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FORM OF AUCTION AGENCY AGREEMENT
dated as of June __, 2004
Relating to
Auction Preferred Shares
Series M28
Of
EVERGREEN UTILITIES AND HIGH INCOME FUND
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DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of June __,
2004, is between Evergreen UTILITIES AND HIGH INCOME Fund (the "Fund") and
Deutsche Bank Trust Company Americas, a New York banking corporation.
The Fund proposes to issue an aggregate of 3200 preferred shares,
liquidation preference $25,000 per share, designated as Auction Preferred Shares
Series M28, the "Preferred Shares", pursuant to the Fund's Statement of
Preferences of Auction Preferred Shares (the "Statement") (as defined below).
The Fund desires that Deutsche Bank Trust Company Americas perform
certain duties as agent in connection with each Auction (as defined below) of
Preferred Shares (in such capacity, the "Auction Agent"), and as the transfer
agent, registrar, dividend paying agent and redemption agent with respect to the
Preferred Shares (in such capacity, the "Paying Agent"), upon the terms and
conditions of this Agreement, and the Fund hereby appoints Deutsche Bank Trust
Company Americas as said Auction Agent and Paying Agent in accordance with those
terms and conditions (hereinafter generally referred to as the "Auction Agent,"
except in Sections 3 and 4 below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Statement.
Capitalized terms used herein but not defined herein shall have the
respective meanings specified in the Statement.
1.2 Certain Defined Terms.
As used herein and in the Settlement Procedures (as defined below), the
following terms shall have the following meanings, unless the context otherwise
requires:
(a) "Agent Member" of any Person shall mean a member of, or
participant in, the Securities Depository that will act on behalf of a
Bidder.
(b) "Statement" shall mean the Statement of Preferences of Auction
Preferred Shares of the Fund in effect at the time the Registration
Statement relating to the Preferred Shares is declared effective by the
Securities and Exchange Commission, specifying the voting powers,
preferences and other rights and limitations of the Preferred Shares.
(c) "Auction" shall have the meaning specified in Section 2.1 hereof.
(d) "Auction Procedures" shall mean the procedures as from time to
time in effect for conducting Auctions that are set forth in Part II of the
Statement.
(e) "Authorized Officer" shall mean each Director, Vice President,
Assistant Vice President and Associate of the Auction Agent and every other
officer or employee of the Auction Agent designated as an "Authorized
Officer" for purposes hereof in a written communication from the Auction
Agent to the Fund.
(f) "Broker-Dealer Agreement" shall mean each agreement between the
Auction Agent and a Broker-Dealer substantially in the form attached hereto
as Exhibit A.
(g) "Closing" shall mean the date the Fund consummates the
transactions for the issuance and sale of the Preferred Shares
(h) "Fund Officer" shall mean the President, each Vice President
(whether or not designated by a number or word or words added before or
after the title "Vice President"), the Secretary, the Treasurer, each
Assistant Secretary and each Assistant Treasurer of the Fund and every
other officer or employee of the Fund designated as a "Fund Officer" for
purposes hereof in a notice from the Fund to the Auction Agent.
(i) "Holder" shall be a Person identified as a holder of record of one
or morePreferred Shares, listed as such in the Share Register.
(j) "Settlement Procedures" shall mean the Settlement Procedures
attached as Exhibit D to the Broker-Dealer Agreement.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of similar
import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
II. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
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(a) The Statement provides that the Applicable Rate on shares of a
series of Preferred Shares for each Dividend Period after the Initial
Dividend Period shall be the rate per annum determined by the Auction Agent
in accordance with the Auction Procedures. The Board of Trustees of the
Fund has adopted a resolution appointing Deutsche Bank Trust Company
Americas as Auction Agent for purposes of the Auction Procedures. The
Auction Agent hereby accepts such appointment and agrees that, on each
Auction Date, it shall follow the procedures set forth in this Section 2
and the Auction Procedures for the purpose of determining the Applicable
Rate for the Preferred Shares for the next Dividend Period. Each periodic
operation of such procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and in
the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part hereof to the same extent as if
such provisions were set forth fully herein.
2.2 Preparation for Each Auction; Maintenance of Registry of Existing
Holders.
(a) As of the date hereof, the Fund shall provide the Auction Agent
with a list of the Broker-Dealers previously approved by the Auction Agent
and shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by each such Broker-Dealer.
The Auction Agent shall keep such list current and accurate and shall
indicate thereon, or on a separate list, the identity of each Existing
Holder, if any, whose most recent Order was submitted by a Broker Dealer on
such list and resulted in such Existing Holder continuing to hold or
purchase Preferred Shares. Prior to any Auction Date for which any change
in such list of Broker-Dealers is to be effective, the Fund shall notify
the Auction Agent in writing of such change and, if any such change is the
addition of a Broker-Dealer to such list, the Fund shall cause to be
delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by such Broker-Dealer. The Auction Agent
shall have entered into a Broker-Dealer Agreement with each Broker-Dealer
prior to the participation of any such Broker-Dealer in any Auction.
(b) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent shall have given the notice referred to in
paragraph (g) of Section 1 of the Settlement Procedures, the Auction Agent,
by such means as the Auction Agent reasonably deems practicable, shall give
notice of such change to the Broker-Dealers not later than the earlier of
9:15 a.m. on the new Auction Date or 9:15 a.m. on the old Auction Date.
(c) The provisions contained in Section 3 of Part I of the Statement
concerning Special Rate Periods and the notification of a Special Rate
Period will be followed by the Fund and, to the extent applicable, the
Auction Agent, and the provisions contained therein are incorporated herein
by reference in their entirety and shall be deemed to be a part of this
Agreement to the same extent as if such provisions were set forth fully
herein.
