights or remedies 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 of each of
the Fund and the Auction Agent.
7.7 Limitation of Liability. Pursuant to the provisions of Article V,
Section 5.5 of the Fund's Declaration of Trust, as amended or restated as of the
date hereof, this Agreement is entered into by the trustees of the Fund not
individually, but as trustees under such Declaration of Trust and the
obligations of the Fund hereunder are not binding upon any such trustees or
shareholders of the Fund, individually, but bind only the trust estate.
17
7.8 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.
7.9 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.
7.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the- State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Auction Agency
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM
HIGH INCOME TRUST
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
BANKERS TRUST COMPANY
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Assistant Treasurer
18
Exhibit A
--------------------------------------------------------------------------------
BROKER-DEALER AGREEMENT
Between
BANKERS TRUST COMPANY
and
Dated as of November __, 1992
Relating to
AUCTION PREFERRED SHARES
of
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
--------------------------------------------------------------------------------
BROKER-DEALER AGREEMENT dated as of November __, 1992 between BANKERS
TRUST COMPANY (the "Auction Agent"), a New York banking corporation (not in its
individual capacity but solely as agent of Van ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Limited Term High
Income Trust (the "Fund") pursuant to authority granted it in the
Auction Agency
Agreement), and [UNDERWRITER] (together with its successors and assigns, "BD").
The Fund has issued shares of Auction Preferred Shares, par value $.01
per share, liquidation preference $50,000 per share (the "APS") pursuant to its
Declaration of Trust, as amended by the Certificate of Vote (the "Certificate").
The Certificate will provide that, for each Subsequent Dividend Period
of any APS then outstanding, the Applicable Rate for such Subsequent Dividend
Period shall, under certain conditions, be the rate per annum that a bank or
trust company appointed by the Fund advises results from implementation of the
Auction Procedures. The Board of Trustees has adopted a resolution appointing
Bankers Trust Company as Auction Agent for purposes of the Auction Procedures
for the APS.
The Auction Procedures require the participation of one or more
Broker-Dealers for the APS.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the Auction Agent and BD agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Statement.
Capitalized terms not defined herein shall have the respective
meanings specified in the Certificate.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following
terms shall have the following meanings, unless the context otherwise requires:
(a) "Auction" shall have the meaning specified in Section
2.1 hereof.
(b) "
Auction Agency Agreement" shall mean the
Auction
Agency Agreement, dated as of November _, 1992, between the fund and the Auction
Agent relating to the APS.
(c) "Auction Procedures" shall mean the auction
procedures constituting Part II of the Certificate.
(d) "Authorized Officer" shall mean each Senior Vice
President, Vice President, Assistant Vice President, Trust Officer, Assistant
Treasurer and Assistant Secretary of the Auction Agent assigned to its Corporate
Trust and Agency Group and
2
every other officer or employee of the Auction Agent designated as an
"Authorized officer" for purposes of this Agreement in a communication to BD.
(e) "BD Officer" shall mean each officer or employee of
BD designated as a "BD Officer" for purposes of this Agreement in a
communication to the Auction Agent.
(f) "Broker-Dealer Agreement" shall mean this Agreement
and any substantially similar agreement between the Auction Agent and a
Broker-Dealer.
(g) "Certificate" shall mean the Certificate of Vote of
Trustees Establishing A Series of Preferred Shares authorizing the issuance of
APS filed by the Fund with the office of the Secretary of The Commonwealth of
Massachusetts.
(h) "Master Purchaser's Letter" shall mean a letter
addressed to the Fund, the Auction Agent, a Broker-Dealer and an Agent Member,
substantially in the form attached hereto as Exhibit A.
(i) "Settlement Procedures" shall mean the Settlement
Procedures attached hereto as Exhibit B.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof", "herein", "hereto", and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to
New York City time.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The provisions of the Auction Procedures will be followed by
the Auction Agent for the purpose of determining the Applicable Rate for any
Subsequent Dividend Period of any APS for which the Applicable Rate is to be
determined by an
3
Auction. Each periodic operation of such procedures is hereinafter referred to
as an "Auction".
(b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their entirety
and shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of, and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement
for the APS: BD understands that other Persons meeting the requirements
specified in the definition of "Broker-Dealer" contained in the Auction
Procedures may execute Broker-Dealer Agreements and Master Purchaser's Letters
and participate as Broker-Dealers in Auctions.
2.2 Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the APS, the
Auction Agent shall advise the Broker-Dealers for such APS by telephone of the
Maximum Rate therefor and the "AA" Composite Commercial Paper Rate(s) and
Treasury Rate(s), as the case may be, used in determining such Maximum Rate.
(b) In the event that any Auction Date for the APS shall be
changed after the Auction Agent has given the notice referred to in clause (vi)
of paragraph (a) of the Settlement Procedures, or after the notice referred to
in Section 2.5(a) hereof, if applicable, the Auction Agent, by such means as the
Auction Agent deems practicable, shall give notice of such change to BD 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 Auction Agent from time to time may request the
Broker-Dealers to provide the Auction Agent with a list of their respective
customers that such Broker-Dealers believe are Existing Holders of shares of
APS. BD shall comply with any such request, and the Auction Agent shall keep
confidential any such information so provided by BD and shall not disclose any
information so provided by BD to any Person other than the Fund and BD.
(d) BD agrees to maintain a list of Potential Holders and to use
its best efforts to contact the Potential Holders on such list whom BD believes
may be interested in participating in such Auction on each Auction Date for the
purposes set forth in the Auction Procedures.
(e) The Auction Agent is not required to accept the Master
Purchaser's Letter of any Potential Holder who wishes to submit a Bid for the
first time in an Auction or of any Potential Holder or Existing Holder who
wishes to amend its Master Purchaser's Letter unless such letter or amendment is
received by the Auction Agent by 3:00 P.M. on the Business Day preceding such
Auction.
4
2.3 Auction Schedule: Method of Submission of Orders.
(a) The Fund and the Auction Agent shall conduct Auctions for APS
in accordance with the schedule set forth below. Such schedule may be changed by
the Auction Agent with the consent of the Fund, which consent shall not be
unreasonably withheld. The Auction Agent shall give written notice of any such
change to each Broker-Dealer. Such notice shall be given prior to the close of
business on the Business Day next preceding the first Auction Date on which such
change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Fund and the
Broker-Dealers of the applicable Maximum
Rate and the "AA" Composite Commercial Paper
Rate(s) and Treasury Rate(s), as the case
may be, used in determining such Maximum
Rate as set forth in Section 2.2(a) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in Section 3(a) of the Auction
Procedures. Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant
to Section 4(a) of the Auction Procedures.
By approximately 3:00 P. M. Auction Agent advises Fund of results of
Auction as provided in Section 4(b) of the
Auction Procedures.
Submitted Bids and Submitted Sell orders are
accepted and rejected and shares of APS
allocated as provided in Section 5 of the
Auction Procedures.