(d) (i) On each Auction Date, the Auction Agent shall determine the
Maximum Rate and the Reference Rate. 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 and the Reference Rate. On the date
hereof, the applicable percentage is 125%, the applicable spread is 0.125%
and the rating for each series of Preferred Shares is as follows: AAA by
Fitch Rating and Aaa by ▇▇▇▇▇'▇ Investors Service, Inc.
(ii) If the Reference Rate is the LIBOR Rate and such rate is to be
determined by reference to Telerate Page 3750 or by rate quotations
provided by LIBOR Dealers, as the case may be, and Telerate Page 3750 is
unavailable or the LIBOR Dealer(s) fail to provide rate quotations, as the
case may be (as described in the Statement), then the Auction Agent
immediately shall notify the Fund so that the Fund can determine whether to
select a substitute LIBOR Dealer or substitute LIBOR Dealers to provide
such rate quotation or quotations not being supplied by any LIBOR Dealer or
LIBOR Dealers. The Fund promptly shall advise the Auction Agent of any such
selection. If the Fund does not select any such substitute LIBOR Dealer or
substitute LIBOR Dealers, then the rates shall be supplied by the remaining
LIBOR Dealer or LIBOR Dealers, if any, or, if there are no such LIBOR
Dealers, by the Auction Agent pursuant to the Statement.
(iii) If the Reference Rate is the Treasury Index Rate, then such rate
shall be determined based upon data set forth in the most recent weekly
statistical release published by the Board of Governors of the Federal
Reserve System (currently H.15(519)), provided, however, if the most recent
such statistical release shall not have been published during the 15 days
preceding the date of computation, then the foregoing computations shall be
based upon the average of comparable data as quoted to the Fund by at least
three U.S. Government Securities Dealers (as described in the Statement).
(e) (i) The Auction Agent shall maintain a registry of the Existing
Holders of the Preferred Shares for purposes of each individual Auction.
The Auction Agent shall keep such registry current and accurate and shall
indicate thereon, or on a separate list, 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 purchase Preferred Shares.
The Fund shall provide or cause to be provided to the Auction Agent at or
prior to the Date of Original Issue of the Preferred Shares of each series
a list of the initial Existing Holders of the shares of each such series of
Preferred Shares, the number of shares purchased by each such Existing
Holder and the respective Broker-Dealer of each such Existing Holder or the
affiliate thereof through which each such Existing Holder purchased such
shares. The Auction Agent may rely upon, as evidence of the identities of
the Existing Holders, such list, the results of each Auction and notices
from any Existing Holder, the Agent Member of any Existing Holder or the
Broker-Dealer of any Existing Holder with respect to such Existing Holder's
transfer of any Preferred Shares to another Person.
(ii) In the event of any partial redemption of Preferred Shares, upon
notice by the Fund to the Auction Agent of such partial redemption, the
Auction Agent promptly shall request the Securities Depository to notify
the Auction Agent of the identities of the Agent Members (and the
respective numbers of shares) from the accounts of which shares have been
called for redemption and the person or department at such Agent Member to
contact regarding such redemption. At least two Business Days prior to the
Auction preceding the date of redemption, the Auction Agent shall request
each Agent Member so identified to disclose to the Auction Agent (upon
selection by such Agent Member of the Existing Holders whose shares are to
be redeemed) the number of Preferred Shares of each such Existing Holder,
if any, to be redeemed by the Fund, provided that the Auction Agent has
been furnished with the name and telephone number of a person or department
at such Agent Member from which it is to request such information. In the
absence of receiving any such information with respect to an Existing
Holder, from such Existing Holder's Agent Member or otherwise, the Auction
Agent may continue to treat such Existing Holder as having ownership of the
number of Preferred Shares shown in the Auction Agent's registry of
Existing Holders.
(iii) The Auction Agent shall register a transfer of the ownership of
Preferred Shares from an Existing Holder to another Existing Holder, or to
another Person if permitted by the Fund, only if (A) such transfer is made
pursuant to an Auction or (B) if such transfer is made other than pursuant
to an Auction, the Auction Agent has been notified of such transfer in
writing, in a notice substantially in the form of Exhibit C to the
Broker-Dealer Agreement, by such Existing Holder or by the Agent Member of
such Existing Holder. The Auction Agent is not required to accept any
notice of transfer delivered for an Auction unless it is received by the
Auction Agent by 12:00 noon of the Auction Date. The Auction Agent shall
rescind a transfer made on the registry of the Existing Holders of any
Preferred Shares if the Auction Agent has been notified in writing, in a
notice substantially in the form of Exhibit D to the Broker-Dealer
Agreement, by the Agent Member or the Broker-Dealer of any Person that (i)
purchased any Preferred Shares and the seller failed to deliver such shares
or (ii) sold any Preferred Shares and the purchaser failed to make payment
to such Person upon delivery to the purchaser of such shares.
(f) The Auction Agent may request that the Broker-Dealers, as set
forth in Section 3.2(b) of the Broker-Dealer Agreements, provide the
Auction Agent with a list of their respective customers that such
Broker-Dealers believe are Beneficial Owners of Preferred Shares. The
Auction Agent shall keep confidential any such information and shall not
disclose any such information so provided to any Person other than the
relevant Broker-Dealer and the Fund, provided that the Auction Agent
reserves the right to disclose any such information if it is advised by its
counsel that its failure to do so would be unlawful.
2.3 Auction Schedule.
Subject to Section 3 of Part I of the Statement, the Auction Agent
shall normally conduct Auctions (every 28 days after the first Auction,
usually Monday for Series M28 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 withheld unreasonably. The Auction
Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.
Time Event
By 9:30 a.m. Auction Agent shall advise the Fund and the Broker-
Dealers of theReference Rate and the Maximum Rate
as set forth in Section 2.2(d)(i) hereof.
9:30 a.m. - 1:30 p.m. Auction Agent shall assemble information
communicated to it by Broker-Dealers as provided in
Section 2(a) of Part II of the Statement. Submission
deadline is 1:30 p.m.
Not earlier than 1:30 p.m. Auction Agent shall make determinations pursuant to
Section 3(a) of Part II of the Statement.
By approximately 3:30 p.m. Auction Agent shall advise the Fund of the results of
the Auction as provided in Section 3(b) of Part II of the
Statement.
Submitted Bids and Submitted Sell Orders will be
accepted and rejected in whole or in part and Preferred
Shares will be allocated as provided in Section 4 of Part
II of the Statement.
Auction Agent shall give notice of the Auction results
as set forth in Section 2.4 hereof.
2.4 Notice of Auction Results.
On each Auction Date, the Auction Agent will advise each Broker-Dealer
who submitted a Bid or Sell Order in an Auction whether such Bid or Sell
Order was accepted or rejected in whole or in part and of the Applicable
Rate for the next Dividend Period for the related Preferred Shares by
telephone or through its Auction Processing System as set forth in Section
1 of the Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 12:00 noon on each Dividend Payment Date, the
Auction Agent after each Auction will pay a service charge from funds
provided by the Fund to each Broker-Dealer on the basis of the purchase
price of Preferred Shares placed by such Broker-Dealer at such Auction. The
service charge shall be (i) in the case of any Auction Date immediately
preceding a Dividend Period of less than one year, the product of (A) a
fraction the numerator of which is the number of days in such Dividend
Period and the denominator of which is 360, times (B) 1/4 of 1%, times (C)
$25,000 times (D) the sum of (I) the aggregate number of Preferred Shares
placed by the Broker-Dealer in the applicable Auction that were (x) the
subject of a Submitted Bid of a Beneficial Owner submitted by the
Broker-Dealer and continued to be held as a result of such submission and
(y) the subject of a Submitted Bid of a Potential Beneficial Owner
submitted by the Broker-Dealer and were purchased as a result of such
submission plus (II) the aggregate number of Preferred Shares subject to
valid Hold Orders (determined in accordance with Section 2 of Part II of
the Statement) submitted to the Auction Agent by the Broker-Dealer plus
(III) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Statement that
were acquired by the Broker-Dealer for its own account or were acquired by
such Beneficial Owners through the Broker-Dealer; and (ii) in the case of
any Special Rate Period of one year or longer the amount determined by
mutual consent of the Fund and any such Broker-Dealer or Broker-Dealers and
shall be based upon a selling concession that would be applicable to an
underwriting of fixed or variable rate preferred shares with a similar
final maturity or variable rate dividend period, respectively, at the
commencement of the Special Rate Period with respect to such Auction.
For purposes of subclause (a)(D)(II) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through a Broker-Dealer
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
the Broker-Dealer, provided, however, that if the transfer was effected by,
or if the transferee is, a Broker-Dealer other than that Broker-Dealer,
then such Broker-Dealer shall be the Broker-Dealer for such shares.
Notwithstanding any provision of the Auction Procedures or of the
Settlement Procedures to the contrary, in the event a Broker-Dealer is an
Existing Holder with respect to any Preferred Shares and the Auction
Procedures provide that a Broker-Dealer shall be deemed to have submitted a
Sell Order in an Auction with respect to such shares if the Broker-Dealer
fails to submit an Order in that Auction with respect to such shares, a
Broker-Dealer shall have no liability to any Person failing to sell such
shares pursuant to such a deemed Sell Order if (i) such shares were
transferred by the Beneficial Owner thereof without notification of such
transfer in compliance with the Auction Procedures or (ii) a Broker-Dealer
has indicated to the Auction Agent pursuant to Section 3.2(c) of this
Agreement that, according to the Broker-Dealer's records, the Broker-Dealer
is not an Existing Holder of such shares.
(b) The Fund shall not designate any Person to act as a Broker-Dealer,
or permit an Existing Holder or a Potential Beneficial Owner to participate
in Auctions through any Person other than a Broker-Dealer, without the
prior written approval of the Auction Agent, which approval shall not be
withheld unreasonably. The Fund may designate an Affiliate or Citigroup to
act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as
set forth therein if so directed by the Fund provided that at least one
Broker-Dealer Agreement would be in effect for each series of Preferred
Shares after such termination.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from time to
time shall enter into such Broker-Dealer Agreements as the Fund shall
request.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6 Special Rate Periods.
The provisions contained in Section 3 of Part I of the Statement
concerning Special Rate Periods and the notification of a Special Rate
Period will be followed by the Fund and, to the extent applicable, the
Auction Agent, and the provisions contained therein are incorporated herein
by reference in their entirety and shall be deemed to be a part of this
Agreement to the same extent as if such provisions were set forth fully
herein.
2.7 Ownership of Preferred Shares and Submission of Bids by the Fund and
its Affiliates.
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Neither the Fund nor any Affiliate of the Fund may submit an Order in
any Auction, except that an Affiliate of the Fund that is a Broker-Dealer
may submit an Order, but only if such Orders are not for its own account.