Auction Agent gives notice of Auction
results as set forth in section 2.4(a)
hereof.
(b) BD agrees not to sell, assign or dispose of any share of APS
to any Person who has not delivered, or on whose behalf a Broker-Dealer has not
delivered, a signed Master Purchaser's Letter to the Auction Agent.
(c) BD shall submit Orders to the Auction Agent in writing
substantially in the form attached hereto as Exhibit C. BD shall submit a
separate order to the Auction Agent for each Potential Holder or Existing Holder
on whose behalf BD is
5
submitting an Order and shall not net or aggregate the orders of different
Potential Holders or Existing Holders on whose behalf BD is submitting Orders.
e_.
(d) BD shall deliver to the Auction Agent (i) a written notice in
substantially the form attached hereto as Exhibit D or transfers of shares of
APS made through BD by an Existing Holder to another Person other than pursuant
to an Auction and shall deliver or cause to be delivered the related Master
Purchaser's Letter executed by such Person if such Person has not previously so
delivered a Master Purchaser's Letter and (ii) a written notice substantially in
the form attached hereto as Exhibit E, of the failure of any shares of APS to be
transferred to or by any Person that purchased or sold shares of APS through BD
pursuant to an Auction. The Auction Agent is not required to accept any such
notice for an Auction unless it is received by the Auction Agent by 3:00 P.M. on
the Business Day preceding such Auction.
(e) BD has delivered to the Auction Agent its executed Master
Purchaser's Letter. BD and other Broker-Dealers which have delivered duly
executed Master Purchaser's Letters may submit orders in Auctions for their own
accounts unless the Fund shall have notified BD and all other Broker-Dealers
that they may no longer do so, in which case Broker-Dealers may continue to
submit Hold Orders and Sell Orders for their own accounts.
(f) BD agrees to handle its customers' Orders in accordance with
its duties under applicable securities laws and rules.
2.4 Notices of Auction Results.
(a) On each Auction Date for APS, the Auction Agent shall notify
BD by telephone of the results of the Auction as set forth in paragraph (a) of
the Settlement Procedures. By approximately 11:30 A.M., on the Business Day next
succeeding such Auction Date, the Auction Agent shall confirm to BD in writing
the disposition of all orders submitted by BD in such Auction.
(b) BD shall notify each Existing Holder or, Potential Holder on
whose behalf BD has submitted an order as set forth in paragraph (b) of the
Settlement Procedures and take such other action as is required of BD pursuant
to the Settlement Procedures.
2.5 Designation of Special Dividend Period.
(a) If the Fund delivers to the Auction Agent a notice of the
Auction Date for APS for a Rate Period thereof that next succeeds a Rate Period
that is not a Minimum Dividend Period in the form of Exhibit E to the
Auction
Agency Agreement, the Auction Agent shall deliver such notice to BD as promptly
as practicable after its receipt of such notice from the Fund.
(b) If the Board of Trustees proposes to designate any succeeding
Subsequent Dividend Period of the APS as a Special Dividend Period and the Fund
delivers to the Auction Agent a notice of such proposed Special Dividend Period
in the
6
form of Exhibit F to the
Auction Agency Agreement, the Auction Agent shall
deliver such notice to BD as promptly as practicable after its receipt of such
notice from the Fund.
(c) If the Board of Trustees determines to designate such
succeeding Subsequent Dividend Period as a Special Dividend Period, and the Fund
delivers to the Auction Agent a notice of such Special Dividend Period in the
form of Exhibit G to the
Auction Agency Agreement not later than 11:00 A.M. on
the second Business Day next preceding the first day of such Rate Period, the
Auction Agent shall deliver such notice to BD not later than 3:00 P.M. on such
second Business Day.
(d) If the Fund shall deliver to the Auction Agent a notice not
later than 11:00 A.M. on the second Business Day next preceding the first day of
any Rate Period stating that the Fund has determined not to exercise its option
to designate such succeeding Subsequent Dividend Period as a Special Dividend
Period, in the form of Exhibit H to the
Auction Agency Agreement, or shall fail
to timely deliver either such notice or a notice in the form of Exhibit G to the
Auction Agency Agreement, the Auction Agent shall deliver a notice in the form
of Exhibit H to the Auction Agency Agreement to BD not later than 3:00 P.M. on
such second Business Day.
2.6 Allocation of Taxable Income.
If the Fund delivers to the Auction Agent a notice in the form of
Exhibit K to the Auction Agency Agreement designating all or a portion of any
dividend on shares of APS to consist of net capital gains or other income
taxable for Federal income tax purposes, the Auction Agent shall deliver such
notice to BD on the Business Day following its receipt of such notice from the
Fund. On or prior to the Auction Date referred to in such notice, BD will
contact each of its customers that BD believes to be an Existing Holder of
shares of APS or a Potential Holder interested in submitting an order with
respect to the Auction to be held on such Auction Date, and BD will notify such
customer of the .contents of such notice. BD will be deemed to have notified
such Existing Holders and Potential Holders if, for each such Holder, (i) it
makes a reasonable effort to contact such Holder by telephone, and (ii) upon
failing to contact such Holder by telephone it mails written, notification to
such Holder at the mailing address indicated in such Holder's most recently
submitted Master Purchaser's Letter or at such other address as is indicated in
the account records of BD.
The Auction Agent shall be required to notify BD within two
Business Days after each Auction that involves an allocation of income taxable
for Federal income tax purposes as to the dollar amount per share of such
taxable income and income exempt from Federal income taxation included in the
related dividend.
2.7 Failure to Deposit.
(a) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of APS during any Rate Period thereof (other than any Special
Dividend Period consisting of four or more Dividend Periods or any Rate
7
Period succeeding any Special Dividend Period consisting of four or
more Dividend Periods during which a Failure to Deposit occurred that
has not been cured); and
(ii) prior to 12:00 Noon on the third Business Day next
succeeding the date on which such Failure to Deposit occurred, such
Failure to Deposit shall have been cured as described in Section 2.7
(a) of the Auction Agency Agreement and the Fund shall have paid to the
Auction Agent a late charge as described in such Section 2.7(a);
then, the Auction Agent shall deliver a notice in the form of Exhibit I to the
Auction Agency Agreement by first-class mail, postage prepaid, to BD not later
than one Business Day after its receipt of the payment from the Fund curing such
Failure to Deposit and such late charge.