The Fund shall notify the Auction Agent if the Fund or, to the best of the
Fund's knowledge, any Affiliate of the Fund becomes a Beneficial Owner of
any Preferred Shares. Pursuant to the Statement of the Fund, the Fund and
the Fund's Affiliates shall be prohibited from reissuing and its Affiliates
will be prohibited from transferring (other than to the Fund or pursuant to
an Auction) any Preferred Shares they may acquire; provided that this
provision does not prevent a person who is an Affiliate of the Fund from
acting as an underwriter in the initial offering of the Preferred Shares.
The restrictions in this Section 2.7 shall in no way limit the activities
of the Auction Agent. The Auction Agent shall have no duty or liability
with respect to enforcement of this Section 2.7.
2.8 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Fund and its agents, independent
public accountants and counsel access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole
cost and expense) of all books, records, documents and other information
concerning the conduct and results of Auctions, provided that any such
agent, accountant or counsel shall furnish the Auction Agent with a letter
from the Fund requesting that the Auction Agent afford such person access.
The Auction Agent shall maintain records relating to any Auction for a
period of at least two years after such Auction, and such records, in
reasonable detail, shall accurately and fairly reflect the actions taken by
the Auction Agent hereunder. The Fund agrees to keep confidential any
information regarding the customers of any Broker-Dealer received from the
Auction Agent in connection with this Agreement or any Auction, and shall
not disclose such information or permit the disclosure of such information
without the prior written consent of the applicable Broker-Dealer to anyone
except such agent, accountant or counsel engaged to audit or review the
results of Auctions as permitted by this Section 2.8. The Fund reserves the
right to disclose any such information if it is advised by its counsel that
its failure to do so would (i) be unlawful or (ii) expose it to liability,
unless the Broker-Dealer shall have offered indemnification satisfactory to
the Fund. Any such agent, accountant or counsel, before having access to
such information, shall agree to keep such information confidential and not
to disclose such information or permit disclosure of such information
without the prior written consent of the applicable Broker-Dealer, provided
that such agent, accountant or counsel may reserve the right to disclose
any such information if it is advised by its counsel that its failure to do
so would (i) be unlawful or (ii) expose it to liability, unless the
Broker-Dealer shall have offered indemnification satisfactory to such
agent, accountant or counsel.
2.9 Auction Procedures.
The provisions contained in Part II of the Statement concerning
Auction Procedures will be followed by the Fund and, to the extent
applicable, the Auction Agent, and the provisions contained therein are
incorporated herein by reference in their entirety and shall be deemed to
be a part of this Agreement to the same extent as if such provisions were
set forth fully herein.
III. THE AUCTION AGENT AS PAYING AGENT.
3.1 The Paying Agent.
The Board of Trustees of the Fund has adopted resolutions appointing
Deutsche Bank Trust Company Americas as Auction Agent and dividend paying
agent (in such capacity, the "Paying Agent"). The Paying Agent hereby
accepts such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Statement which are specified herein
with respect to the Preferred Shares and as set forth in this Section 3.
3.2 The Fund's Notices to the Paying Agent.
Whenever any Preferred Shares are to be redeemed, the Fund shall mail
a Notice of Redemption by first-class mail, postage prepaid, to each Holder
of Preferred Shares being redeemed and to the Paying Agent pursuant to the
Statement.
3.3 The Fund to Provide Funds for Dividends and Redemptions.
(a) Not later than 12:00 noon on the Business Day next preceding
each Dividend Payment Date, the Fund shall deposit with the Paying
Agent an aggregate amount of federal funds or similar same-day funds
equal to the declared dividends to be paid to Holders on such Dividend
Payment Date and shall give the Paying Agent irrevocable instructions
to apply such funds to the payment of such dividends on such Dividend
Payment Date.
(b) If the Fund shall give a Notice of Redemption, then by noon
of the date fixed for redemption, the Fund shall deposit in trust with
the Paying Agent an aggregate amount of Federal Funds or similar
same-day funds sufficient to redeem such Preferred Shares for
redemption and shall give the Paying Agent irrevocable instructions
and authority to pay the redemption price to the Holders of Preferred
Shares called for redemption upon surrender of the certificate or
certificates therefor.
3.4 Disbursing Dividends and Redemption Price.
After receipt of the Federal Funds or similar same-day funds and
instructions from the Fund described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
corresponding Dividend Payment Date, dividends on the Preferred Shares, and (ii)
on any date fixed for redemption, the redemption price of any Preferred Shares
called for redemption. The amount of dividends for any Dividend Period to be
paid by the Paying Agent to Holders will be determined by the Fund as set forth
in Section 2(e) of Part I of the Statement. The redemption price to be paid by
the Paying Agent to the Holders of any Preferred Shares called for redemption
will be determined as set forth in Section 9 of Part I of the Statement.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Original Issue of Share Certificates.
On the Date of Original Issue for any Preferred Share, one certificate
for each series of Preferred Shares shall be issued by the Fund and registered
in the name of Cede & Co., as nominee of the Securities Depository, and
countersigned by the Paying Agent.
4.2 Registration of Transfer or Exchange of Shares.
Shares of each series of Preferred Shares shall be registered solely in
the name of the Securities Depository or its nominee.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing Preferred Shares shall be accompanied by
an opinion of counsel stating that such legend may be removed and such shares
may be transferred free of the restriction described in such legend, said
opinion to be delivered under cover of a letter from a Fund Officer authorizing
the Paying Agent to remove the legend on the basis of said opinion.