(b) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of APS during a Rate Period thereof (other than any Special
Dividend Period consisting of four or more Dividend Periods or any Rate
Period succeeding any Special Dividend Period consisting of four or
more Dividend Periods during which a Failure to Deposit occurred that
has not been cured), and, prior to 12:00 Noon on the third Business Day
succeeding the date on which such Failure to Deposit occurred, such
Failure to Deposit shall not have been cured as described in Section
2.7 (a) of the Auction Agency Agreement and the Fund shall not have
paid to the Auction Agent the late charge described in such Section
2.7(a), but such Failure to Deposit shall subsequently be so cured; or
(ii) any Failure to Deposit shall have occurred with respect
to shares of APS during a Special Dividend Period consisting of four or
more Dividend Periods, or during any Rate Period succeeding any Special
Dividend Period consisting of four or more Dividend Periods during
which a Failure to Deposit occurred, and such Failure to Deposit shall
subsequently have been cured within the meaning of Section 2.7(a) of
the Auction Agency Agreement,
then the Auction Agent shall deliver a notice in the form of Exhibit J to the
Auction Agency Agreement to the Broker-Dealers not later than one Business Day
after the receipt of the payment from the Fund curing such Failure to Deposit.
2.8 Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date, the Auction
Agent shall pay to BD from moneys received from the Fund an amount equal to the
product of (a) (i) in the case of any Auction Date immediately preceding a Rate
Period consisting of less than one year, 1/4 of 1%, or (ii) in the case of any
Auction Date immediately preceding a Rate Period consisting of one year or more,
a percentage agreed
8
upon in writing by the Fund and the Broker-Dealers times (b) a fraction, the
numerator of which is the number of days in the Rate Period therefor beginning
on such Business Day and the denominator of which is 365 if such Rate Period is
less than one year and 360 for all other Rate Periods, times (c) $50,000 times
(d) the sum of (1) the aggregate number of shares placed by BD in such Auction
that were (A) the subject of Submitted Bids of Existing Holders submitted by BD
and continued to be held as a result of such submission and (B) the subject of
Submitted Bids of Potential Holders submitted by BD and purchased as a result of
such submission plus (ii) the aggregate number of shares subject to valid Hold
Orders (determined in accordance with paragraph (d) of Section 3 of the Auction
Procedures) submitted to the Auction Agent by BD plus (iii) the number of shares
of APS deemed to be subject to Hold Orders by Existing Holders pursuant to
paragraph (c) of Section 3 of the Auction Procedures that were acquired by such
Existing Holders through BD.
For purposes of subclause (d)(iii) of the foregoing paragraph,
if any Existing Holder who acquired shares of APS .through BD transfers those
shares to another Person other than pursuant to an Auction, then the
Broker-Dealer for the shares so transferred shall continue to be BD; provided,
however, that if the transfer was effected by, or if the transferee is, a
Broker-Dealer other than BD, then such Broker-Dealer shall be the Broker-Dealer
for such shares.
2.9 Settlement.
(a) if any Existing Holder on whose behalf BD has submitted a Bid
or Sell Order for shares of APS that was accepted in whole or in part fails to
instruct its Agent Member to deliver the shares of APS subject to such Bid or
Sell order against payment therefor, BD shall instruct such Agent Member to
deliver such shares against payment therefor and BD may deliver to the Potential
Holder on whose behalf BD submitted a Bid for shares of APS that was accepted in
whole or in part a number of shares of APS that is less than the number of
shares of APS specified in such Bid to be purchased by such Potential Holder.
Notwithstanding the foregoing terms of this Section, any delivery or nondelivery
of shares of APS which represents any departure from the results of an Auction,
as determined by the Auction Agent, shall be of no effect unless and until the
Auction Agent shall have been notified of such delivery or nondelivery in
accordance with the terms of Section 2.3(d)(ii) hereof. The Auction Agent shall
have no duty or liability with respect to enforcement of this Section 2.9.
(b) Neither the Auction Agent nor the Fund shall have any
responsibility or liability with respect to the failure of an Existing Holder, a
Potential Holder or its respective Agent Member to deliver shares of APS or to
pay for shares of APS sold or purchased pursuant to the Auction Procedures or
otherwise.
9
3. The Auction Agent.
3.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any other Person, other than the Fund,
by reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth 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 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 or judgment made
in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby and upon any
written instruction, notice, request, direction, consent, report, certificate,
share certificate or other instrument, paper or document believed in good faith
by it to be genuine. The Auction Agent shall not be liable for acting upon any
telephone communication authorized by this Agreement which the Auction Agent
believes in good faith to have been given by the Fund or by a Broker-Dealer. The
Auction Agent may record telephone communications with the Broker-Dealers.
(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 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.
3.3 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or
adequacy of this Agreement, the Auction Agency Agreement or the shares of APS.
10
4. Miscellaneous.
4.1 Termination.
Either party may terminate this Agreement at any time on five
days' notice to the other party, provided that neither BD nor the Auction Agent
may terminate this Agreement without first obtaining prior written consent of
the Fund to such termination, which consent shall not be unreasonably withheld.
This Agreement shall automatically terminate upon the termination of the Auction
Agency Agreement.
4.2 Participant in Securities Depository; Payment of Dividends in
Same-Day Funds.
(a) BD is, and shall remain for the term of this Agreement, a
member of, or participant in, the Securities Depository (or an affiliate of such
a member or participant).
(b) BD represents that it (or if such BD does not act as Agent
Member, one of its affiliates) shall make all dividend payments on the APS
available in same-day funds on each Dividend Payment Date to customers that use
such BD or affiliate as Agent Member.
4.3 Communications.
Except for (i) communications authorized to be by telephone by
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, addressed to it, at its address or telecopy number set forth below:
If to BD, [Address]
addressed: [Address]
[Address]
[Address]
Attention:
Telecopier No.: ( )
Telephone No.: ( )
11
If to the Auction Bankers Trust Company
Agent, addressed: Corporate Trust and Agency Group
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Auction Rate/Remarketed Securities
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other parties. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
4.4 Entire Agreement.
This Agreement contains the entire agreement among the parties
hereto relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or implied, among the parties hereto relating to the subject matter
hereof.
4.5 Benefits.
Nothing in this Agreement, express or implied, shall give to any
person, other than the Fund, the Auction Agent, BD and their respective
successors and assigns, any benefit of any legal or equitable right, remedy or
claim hereunder.
4.6 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged.
(b) Failure of any party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by any other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
4.7 Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the respective successors and assigns of each of the Auction
Agent and BD. This Agreement may not be assigned by either party hereto absent
the prior written consent of the other party; provided, however, that this
Agreement may be assigned by the Auction. Agent to a successor Auction Agent
selected by the Fund without the consent of BD.
12
4.8 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.
4.9 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.
4.10 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.
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.
BANKERS TRUST COMPANY
By
-----------------------------------------------
Name:
Title:
[UNDERWRITER]
By
-----------------------------------------------
Name:
Title:
13
EXHIBIT C
(Submit only one Order on this order form)
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
AUCTION PREFERRED SHARES ("APS")
ORDER FORM
To:
---------------------------- -----------------
Date of Auction
---------------------------
New York, New York
Attention:
------------------------
The undersigned Broker-Dealer submits the following Order on behalf of
the Bidder listed below:
Name of Bidder:
----------------------------
Bidder places the Order listed below covering the number of shares indicated
(complete only one blank):
shares now held by Bidder (an Existing Holder), and the Order is a (check one):
--------
Hold order; or
--------
Bid at a rate of ___%; or
--------
Sell Order;
--------
- or -
shares not now held by Bidder (a Potential Holder), and the Order is a Bid at a rate of %.
-------- -------
Notes:
(1) If submitting more than one Order for one Bidder, use additional Order
forms.
(2) If one or more Orders covering in the aggregate more than the number of
outstanding shares of APS held by any Existing Holder are submitted, such orders
shall be considered valid in the order of priority set forth in the Auction
Procedures.
(3) A Hold Order may be placed only by an Existing Holder covering a number of
shares of APS not greater than the number of shares of APS currently held by
such Existing Holder.
(4) Potential holders may make only Bids, each of which must specify a rate. If
more than one Bid is submitted on behalf of any Potential Holder, each Bid
submitted shall be a separate Bid with the rate specified.
(5) Bids may contain no more than three figures to the right of the decimal
point (.001 of 1%).
Name of Broker-Dealer:
By:
--------------------------------------------------
EXHIBIT D
(To be used only for transfers made other than pursuant to an Auction)
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
AUCTION PREFERRED SHARES ("APS")
TRANSFER FORM
We are (check one):
the Existing Holder named below;
--------
the Broker-Dealer for such Existing Holder; or
--------
the Agent Member for such Existing Holder.
--------
We hereby notify you that such Existing Holder has transferred ____ shares of
APS to _____________.
------------------------------------
(Name of Existing Holder)
------------------------------------
(Name of Broker-Dealer)
------------------------------------
(Name of Agent Member)
By:
--------------------------------
Printed Name:
Title:
EXHIBIT E
(To be used only for failures to
deliver shares of Auction Preferred
Shares sold pursuant to an Auction)
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
AUCTION PREFERRED SHARES ("APS")
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for _____________________ (the "Purchaser"),
which purchased __ shares of APS in the Auction held on____________
from the seller of such shares.
II. We are a Broker-Dealer for _____________________ (the "Seller"), which
sold __ shares of APS in the Auction held on ____________________ to
the purchaser of such shares.
We hereby notify you that (check one)--
___ the Seller failed to deliver such shares of Auction Preferred
Shares to the Purchaser
___ the Purchaser failed to make payment to the Seller upon
delivery of such shares of Auction Preferred Shares
Name:
-----------------------------------
(Name of Broker-Dealer)
By:
-----------------------------------
Printed Name:
Title:
Exhibit B
MASTER PURCHASER'S LETTER
Relating to Securities Involving Rate
Settings Through Auctions or Remarketings
THE COMPANY
A REMARKETING AGENT
THE TRUST COMPANY
OR AUCTION AGENT
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS
Dear Sirs:
1. This letter is designed to apply to publicly or privately offered debt
or equity securities ("Securities") of any issuer ("Company") which are
described in any final prospectus or other offering materials relating to such
Securities as the same may be amended or supplemented (collectively, with
respect to the particular Securities concerned, the "Prospectus") and which
involve periodic rate settings through auctions ("Auctions") or remarketing
procedures ("Remarketings"). This letter shall be for the benefit of any Company
and of any trust company, auction agent, paying agent (collectively, "trust
company"), remarketing agent, broker-dealer, agent member, securities depository
or other interested person in connection with any Securities and related
Auctions or Remarketings (it being understood that such persons may be required
to execute specified agreements and nothing herein shall alter such
requirements). The terminology used herein is intended to be general in its
application and not to exclude any Securities in respect of which (in the
Prospectus or otherwise) alternative terminology is used.
2. We may from time to time offer to purchase, purchase, offer to sell
and/or sell Securities of any Company as described in the Prospectus relating
thereto. We agree that this letter shall apply to all such purchases, sales and
offers and to Securities owned by us. We understand that the dividend/ interest
rate on Securities may be based from time to time on the results of Auctions or
Remarketings as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us in an Auction shall
constitute an irrevocable offer (except as otherwise described in the
Prospectus) by us to purchase or sell the Securities subject to such bid or sell
order, or such lesser amount of Securities as we shall be required to sell or
purchase as a result of such Auction or Remarketing, at the applicable price,
all as set forth in the Prospectus, and that if we fail to place a bid or sell
order with respect to Securities owned by us with a broker-dealer on any Auction
or Remarketing date, or a broker-dealer to which we communicate a bid or sell
order fails to submit such bid or sell order to the trust company or remarketing
agent concerned, we shall be deemed to have placed a hold order with respect to
such Securities as described
in the Prospectus, except as may otherwise be described therein. We authorize
any broker-dealer that submits a bid or sell order as our agent in Auctions or
Remarketings to execute contracts for the sale of Securities covered by such bid
or sell order. We recognize that the payment by such broker-dealer for
Securities purchased on our behalf shall not relieve us of any liability to such
broker-dealer for payment for such Securities.
4. We understand that in a Remarketing, the dividend or interest rate or
rates on the Securities and the allocation of Securities tendered for sale among
dividend or interest periods of different lengths will be based from time to
time on the determinations of one or more remarketing agents, and we agree to be
conclusively bound by such determinations. We further agree to the payment of
different dividend or interest rates to different holders of Securities
depending on the length of the dividend or interest period elected by such
holders. We agree that any notice given by us to a remarketing agent (or to a
broker-dealer for transmission to a remarketing agent) of our desire to tender
Securities in a Remarketing shall constitute an irrevocable (except to the
limited extent set forth in the Prospectus) offer by us to sell the Securities
specified in such notice, or such lesser number of Securities as we shall be
required to sell as a result of such Remarketing. in accordance with the terms
set forth in the Prospectus. and we authorize the remarketing agent to sell.
transfer or otherwise dispose of such Securities as set forth in the Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell. transfer or otherwise dispose of any
Securities held by us from time to time only pursuant to a bid or sell order
placed in an Auction, in a Remarketing, to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and delivered to the
applicable trust company. auction agent or remarketing agent a letter
substantially in the form of this letter (or other applicable purchaser's
letter), provided that in the case of all transfers other than pursuant to
Auctions or Remarketings we or our broker-dealer or our agent member shall
advise such trust company, auction agent or remarketing agent of such transfer.
We understand that a restrictive legend will be placed on certificates
representing the Securities and stop-transfer instructions will be issued to the
transfer agent and/or registrar. all as set forth in the Prospectus.
6. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by one or more global
certificates registered in the name of the applicable securities depository or
its nominee, that we will not be entitled to receive any certificate
representing the Securities and that our ownership of any Securities will be
maintained in book entry form by the securities depository for the account of
our agent member, which in turn will maintain records of our beneficial
ownership. We authorize and instruct our agent member to disclose to the
applicable trust company, auction agent or remarketing agent such information
concerning our beneficial ownership of Securities as such trust company or
remarketing agent shall request.