4.4 Lost, Stolen or Destroyed Share Certificates.
The Paying Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed, upon the
fulfillment of such requirements as shall be deemed appropriate by the Fund and
by the Paying Agent, subject at all times to provisions of law, the Statement
governing such matters and resolutions adopted by the Fund with respect to lost,
stolen or destroyed securities. The Paying Agent may issue new certificates in
exchange for and upon the cancellation of mutilated certificates. Any request by
the Fund to the Paying Agent to issue a replacement or new certificate pursuant
to this Section 4.4 shall be deemed to be a representation and warranty by the
Fund to the Paying Agent that such issuance will comply with provisions of
applicable law and the Statement and resolutions of the Fund.
4.5 Disposition of Canceled Certificates; Record Retention.
The Paying Agent shall retain share certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Securities and Exchange Commission
(the "Commission") for at least two calendar years from the date of such
cancellation. The Paying Agent, upon written request by the Fund, shall afford
to the Fund, its agents and counsel access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole cost
and expense) of such certificates and accompanying documentation. Upon the
expiration of this two-year period, the Paying Agent shall deliver to the Fund
the canceled certificates and accompanying documentation. The Paying Agent also
shall undertake to furnish to the Commission, upon demand, either at its
principal office or at any regional office, complete, correct and current hard
copies of any and all such records. Thereafter, such records shall not be
destroyed by the Fund without the approval of the Paying Agent, which approval
shall not be withheld unreasonably, but will be safely stored for possible
future reference.
4.6 Share Register.
The Paying Agent shall maintain the share register, which shall contain
a list of the Holders, the number of shares held by each Holder and the address
of each Holder. The Paying Agent shall record in the share register any change
of address of a Holder upon notice by such Holder. In case of any written
request or demand for the inspection of the share register or any other books of
the Fund in the possession of the Paying Agent, the Paying Agent will notify the
Fund and secure instructions as to permitting or refusing such inspection. The
Paying Agent reserves the right, however, to exhibit the share register or other
records to any person in case it is advised by its counsel that its failure to
do so would be unlawful.
4.7 Return of Funds.
Any funds deposited with the Paying Agent by the Fund for any reason
under this Agreement, including for the payment of dividends or the redemption
of Preferred Shares, that remain with the Paying Agent after ninety days shall
be repaid to the Fund upon written request by the Fund.
V. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(i) the Fund has been duly organized and is validly existing as a
statutory trust under the laws of The State of Delaware and has full
power to execute and deliver this Agreement and to authorize, create
and issue the Preferred Shares;
(ii) the Fund is registered with the Commission under the 1940
Act as a closed-end, diversified, management investment company;
(iii) this Agreement has been duly and validly authorized,
executed and delivered by the Fund and constitutes the legal, valid
and binding obligation of the Fund, enforceable against the Fund in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles;
(iv) the form of the certificates evidencing the Preferred Shares
complies with all applicable laws of the State of Delaware;
(v) the Preferred Shares have been duly and validly authorized by
the Fund and, upon completion of the initial sale of the Preferred
Shares and receipt of payment therefor, will be validly issued by the
Fund, fully paid and nonassessable;
(vi) at the time of the offering of the Preferred Shares, the
shares offered will be registered under the Securities Act and no
further action by or before any governmental body or authority of the
United States or of any state thereof is required in connection with
the execution and delivery of this Agreement or will be required in
connection with the issuance of the Preferred Shares, except such
action as required by applicable state securities laws;
(vii) the execution and delivery of this Agreement and the
issuance and delivery of the Preferred Shares do not and will not
conflict with, violate or result in a breach of the terms, conditions
or provisions of, or constitute a default under, the Agreement and
Declaration of Trust, any order or decree of any court or public
authority having jurisdiction over the Fund or any mortgage,
indenture, contract, agreement or undertaking to which the Fund is a
party or by which it is bound the effect of which conflict, violation,
default or breach would be material to the Fund; and
(viii) no taxes are payable upon or in respect of the execution
of this Agreement or will be payable upon or in respect of the
issuance of the Preferred Shares.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Fund that:
(i) The Auction Agent is duly organized and is validly existing
as a banking corporation in good standing under the laws of the State
of New York and has the corporate power to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal,
valid and binding obligation of the Auction Agent, enforceable against
the Auction Agent in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles.
VI. THE AUCTION AGENT.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any Person except as
provided by this Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no
implied covenants or obligations shall be read into this Agreement
against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or
omitted by it, or for any error of judgment made by it in the
performance of its duties under this Agreement. The Auction Agent
shall not be liable for any error of judgment made in good faith
unless the Auction Agent shall have been negligent in ascertaining the
pertinent facts.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be
protected in acting or refraining from acting upon, any communication
authorized by this Agreement and any written instruction, notice,
request, direction, consent, report, certificate, share certificate or
other instrument, paper or document reasonably believed by it to be
genuine. The Auction Agent shall not be liable for acting upon any
telephone communication authorized by this Agreement which the Auction
Agent reasonably believes in good faith to have been given by the Fund
or by a Broker-Dealer. The Auction Agent may record telephone
communications with the Fund or with the Broker-Dealers or with both.
(b) The Auction Agent may consult with counsel of its choice, and
the advice of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
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 or negligence on the
part of any agent or attorney appointed by it with due care hereunder.
(e) The Auction Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, it being understood that
the Auction Agent shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance
as soon as practicable under the circumstances.
6.3 Compensation, Expenses and Indemnification.
(a) The Fund shall pay to the Auction Agent from time to time
compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate
writing signed by the Fund and the Auction Agent.
(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 of the Broker-Dealer Agreements (including the
compensation, expenses and disbursements of its agents and counsel),
except any expense, disbursement or advance attributable to its
negligence or bad faith. In no event shall the Auction Agent be
responsible or liable for special, indirect or consequential loss or
damage of any kind whatsoever (including, but not limited to, loss of
profit), even if the Auction Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.