7. We acknowledge that partial deliveries of Securities purchased in
Auctions or Remarketings may be made to us and such deliveries shall constitute
good delivery as set forth in the Prospectus.
8. This letter is not a commitment by us to purchase any Securities.
9. This letter supersedes any prior-dated version of this master
purchaser's letter, and supplements any prior- or post-dated purchaser's letter
specific to particular Securities. and this letter may only be revoked by a
signed writing delivered to the original recipients thereof.
10. The descriptions of Auction or Remarketing procedures set forth in each
applicable Prospectus are incorporated by reference herein and in case of any
conflict between this letter. any purchases letter specific to particular
Securities and any such description. such description shall control.
11. Any xerographic or other copy of this letter shall be deemed of equal
effect as a signed original.
12. Our agent member of The Depository Trust Company currently is
____________.
13. Our personnel authorized to place orders with broker-dealers for the
purpose set forth in the Prospectus in Auctions and Remarketings currently
is/are , telephone number
14. Our taxpayer identification number is
15. In the case of each purchase, offer to purchase. offer to sell or sale
by us of Securities not registered under the Securities Act of 1933, as amended
(the "Act'). we represent and agree as follows:
A. We understand and expressly acknowledge that the Securities have
not been and will not be registered under the Act and, accordingly, that
the Securities may not be reoffered, resold or otherwise pledged
hypothecated or transferred unless an applicable exemption from the
registration requirements of the Act is available.
B. We hereby confirm that any purchase of Securities made by to will
be for our own account, or for the account of one or more parties for which
we are acting as trustee or agent with complete investment discretion and
with authority to bind such parties, and not with a view to any public
resale or distribution thereof. We and each other party for which we are
acting which will acquire Securities will be "accredited investors" within
the meaning of Regulation D under the Act with respect to the Securities to
be purchased by u. or such party. as the case may be. will have previously
invested in similar types of instruments and will be able and prepared to
bear the economic risk of investing in and holding such Securities.
C. We acknowledge that prior to purchasing any Securities we shall
have received a Prospectus (or private placement memorandum) with respect
thereto and acknowledge that we will have had access to such financial and
other information.
and have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase Securities.
D. We recognize that the Company and broker-dealers will rely upon the
truth and accuracy of the foregoing investment representations and
agreements and we agree that each of ~r purchases of Securities now or in
the future shall be deemed to constitute our concurrence in all of the
foregoing which shall be binding on us and each party for which we are
acting as set forth in Subparagraph B above.
Dated
--------------------------- ---------------------------------------
(Name of Purchaser)
Mailing Address of Purchaser
By
--------------------------------- ---------------------------------------
Printed Name:
--------------------------------- ----------------------------
Title:
--------------------------------- -----------------------------------
Exhibit C
SETTLEMENT PROCEDURES
Capitalized terms used herein have the respective meanings specified in
the Prospectus.
(a) On each Auction Date for the APS, the Auction Agent shall
notify by telephone the Broker-Dealers that participated in the Auction held on
such Auction Date and submitted an Order on behalf of an Existing Holder or
Potential Holder of
(i) the Applicable Rate fixed for the next succeeding Rate Period;
(ii) whether Sufficient Clearing Bids existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer submitted a Bid or a Sell Order on
behalf of an Existing Holder, whether such Bid or Sell Order was accepted or
rejected, in whole or in part, and the number of shares, if any, of APS then
outstanding to be sold by such Existing Holder,
(iv) if such Broker-Dealer submitted a Bid on behalf of a
Potential Holder, whether such Bid was accepted or rejected, in whole or in
part, and the number of shares, if any, of APS to be purchased by such Potential
Holder,
(v) if the aggregate number of APS to be sold by all Existing
Holders on whose behalf such Broker-Dealer submitted Bids or Sell Orders is
different than the aggregate number of APS to be purchased by all Potential
Holders on whose behalf such Broker-Dealer submitted a Bid, the name or names of
one or more other Broker-Dealers (and the Agent Member, if any, of each such
other Broker-Dealer,) and the number of APS to be (x) purchased from one or more
Existing Holders on whose behalf such other Broker-Dealers submitted Bids or
Sell Orders, or (y) sold to one or more Potential Holders on whose behalf such
other Broker-Dealers submitted Bids; and
(vi) the scheduled Auction Date of the next succeeding Auction.
(b) On each Auction Date for the APS, each Broker-Dealer that
submitted an Order on behalf of any Existing Holder or Potential Holder shall:
(i) advise each Existing Holder and Potential Holder on whose
behalf such Broker-Dealer submitted a Bid or Sell Order whether such Bid or Sell
Order was accepted or rejected, in whole or in part;
(ii) instruct each Potential Holder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, to
instruct such Bidder's Agent Member to pay to such Broker-Dealer (or its Agent
Member) through the Securities Depository the amount necessary to purchase the
number of APS to be purchased pursuant to such Bid against receipt of such
shares;
(iii) instruct each Existing Holder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, or a Sell
Order that was accepted, in whole or in part. to instruct such Bidder's Agent
Member to deliver to such Broker-Dealer (or its Agent Member) through the
Securities Depository the number of APS to be sold pursuant to such Bid or Sell
Order against payment therefor;
(iv) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order and each Potential Holder on whose behalf such
Broker-Dealer submitted a Bid of the Applicable Rate for the next succeeding
Rate Period;
(v) advise each Existing Holder an whose behalf such Broker-Dealer
submitted an Order of the Auction Date of the next succeeding Auction; and
(vi) advise each Potential Holder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, of the
Auction Date of the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to
paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order for
any APS shall allocate any funds received by it pursuant to paragraph (b) (ii)
above, and any APS received by it pursuant to paragraph (b) (iii) above, among
the Potential Holders, if any, on whose behalf such Broker-Dealer submitted
Bids, the Existing Holders, if any, on whose behalf such Broker-Dealer submitted
Bids or Sell Orders, and any Broker-Dealers identified to it by the Auction
Agent pursuant to paragraph (a) (v) above.
(d) On the Business Day after the Auction Date, the Securities
Depository shall execute the transactions described above, debiting and
crediting the accounts of the respective Agent Members as necessary to effect
the purchases and sale of APS as determined in the Auction.
Exhibit D
AUCTION PROCEDURES
The following procedures will be set forth in the Certificate of
Vote. The terms not defined below are defined in the Glossary or elsewhere in
this Prospectus.