(c) The Fund shall indemnify the Auction Agent for and hold it
harmless against any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection
with its agency under the Agreement and the Broker-Dealer Agreements,
including the costs and expenses of defending itself against any such
claim or liability in connection with its exercise or performance of
any of its duties hereunder and thereunder.
6.4 Auction Agent's Disclaimer.
(a) The Auction Agent makes no representation as to the validity
or adequancy of the Agreement, the Broker-Dealer Agreements or the
Preferred Shares of any series except that the Auction Agent hereby
represents that the Agreement has been duly authorized, executed and
delivered by the Auction Agent and constitutes a legal and binding
obligation of the Auction Agent.
VII. MISCELLANEOUS.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate
this Agreement at any time by so notifying the Auction Agent, provided
that, if any Preferred Shares remain outstanding, the Fund shall have
entered into an agreement with a successor auction agent. The Auction
Agent may terminate this Agreement upon prior notice to the Fund on
the date specified in such notice, which date shall be no earlier than
60 days after delivery of such notice. If the Auction Agent terminates
this Agreement while any Preferred Shares remain outstanding, the Fund
shall use its best efforts to enter into an agreement with a successor
auction agent containing substantially the same terms and conditions
as this Agreement.
(b) Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Fund and the Auction Agent under
this Agreement shall cease upon termination of this Agreement. The
Fund's representations, warranties, covenants and obligations to the
Auction Agent under Section 6.3 hereof shall survive the termination
hereof. The Auction Agent's representations, warranties, covenants and
obligations under Section 6.1 shall survive the termination hereof.
Upon termination of the Agreement with respect to any series of
Preferred Shares, the Auction Agent shall deliver to the Fund copies
of all books and records maintained by it with respect to Preferred
Shares in connection with its duties hereunder and to any successor
Auction Agent any funds then held by the Auction Agent for the benefit
of the Holders of Preferred Shares or the Fund.
7.2 Communications.
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party at its address or telecopier number set forth below:
If to the Fund, EVERGREEN UTILITIES AND HIGH INCOME FUND
addressed to: c/o Evergreen Investment Management Company, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Auction Agent, Deutsche Bank Trust Company Americas Trust & Securities
addressed to: Services
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention Auction Rate Securities
Facsimile No.: 212- 797-8600
Telephone No.: ▇▇▇- ▇▇▇-▇▇▇▇
or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Fund by a Fund Officer and on
behalf of the Auction Agent by an Authorized Officer.
7.3 Entire Agreement.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof, except for agreements
relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Fund, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part,
except by a written instrument signed by a duly authorized
representative of the party to be charged.
(b) Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party
shall not constitute a waiver of any such right or remedy with respect
to any subsequent breach.
7.6 Successors and Assigns.
The Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and assigns of each of the Fund and
the Auction Agent. This Agreement may not be assigned by either party hereto
absent the prior written consent of the other party, which consent shall not be
unreasonably withheld.
7.7 Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.9 Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
performed in said state.
7.10 Limitation of Liability.
The Fund's Amended and Restated Certificate of Trust is on file with
the Secretary of State of The State of Delaware. This Agreement is executed on
behalf of the Fund by the Fund's officers as officers and not individually, and
the obligations imposed upon the Fund by this Agreement are not binding upon any
of the Fund's Trustees, officers or shareholders individually but are binding
only upon the assets and property of the Fund.
[Signature pages follow]
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.
EVERGREEN UTILITIES AND HIGH
INCOME
FUND
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
DEUTSCHE BANK TRUST
COMPANY AMERICAS
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
EXHIBIT A
FORM OF BROKER-DEALER AGREEMENT
This Broker-Dealer Agreement dated as of June 25, 2004 is between Deutsche
Bank Trust Company Americas, a New York banking corporation (the "Auction
Agent") (not in its individual capacity, but solely as agent of Evergreen
Utilities and High Income Fund (the "Fund"), pursuant to authority granted to it
in the Auction Agency Agreement dated as of June 25, 2004, between the Fund and
the Auction Agent (the "Auction Agency Agreement") and Citigroup Global Markets
Inc. (together with its successors and assigns, "BD").
The Fund proposes to issue an aggregate of 3,200 preferred shares, no
par value per share, liquidation preference $25,000 per share, designated
as Auction Preferred Shares, Series M28 (the "Preferred Shares"), pursuant
to the Fund's Statement (as defined below)
As provided in and subject to the Fund's Statement, for the Preferred
Shares then outstanding, the Applicable Rate for Preferred Shares for each
subsequent Dividend Period shall be equal to the rate per annum that results
from an Auction for outstanding Preferred Shares on the respective Auction Date
therefore next preceding the period from and after the Date of Original Issue to
and including the last day of the initial Dividend Period. The Board of Trustees
of the Fund has adopted a resolution appointing Deutsche Bank Trust Company
Americas as Auction Agent for purposes of the Auction Procedures, and pursuant
to Section 2.1 of the Auction Agency Agreement, the Fund has requested and
directed the Auction Agent to execute and deliver this Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW THEREFORE, in consideration of the premises and the mutual covenants
obtained herein, the Auction Agent and BD agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Certificate.
Capitalized terms user herein but not defined herein shall have the
respective meanings specified in the Statement.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures (as defined below),
the following terms shall have the following meanings, unless the context
otherwise requires:
(a) "Auction" shall have the meaning specified in Section 2.1 of the
Auction Agency Agreement.
(b) "Auction Procedures" shall mean the procedures for conducting
Auctions that are set forth in Part II of the Statement.