2. orders by Existing Holders and Potential Holders. (a) Prior to
the Submission Deadline on each Auction Date:
(i) each Existing Holder of APS subject to an Auction on such
Auction Date may submit to a Broker-Dealer by telephone or otherwise information
as to:
(A) the number of Outstanding shares, if any, of APS held by such
Existing Holder which such Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next succeeding Rate Period;
(B) the number of Outstanding shares, if any, of APS which such
Existing Holder offers to sell if the Applicable Rate for the next succeeding
Rate Period shall be less than the rate per annum specified by such Existing
Holder, and/or
(C) the number of Outstanding shares, if any, of APS held by such
Existing Holder which such Existing Holder offers to sell without regard to the
Applicable Rate for the next succeeding Rate Period;
and
(ii) one or more Broker-Dealers, using lists of Potential Holders,
shall in good faith for the purpose of conducting a competitive Auction in a
commercially reasonable manner, contact Potential Holders (by telephone or
otherwise), including Persons that are not Existing Holders, on such lists to
determine the number of shares, if any, of APS which each such Potential Holder
offers to purchase if the Applicable Rate for the next succeeding Rate Period
shall not be less than the rate per annum specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i) (A), (i)(B), (i)(C) or (ii) of this paragraph (a) is
hereinafter referred to as an "Order" and collectively as "Orders" and each
Existing Holder and each Potential Holder placing an Order is hereinafter
referred to as a "Bidder" and collectively as "Bidders"; an Order containing the
information referred to in clause (i) (A) of this paragraph (a) is hereinafter
referred to as a "Hold Order" and collectively as "Hold Orders"; an Order
containing the information referred to in clause (i) (B) or (ii) of this
paragraph (a) is hereinafter referred to as a "Bid" and collectively as "Bids";
and an Order containing the information referred to in clause (i) (C) of this
paragraph (a) is hereinafter referred to as a "Sell Order" and collectively as
"Sell Orders."
(b) (i) A Bid by an Existing Holder of APS subject to an Auction
on any Auction Date shall constitute an irrevocable offer to sell:
(A) the number of Outstanding shares of APS specified in such Bid
if the Applicable Rate determined on such Auction Date shall be less than the
rate specified therein;
(B) such number or a lesser number of Outstanding shares of APS to
be determined as set forth in clause (iv) of paragraph (a) of Section 5 of this
Part II if the Applicable Rate determined on such Auction Date shall be equal to
the rate specified therein; or
(C) the number of Outstanding shares of APS specified in such Bid
if the rate specified therein shall be higher than the Maximum Rate, or such
number or a lesser number of Outstanding shares of APS to be determined as set
forth in clause (iii) of paragraph (b) of Section 5 of this Part 11 if the rate
specified therein shall be higher than the Maximum Rate and Sufficient Clearing
Bids do not exist.
(ii) A Sell Order by an Existing Holder of APS subject to an
Auction on any Auction Date shall constitute an irrevocable offer to sell:
(A) the number of Outstanding APS specified in such Sell Order, or
(B) such number or a lesser number of Outstanding APS as set forth
in clause (iii) of paragraph (b) of Section 5 of this Part II if Sufficient
Clearing Bids do not exist.
(iii) A Bid by a Potential Holder of APS subject to an Auction on
any Auction Date shall constitute an irrevocable offer to purchase:
(A) the number of Outstanding APS specified in such Bid if the
Applicable Rate determined on such Auction Date shall be higher than the rate
specified therein; or
(B) such number or a lesser number of Outstanding APS as set forth
in clause (v) of paragraph (a) of Section 5 of this Part 11 if the Applicable
Rate determined on such Auction Date shall be equal to the rate specified
therein.
(c) No Order for any number of APS other than whole shares shall
be valid.
3. Submission of Orders by Broker-Dealers to Auction Agent. (a)
Each Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders for APS subject to an
Auction on such Auction Date obtained by such Broker-Dealer and shall specify
with respect to each Order for such shares:
(i) the name of the Bidder placing such Order,
(ii) the aggregate number of APS that are the subject of such
Order,
(iii) to the extent that such Bidder is an Existing Holder of APS:
(A) the number of shares, if any, of APS subject to any Hold Order
placed by such Existing Holder,
(B) the number of shares, if any, of APS subject to any Bid placed
by such Existing Holder and the rate specified in such Bid; and
(C) the number of shares, if any, of APS subject to any Sell Order
placed by such Existing Holder, and
(iv) to the extent such Bidder is a Potential Holder of APS, the
rate and number of APS specified in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Auction Agent shall round such
rate up to the next highest one thousandth (.001) of 1%.
(c) If an Order or Orders covering all of the Outstanding APS held
by any Existing Holder is not submitted to the Auction Agent prior to the'
Submission Deadline and the subsequent Rate Period is 90 days or less, the
Auction Agent shall deem a Hold Order to have been submitted on behalf of such
Existing Holder covering the number of Outstanding APS held by such Existing
Holder and not subject to Orders submitted to the Auction Agent. If an Order or
Orders covering all of the Outstanding APS held by any Existing Holder is not
submitted to the Auction Agent prior to the Submission Deadline and the
subsequent Rate Period is 90 days or more, the Auction Agent shall deem a Hold
Order to have been submitted on behalf of such Existing Holder covering the
number of Outstanding APS held by such Existing Holder and not subject to Orders
submitted to the Auction Agent.
(d) If any Existing Holder submits through a Broker-Dealer to the
Auction Agent one or more Orders covering in the aggregate more than the number
of Outstanding APS subject to an Auction held by such Existing Holder, such
Orders shall be considered valid in the following order of priority:
(i) all Hold Orders for APS shall be considered valid, but only up
to and including in the aggregate the number of Outstanding APS held by such
Existing Holder, and if the number of APS subject to such Hold Orders exceeds
the number of Outstanding APS held by such Existing Holder, the number of shares
subject to each such Hold Order shall be reduced pro rata to cover the number of
Outstanding APS held by such Existing Holder,
(ii) (A) any Bid for APS shall be considered valid up to and
including the excess of the number of Outstanding APS held by such Existing
Holder over the number of APS subject to any Hold Orders referred to in clause
(i) above;
(B) subject to subclause (A), if more than one Bid for APS with
the same rate is submitted on behalf of such Existing Holder and the number of
Outstanding APS
subject to such Bids is greater than such excess, such Bids shall be considered
valid up to and including the amount of such excess, and the number of APS
subject to each Bid with the same rate shall be reduced pro rata to cover the
number of APS equal to such excess;
(C) subject to subclauses (A) and (B), if more than one Bid for
APS with different rates is submitted on behalf of such Existing Holder, such
Bids shall be considered valid in the ascending order of their respective rates
up to and including the amount of such excess; and
(D) in any such event, the number, if any, of such Outstanding APS
subject to any portion of Bids considered not valid in whole or in part under
this clause (ii) shall be treated as the subject of a Bid for APS by a Potential
Holder at the rate therein specified; and
(iii) all Sell Orders for APS shall be considered valid up to and
including the excess of the number of Outstanding APS held by such Existing
Holder over the sum of the APS subject to valid Hold Orders referred to in
clause (i) above and valid Bids by such Existing Holder referred to in clause
(ii) above.
(e) If more than one Bid for one or more APS is submitted on
behalf of any Potential Holder :each such Bid submitted shall be a separate Bid
with the rate and number of shares therein specified.
(f) Any Order submitted by a Broker-Dealer to the Auction Agent
prior to the Submission Deadline on any Auction Date shall be irrevocable.
4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or deemed
submitted by a Broker-Dealer being hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the
case may be, or as a "Submitted Order" and collectively as "Submitted Hold
Orders," "Submitted Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and shall for APS for which an Auction is being held
determine:
(i) the excess of the number of Outstanding APS over the number of
Outstanding APS subject to Submitted Hold Orders (such excess being hereinafter
referred to as the "Available APS");
(ii) from the Submitted Orders whether.
(A) the number of Outstanding APS subject to Submitted Bids by
Potential Holders specifying one or more rates equal to or lower than the
Maximum Rate;
exceeds or is equal to the sum of:
(B) the number of Outstanding APS subject to Submitted Bids by
Existing Holders specifying one or more rates higher than the Maximum Rate; and
(C) the number of Outstanding APS subject to Submitted Sell Orders
(in the event such excess or such equality exists (other than
because the number of APS in subclauses (B) and (C) above is zero because all of
the Outstanding APS are subject to Submitted Hold Orders), such Submitted Bids
in subclause (A) above being hereinafter referred to collectively as "Sufficient
Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the lowest rate specified
in such Submitted Bids (the "Winning Bid Rate") which if:
(A) (1) each such Submitted Bid from Existing Holders specifying
such lowest rate and (II) all other such Submitted Bids from Existing Holders
specifying lower rates were rejected, thus entitling such Existing Holders to
continue to hold the APS that are subject to such Submitted Bids; and
(B) (I) each such Submitted Bid from Potential Holders specifying
such lowest rate and (II) all other such Submitted Bids from Potential Holders
specifying lower rates were accepted;
would result in such Existing Holders described in subclause (A) above
continuing to hold an aggregate number of Outstanding APS which, when added to
the number of Outstanding APS to be purchased by such Potential Holders
described in subclause (B) above, would equal not less than the Available APS.
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 4, the Auction Agent shall advise the
Fund of the Maximum Rate for APS for which an Auction is being held on the
Auction Date and, based on such determination, the Applicable Rate for the next
succeeding Rate Period thereof as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate
for the next succeeding Rate Period thereof shall be equal to the Winning Bid
Rate so determined;
(ii) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding APS are subject to Submitted Hold Orders), that the
Applicable Rate for the next succeeding Rate Period thereof shall be equal to
the Maximum Rate; or
(iii) if all of the Outstanding APS are subject to Submitted Hold
Orders, that the Applicable Rate for the next succeeding Rate Period thereof
shall be (A) (1) the "AA" Composite Commercial Paper Rate on such Auction Date
for such Rate Period, if such Rate Period is less than one year or (11) the
Treasury Rate on such Auction Date for such Rate Period, if such Rate Period is
one year or longer.
5. Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares. Existing Holders shall continue to hold the APS
that are
subject to Submitted Hold Orders, and based on the determinations made pursuant
to paragraph (a) of Section 4 of this Part 11, the Submitted Bids and Submitted
Sell Orders shall be accepted or rejected and the Auction Agent shall take such
other action as set forth below:
(a) If Sufficient Clearing Bids for the APS have been made, all
Submitted Sell Orders shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 5, Submitted Bids shall be accepted or
rejected as follows in the following order of priority and all other Submitted
Bids shall be rejected:
(i) Existing Holders' Submitted Bids for APS specifying any rate
that is higher than the Winning Bid Rate shall be accepted, thus requiring each
such, Existing Holder to sell the APS subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids for APS specifying any rate
that is lower than the Winning Bid Rate shall be rejected, thus entitling each
such Existing Holder to continue to hold the APS subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for APS specifying any
rate that is lower than the Winning Bid Rate shall be accepted;
(iv) each Existing Holder's Submitted Bid for APS specifying a
rate that is equal to the Winning Bid Rate shall be rejected, thus entitling
such Existing Holder to continue to hold the APS subject to such Submitted Bid,
unless the number of Outstanding APS subject to all such Submitted Bids shall be
greater than the number of APS ("remaining shares") in the excess of the
Available APS over the number of APS subject to Submitted Bids described in
clauses (ii) and (iii) of this paragraph (a), in which event such Submitted Bid
of such Existing Holder shall be rejected in part, and such Existing Holder
shall be entitled to continue to hold APS subject to such Submitted Bid, but
only in an amount equal to the number of APS obtained by multiplying the number
of remaining shares by a fraction, the numerator of which shall be the number of
Outstanding APS held by such Existing Holder subject to such Submitted Bid and
the denominator of which shall be the aggregate number of Outstanding APS
subject to such Submitted Bids made by all such Existing Holders that specified
a rate equal to the Winning Bid Rate ; and
(v) each Potential Holder's Submitted Bid for APS specifying, a
rate that is equal to the Winning Bid Rate shall be accepted but only in an
amount equal to the number of APS obtained by multiplying the number of shares
in the excess of the Available APS over the number of APS subject to Submitted
Bids described in clauses (ii) through, (iv) of this paragraph (a) by a
fraction, the numerator of which shall be the number of Outstanding APS subject
to such Submitted Bid and the denominator of which shall be the aggregate number
of Outstanding APS subject to such Submitted Bids made by all such Potential
Holders that specified a rate equal to the Winning Bid Rate; and
(b) If Sufficient Clearing Bids for APS have not been made (other
than because all of the Outstanding APS are subject to Submitted Hold Orders),
subject to the
provisions of paragraph (d) of this Section 5, Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids shall be rejected:
(i) Existing Holders' Submitted Bids for APS specifying any rate
that is equal to or lower than the Maximum Rate shall be rejected, thus
entitling such Existing Holders to continue to hold the APS subject to such
Submitted Bids;
(ii) Potential Holders' Submitted Bids for APS specifying any rate
that is equal to or lower than the Maximum Rate shall be accepted; and
(iii) Each Existing Holder's Submitted Bid for APS specifying any
rate that is higher than the Maximum Rate and the Submitted Sell Orders for APS
of each Existing Holder shall be accepted, thus entitling each Existing Holder
that submitted any such Submitted Bid or Submitted Sell Order to sell the APS
subject to such Submitted Bid or Submitted Sell Order, but in both cases only in
an amount equal to the number of APS obtained by multiplying the number of APS
subject to Submitted Bids described in clause (ii) of this paragraph (b) by a
fraction, the numerator of which shall be the number of Outstanding APS held by
such Existing Holder subject to such Submitted Bid or Submitted Sell Order and
the denominator of which shall be the aggregate number of Outstanding APS
subject to all such Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding APS are subject to Submitted Hold
Orders, all Submitted Bids shall be rejected.
(d) If, as a result of the procedures described in clause (iv) or
(v) of paragraph (a) or clause (iii) of paragraph (b) of this Section 5, any
Existing Holder would be entitled or required to sell, or any Potential Holder
would be entitled or required to purchase, a fraction of a share of APS on any
Auction Date, the Auction Agent shall, in such manner as it shall determine in
its sole discretion, round up or down the number of APS to be purchased or sold
by any Existing Holder or Potential Holder on such Auction Date as a result of
such procedures so that the number of APS so purchased or sold by each Existing
Holder or Potential Holder on such Auction Date shall be whole shares of APS.
(e) If, as a result of the procedures described in clause (v) of
paragraph (a) of this Section 5, any Potential Holder would be entitled or
required to purchase less than a whole share of APS on any Auction Date, the
Auction Agent shall, in such manner as it shall determine in its sole
discretion, allocate shares of APS for purchase among Potential Holders so that
only whole shares of APS are purchased on such Auction Date as a result of such
procedures by any Potential Holder, even if such allocation results in one or
more Potential Holders not purchasing APS on such Auction Date.
(f) Based on the results of each Auction for APS, the Auction
Agent shall determine the aggregate number of APS to be purchased and the
aggregate number of APS to be sold by Potential Holders and Existing Holders on
whose behalf each Broker-Dealer submitted Bids or Sell Orders and, with respect
to each Broker-Dealer, to the
extent that such aggregate number of shares to be purchased and such aggregate
number of shares to be sold differ, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers of APS such Broker-Dealer shall
deliver, or from which other Broker-Dealer or Broker-Dealers acting for one or
more sellers of APS such Broker-Dealer shall receive, as the case may be, APS.
6. [Reserved]
7. Miscellaneous. (a) To the extent permitted by applicable law,
the Board of Trustees may interpret or adjust the provisions of this Certificate
of Vote to resolve any inconsistency or ambiguity or to remedy any formal
defect, and may amend this Certificate of Vote with respect to the APS prior to
the issuance of the APS.
(b) An Existing Holder may sell, transfer or otherwise dispose of
APS only in whole shares and only pursuant to a Bid or Sell Order in accordance
with the procedures described in this Part II or to or through a Broker-Dealer
or to a Person that has delivered a signed copy of a Master Purchaser's Letter
to the Auction Agent; provided that in the case of all transfers other than
pursuant to Auctions, such Existing Holder, its Broker-Dealer or its Agent
Member advises the Auction Agent of such transfer.
(c) All of the APS outstanding from time to time shall be
represented by one global certificate registered in the name of the Securities
Depository or its nominee.
(d) Neither the Fund nor any affiliate thereof may submit an Order
in any Auction, except that any Broker-Dealer that is an affiliate of the Fund
may submit Orders in an Auction, but only if such Orders are not for its own
account.
EXHIBIT E
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
NOTICE OF AUCTION DATE FOR
AUCTION PREFERRED SHARES
("APS")
NOTICE IS HEREBY GIVEN that the Auction Date of the next Auction
for the APS of VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST (the "Fund") is
scheduled to be and the next Dividend Payment Date for the Fund's APS will be .
[A Failure to Deposit in respect of the APS currently exists. If
such Failure to Deposit is not cured prior to 12:00 Noon on the fourth Business
Day prior to the next scheduled Auction Date of the APS as defined, the next
Auction will not be held. Notice of the next Auction for the APS will be
delivered when such Failure to Deposit is cured.(1)]
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM HIGH INCOME TRUST
---------
(1) Include this language if a Failure to Deposit exists.
EXHIBIT F
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
NOTICE OF PROPOSED CHANGE OF
LENGTH OF RATE PERIOD OF
ACTION PREFERRED SHARES
("APS")
NOTICE IS HEREBY GIVEN that VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM
HIGH INCOME TRUST (the "Fund") may exercise its option to designate the Rate
Period of its APS commencing [the first day of the proposed Special Dividend
Period] as a Special Dividend Period.
By 11:00 A.M. on the second Business Day next preceding the
first day of such proposed Special Dividend Period, the Fund will notify Bankers
Trust Company of either (a) its determination to exercise such option,
designating the length of such Special Dividend Period and the terms of the
Specific Redemption Provisions, if any, for such series or (b) its determination
not to exercise such option.
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM HIGH
INCOME TRUST
Dated:
------------
EXHIBIT G
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
NOTICE OF CHANGE OF LENGTH OF RATE PERIOD OF
AUCTION PREFERRED SHARES
("APS")
NOTICE IS HEREBY GIVEN that VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH
INCOME TRUST (the "Fund") has determined to designate the Rate Period of its APS
commencing on [the first day of the Special Dividend Period] as a Special
Dividend Period.
The Special Dividend Period will be ___ [days] [year[s]].
The Auction Date for the Special Dividend Period is [the Business
Day next preceding the first day of such Special Dividend Period].
[Specific Redemption Provisions, if applicable.]
[As a result of the Special Dividend Period designation, the
amount of dividends payable on the APS during the Special Dividend Period will
be based on a 360-day year] [include if Rate Period is greater than 28 Rate
Period Days].
The Special Dividend Period shall not commence if (a) on such
Auction Date Sufficient Clearing Bids shall not exist or (b) if a Failure to
Deposit shall have occurred prior to the first day thereof with respect to such
APS.
The scheduled Dividend Payment Dates for such APS during such
Special Dividend Period will be
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM HIGH
INCOME TRUST
Dated:
------------
EXHIBIT H
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
NOTICE OF DETERMINATION NOT TO CHANGE
LENGTH OF RATE PERIOD OF
AUCTION PREFERRED SHARES
("APS")
NOTICE IS HEREBY GIVEN that VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH
INCOME TRUST (the "Fund") has determined not to exercise its option to designate
a Special Dividend Period of its APS and the next succeeding Dividend Period of
such APS will be a Minimum Rate Period of __ days.
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM HIGH
INCOME TRUST
Dated:
------------
EXHIBIT I
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
NOTICE OF CURE OF
FAILURE TO DEPOSIT ON
AUCTION PREFERRED SHARES
("APS")
NOTICE IS HEREBY GIVEN that VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH
INCOME TRUST (the "Fund") has cured its Failure to Deposit with respect to its
APS. The dividend rate on the APS for the current Rate Period is ___% per annum,
the Dividend Payment Date(s) for the current Rate Period is scheduled to be
________ and the next Auction Date is scheduled to be ____________.
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM HIGH
INCOME TRUST
Dated:
------------
EXHIBIT J
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH INCOME TRUST
NOTICE OF SUBSEQUENT CURE OF
FAILURE TO DEPOSIT ON
AUCTION PREFERRED SHARES
("APS")
NOTICE IS HEREBY GIVEN that VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED TERM HIGH
INCOME TRUST (the "Fund") has cured its Failure to Deposit with respect to its
APS. The next Auction Date for the APS is scheduled to be on _______________.
VAN ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LIMITED TERM HIGH
INCOME TRUST
Dated:
---------------------