(c) "Authorized Officer" shall mean each Director, Vice President,
Assistant Vice President and Associate of the Auction Agent and every other
officer or employee of the Auction Agent designed as an "Authorized Officer" for
purposes of this Agreement in a communication to BD.
(d) "BD Officer" shall mean each officer or employee of BD designated as a
"BD Officer" for purpose of this Agreement in a communication to the Auction
Agent.
(e) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.
(f) "Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit A.
(g) "Statement" shall mean the Statement of Preferences for Auction
Preferred Shares specifying the powers, preferences and rights of the preferred
shares.
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 numbers 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 the
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of similar
impact referred to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New York
City time.
II. NOTIFICATION OF DIVIDEND.
The provisions contained in Section 3 of Part II of the Statement
concerning the notification of a Special Dividend Period will be
followed by the Auction Agent and BD, and the provisions contained
therein are incorporated herein by reference in their entirety and
shall be deemed to be a part of this Agreement to the same extent as if
such provisions were set forth fully herein.
III. THE AUCTION.
3.1 Purpose: Incorporation by Reference of Auction Procedures and Settlement
Procedures.
(a) On each Auction Date, the provisions of the Auction Procedures will be
followed by the Auction Agent for the purpose of determining the Applicable Rate
for the Preferred Shares, for each Dividend Period. Each periodic operation of
such procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be part of this Agreement to the same extent as if such
provisions were set fully herein.
(c) BD agrees to act as, and assumes the obligations of and limitations and
restrictions placed upon, a Broker-Dealer under this Agreement. BD understands
that other Persons meeting the requirements specified in the definition of
"Broker-Dealer" contained in the "Definitions" section of the Statement may
execute a Broker-Dealer Agreement and participate as Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their own
accounts. However, the Fund, by notice to BD and all other Broker Dealers, may
prohibit all Broker-Dealers from submitting Bids in Auctions for their own
accounts, provided that Broker-Dealers may continue to submit Hold Orders and
Sell Orders.
3.2 Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the Preferred Shares,
the Auction Agent shall advise BD by telephone of the Reference Rate and the
Maximum Rate in effect on such Auction Date.
(b) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent has given the notice referred to in paragraph
(a)(vii) of the Settlement Procedures, the Auction Agent, by such means as the
Auction Agent reasonably 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. Thereafter, BD promptly shall notify customers of BD
that BD believes are Beneficial Owners of Preferred Shares of such change in the
Auction Date.
(c) The Auction Agent from time to time may request BD to provide it with a
list of the respective customers BD believes are Beneficial Owners of Preferred
Shares. BD shall comply with any such request, and the Auction Agent shall keep
confidential any such information, including information received as to the
identity of Bidders in any Auction, and shall not disclose any such information
so provided to any Person other than the Fund; and such information shall not be
used by the Auction Agent or its officers, employees, agents or representatives
for any purpose other than such purposes as are describe herein. The Auction
Agent shall transmit any list of customers BD believes are Beneficial Owners of
Preferred Shares and information related thereto only to its officers,
employees, agents or representatives who need to know such information for the
purposes of acting in accordance with this Agreement, and the Auction Agent
shall prevent the transmission of such information to others and shall cause its
officers, employees, agents and representatives to abide by the foregoing
confidentiality restrictions.
3.3 Auction Schedule: Method of Submission of Orders.
(a) The Fund and the Auction Agent shall normally conduct Auctions every 28
days after the first Auction (usually Monday) in accordance with the schedule
set forth below.
Time Event
By: 9:30 A.M. Auction Agent shall advise the Fund and the
Broker-Dealers of the Reference Rate and the Maximum
Rate as set forth in Section 3.2(a) hereof.
9:30 A.M. -1:30 P.M. Auction Agent shall assemble information communicated
to it by Broker-Dealers as provided in Section 2(a) of
Part II of the Statement. Submission Deadline is 1:30
P.M.
Not earlier than 1:30 P.M. Auction Agent shall make determinations
pursuant to Section 3(a) of Part II of
the Statement.
By approximately 3:30 P.M. Auction Agent shall advise the Fund of the results
of the Auction as provided in Section 3(b) of Part II of
the Statement.
Submitted Bids and Submitted Sell Orders will be accepted and
rejected in whole or in part and Preferred Shares will be
allocated as provided in Section 4 of Part II of the Statement.
Auction Agent shall give notice of the Auction results as set
forth in Section 3.4(a) hereof.
(b) BD agrees to maintain a list of Potential Beneficial Owners and to
contact the Potential Beneficial Owners on such list on or prior to each Auction
Date for the purposes set forth in Section (2) of Part II of the Statement.
(c) BD shall submit Orders to the Auction Agent in writing in substantially
the form attached hereto as Exhibit B. BD shall submit separate Orders to the
Auction Agent for each Potential Beneficial Owner or Beneficial Owner on whose
behalf BD is submitting an Order and shall not net or aggregate the Orders of
Potential Beneficial Owners or Beneficial Owners on whose behalf BD is
submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit C, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit D, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M on the
Business Day preceding the applicable Auction Date.
3.4 Notice of Auction Results.
(a) On each Auction Date, the Auction Agent shall notify the BD of the
results of the Auction by telephone or through the Auction Agent's auction
processing system as set forth in paragraph (a) of the Settlement Procedures. On
the Business Day next succeeding such Auction Date, the Auction Agent shall
notify BD in writing on the disposition of all Orders submitted by BD in the
Auction held on such Auction Date.
(b) BD shall notify each Beneficial Owner, Potential Beneficial Owner,
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 required of BD pursuant to the Settlement Procedures.
If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole Preferred Shares that is less than the number of shares that
otherwise was to be purchase by such Person. In such event, the number of
Preferred Shares to be so delivered shall be determined by such Broker-Dealer.
Delivery of such lesser number of shares shall constitute good delivery. Up on
the occurrence of any such failure to deliver shares, such Broker-Dealer shall
deliver to the Auction Agent the notice required by Section 3.3(d)(ii) hereof.
Notwithstanding the foregoing terms of this Section 3.4(b), any delivery or
non-delivery of Preferred Shares which represents any departure from the results
of an Auction, as determined by the Auction Agent, shall be of no effect unless
and until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the terms of Section 3.3(d) hereof.
3.5 Service Charge to be Paid to BD.
Not later than 12:00 noon. on each Dividend Payment Date, the Auction Agent
after each Auction will pay a service charge from funds provided by the
Fund to BD on the basis of the purchase price of Preferred Shares placed by
BD at such Auction. The service charge shall be (i) in the case of any
Auction Date immediately preceding a Dividend Period of less than a year,
the product of (A) a fraction the numerator of which is the number of days
in such Dividend Period and the denominator of which is 360, times (B) 1/4
of 1%, times (C) $25,000 times (D) the sum of (I) and the aggregate number
of Preferred Shares placed by BD in the applicable Auction that were (x)
the subject of a Submitted Bid of a Beneficial Owner submitted by BD and
continued to be held as a result of such submission and (y) the subject of
a Submitted Bid of a Potential Beneficial Owner submitted by BD and were
purchased as a result of such submission plus (II) the aggregate number of
Preferred Shares subject to valid Hold Orders (determined in accordance
with Section 2 of Part II of the Statement) submitted to the Auction Agent
by BD plus (III) the number of Preferred Shares deemed to be subject to
Hold Orders by Beneficial Owners pursuant to Section 2 of Part II of the
Statement that were acquired by BD for its own account or were acquired by
such Beneficial Owners through BD; and (ii) in the case of any Special
Dividend Period of one year or longer, the amount determined by mutual
consent of the Fund and BD and shall be based upon a selling concession
that would be applicable to an underwriting of fixed or variable rate
preferred shares with a similar final maturity or variable rate dividend
period, respectively, at the commencement of such Special Dividend Period.
For purposes of subclause (i)(D)(III) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through a Broker-Dealer
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
the Broker-Dealer, provided, however, that if the transfer was effected by,
or if the transferee is, a Broker-Dealer other than that Broker-Dealer,
then such Broker-Dealer shall be the Broker-Dealer for such shares.
IV. THE AUCTION AGENT.
4.1 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 such reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any such taken, suffered or omitted by it, or for
any error of judgment made by it in the performance of its duties under this
Agreement.
4.2 Rights for the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in acting or
refraining from acting upon, any communication authorized by this Agreement and
any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document reasonably
believed by it to be genuine. The Auction Agent shall not be liable for acting
upon any telephone communication authorized by this Agreement, which the Auction
Agent reasonably believes in good faith to have been given by the Fund of by BD.
The Auction Agent may record telephone communications with the Fund or with BD
or with both.
(b) The Auction Agent may consult with counsel of its own 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 reasonable reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk its
own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
4.3 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or adequacy of this
Agreement or the Preferred Shares.
V. MISCELLANEOUS.
5.1 Termination.
Any party may terminate this Agreement at any time upon five days'
prior written notice and the other party: provided, however, that if
the Broker-Dealer is Citigroup Global Markets, Inc., either Citigroup
Global Markets Inc. or the Auction Agent may terminate this Agreement
only upon 60 days' prior written notice to the other party and to the
Fund.
5.2 Participant in Securities Depository: Payment of Dividends in Same-Day
Funds.
(a) BD is, and shall remain for the terms of this Agreement, a member or,
or a participant in, the Securities Depository (or an affiliate of such a member
or participant).
(b) BD represents that is (or if BD does not act as Agent Member, one of
its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliates) as Agent Member.
5.3 Agent Member.
At the date hereof, BD is a participant of the Securities Depository.
5.4 Communications.
Except for (i) communications authorized to be made by telephone pursuant to
this Agreement or the Auction Procedures and (ii) communications in connection
with the Auctions (other than those expressly required in writing), all notices,
request and other communications to any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given to such party as its
address or telecopier number set forth below:
If to the Auction Agent, addressed to: Deutsche Bank Trust Company Americas
Trust & Securities Services
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Auction Rate Securities
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the BD addressed to: Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Short Term Trading Desk
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or telecopier number as party hereafter may specify for
such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
5.5 Entire Agreement.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings,
oral, written or implied, between the parties relating to the subject
matter hereof.
5.6 Benefits.
Nothing in this Agreement, expressed or implied, shall give to any
person, other than the Fund, which is a third-party beneficiary of this
Agreement, the Auction Agent and BD and their respective successors and
assigns, any benefit of any legal or equitable right, remedy or claim
under this Agreement.
5.7 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be charged
and by the Fund.
(b) Failure of either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other party
shall not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
5.8 Successors and Assigns.
(a) This Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the respective successors and permitted assigns of each of BD
and the Auction Agent. This Agreement may not be assigned by either party hereto
absent the prior written consent of the other party; 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.
5.9 Severability.
(a) If any clause, provision or section of this Agreement shall be ruled
invalid or enforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.
5.10 Execution in Counterparts.
(a) 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.
5.11 Governing Law.
(a) 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.
[Signature pages follow]
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 mention.
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: _______________________________________
Name:
Title:
CITIGROUP GLOBAL MARKETS INC.
By: ________________________________________
Name:
Title: