1
Exhibit (k)(4)
Colonial New York Insured Municipal Fund
December __, 1999
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street
New York, New York 10006
Attention: Auction Rate/Remarketed Securities
Ladies and Gentlemen:
Reference is made to the Colonial Auction Agency Agreement -
Basic Terms for Action as Auction Agent dated July 20, 1999 (the "Basic Terms"),
which Basic Terms are incorporated herein by reference and the receipt of which
is acknowledged by the undersigned. The Basic Terms, together with this Request
and Acceptance Letter, are sometimes referred to therein and herein as the
"Auction Agency Agreement" or the "Agreement." For purposes of the Basic Terms,
you shall be considered the Auction Agent and Colonial New York Insured
Municipal Fund shall be considered the Trust. Capitalized terms not defined
herein shall have the meanings ascribed to them in the Basic Terms.
We hereby request that you act as auction agent for the Series
__ Municipal Auction Rate Cumulative Preferred Shares designated below (the
"Municipal Preferred"). You hereby accept such appointment as auction agent and
agree to act in accordance with the Agreement, including Basic Terms. The
following terms are to be added to the Basic Terms:
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street
New York, New York 10006
Attention: Auction Rate/Remarketed Securities
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attached hereto are the By-Laws that fix the rights and
preferences of Municipal Auction Rate Cumulative Preferred Stock.
If the foregoing terms are acceptable to you, please so
indicate in the space provided below. This Request and Acceptance Letter may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one and the same instrument.
2
2
COLONIAL NEW YORK INSURED
MUNICIPAL FUND
By:
-----------------------------------
Name:
Title:
Accepted by and ▇▇▇▇▇▇ to as of
the date first written above:
BANKERS TRUST COMPANY
By:
-----------------------------------
Name:
Title:
3
COLONIAL AUCTION AGENCY AGREEMENT
Basic Terms for Acting as Auction Agent
July 20, 1999
These basic terms ("Basic Terms") set forth the general terms
and conditions pursuant to which a bank or trust company identified in a Request
and Acceptance Letter will act as auction agent (an "Auction Agent") for
Municipal Auction Rate Cumulative Preferred Shares ("Municipal Preferred")
issued by an investment company registered under the Investment Company Act of
1940, as amended, as further identified by such Request and Acceptance Letter (a
"Trust"), for which Colonial Management Associates, Inc. is the investment
adviser.
The Trust proposes to issue shares of Municipal Preferred
pursuant to its Agreement, Declaration of Trust and Bylaws. The Trust desires
that the Auction Agent perform certain duties in connection with the Municipal
Preferred upon the terms and subject to the conditions of the Agreement.
1. Definitions and Rules of Construction.
1.1 Terms Defined By Reference to Bylaws.
Capitalized terms not defined herein shall have the respective
meanings specified in the Bylaws.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following
terms shall have the following meanings, unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository that will act on behalf of a
Bidder.
(b) "Agreement" shall mean the Basic Terms, together with the
Request and Acceptance Letter relating to one or more series of
Municipal Preferred.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Procedures" shall mean the auction procedures
constituting Part II of Section 12.1 of the Bylaws of any Trust as of
the adoption thereof.
(e) "Authorized Officer" of the Auction Agent shall mean each
Senior Vice President, Vice President, Assistant Vice President and
Associate of the
4
2
Auction Agent assigned to its Corporate Trust and Agency Group and
every other officer or employee of the Auction Agent designated as an
"Authorized Officer" for purposes hereof in a communication to the
Trust.
(f) "Broker-Dealer Agreement" shall mean each agreement among
the Trust, the Auction Agent and a Broker-Dealer substantially in the
form attached hereto as Exhibit A.
(g) "By-Laws," with respect to any Trust, shall mean the
By-Laws, as amended and restated, of such Trust, a copy of which will
be attached to the Request and Acceptance Letter of such Trust.
(h) "Declaration" means the Agreement and Declaration of Trust
of any Trust, as the same may be amended, supplemented or modified.
(i) "Municipal Preferred" shall mean the preferred shares, no
par value, of any Trust designated as its "Municipal Auction Rate
Cumulative Preferred Shares" and bearing such further designation as to
series as the Board of Trustees of such Trust or any committee thereof
shall specify, as set forth in the Request Letter.
(j) "Request and Acceptance Letter" shall mean the letter from
the Trust to the Auction Agent pursuant to which the Trust appoints the
Auction Agent and the Auction Agent accepts its appointment as auction
agent for the Municipal Preferred.
(k) "Settlement Procedures" shall mean the Settlement
Procedures attached hereto as Exhibit B.
(l) "Trust Officer" shall mean the Chairman of the Board of
Trustees, each Vice Chairman of the Board of Trustees (whether or not
designated by a number or word or words added before or after the title
"Vice Chairman"), the President, each Vice President (whether or not
designated by a number or word or words added before or after the title
"Vice President"), the Secretary, the Treasurer, each Assistant Vice
President and each Associate of the Trust and every other officer or
employee of the Trust designated as a "Trust Officer" for purposes
hereof in a notice to the Auction Agent.
1.3 Rules of Construction.
Unless the context or use indicates another or different
meaning or intent, the following rules shall apply to the construction of the
Agreement:
(a) Words importing the singular number shall include the
plural number and vice versa.
5
3
(b) The captions and headings herein are solely for
convenience of reference and shall not constitute a part of the
Agreement nor shall they affect its meaning, construction or effect.
(c) The words "hereof", "herein", "hereto" and other words of
similar import refer to the Agreement as a whole.
(d) All references herein to a particular time of day shall be
to New York City time.
2. The Auction.
2.1 Purpose; Incorporation by Reference of
Auction Procedures and Settlement Procedures.
(a) The Bylaws for each series of Municipal Preferred will
provide that the Applicable Rate for such series for each Subsequent
Rate Period thereof shall, except under certain conditions, be the rate
per annum that a bank or trust company appointed by the Trust advises
results from implementation of the Auction Procedures for such series.
The Board of Directors or Board of Trustees, as the case may be, of the
Trust has adopted a resolution appointing the Auction Agent as auction
agent for purposes of the Auction Procedures for each series of
Municipal Preferred. 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 each series of Municipal Preferred for each Subsequent Rate Period
thereof for which the Applicable Rate is to be determined by an
Auction. Each periodic implementation of such procedures is hereinafter
referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures
and the Settlement Procedures are incorporated herein by reference in
their entirety and shall be deemed to be a part hereof to the same
extent as if such provisions were fully set forth herein.
2.2 Preparation for Each Auction; Maintenance
of Registry of Beneficial Owners.
(a) Not later than seven days prior to the first Auction Date
for the first series of Municipal Preferred subject to an Auction, the
Trust shall provide the Auction Agent with a list of the
Broker-Dealers. Not later than seven days prior to any Auction Date for
any series of Municipal Preferred for which any change in such list of
Broker-Dealers is to be effective, the Trust 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;
6
4
provided, however, that if the Trust proposes to designate any Special
Rate Period of any series of Municipal Preferred pursuant to Section 4
of Part I of Section 12.1 of the Bylaws, 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 Rate Period or by such later time or
date, or both, as may be agreed to by the Auction Agent, the Trust
shall provide the Auction Agent with a list of the Broker-Dealers for
such series and a manually signed copy of each Broker-Dealer Agreement
or a new Schedule A to a Broker-Dealer Agreement (which Schedule A
shall replace and supersede any previous Schedule A to such
Broker-Dealer Agreement) with each Broker-Dealer for such series. The
Auction Agent and the Trust shall have entered into a Broker-Dealer
Agreement with each Broker-Dealer prior to the participation of any
such Broker-Dealer in any Auction.
(b) In the event that any Auction Date for any series of
Municipal Preferred shall be changed after the Auction Agent shall have
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
the Broker-Dealers for such series not later than the earlier of 9:15
A.M., New York City time, on the new Auction Date or 9:15 A.M., New
York City time, on the old Auction Date.
(c) (i) The Auction Agent shall maintain a registry of the
beneficial owners of the shares of Municipal Preferred of each series
who shall constitute Existing Holders of shares of Municipal Preferred
of such series for purposes of Auctions and shall indicate thereon the
identity of the respective Broker-Dealer of each Existing Holder, if
any, on whose behalf such Broker-Dealer submitted the most recent Order
in any Auction which resulted in such Existing Holder continuing to
hold or purchasing shares of Municipal Preferred of such series. The
Auction Agent shall keep such registry current and accurate. The Trust
shall provide or cause to be provided to the Auction Agent at or prior
to the Date of Original Issue of the shares of Municipal Preferred of
each series a list of the initial Existing Holders of the shares of
each such series of Municipal Preferred, 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 shall advise
the Trust 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 shares of Municipal Preferred of
any series (A) such list, (B) the results of Auctions, (C) notices from
any Broker-Dealer as described in the first sentence of Section
2.2(c)(iii) hereof and (D) the results of any procedures approved by
the Trust that have been devised for the purpose of determining the
identities of Existing Holders in situations where shares of Municipal
Preferred may have been transferred without compliance with any
restriction on the transfer thereof set forth in the Auction
Procedures.
7
5
(ii) In the event of any partial redemption of any
series of Municipal Preferred, the Auction Agent shall, at least two
Business Days prior to the next Auction for such series, request each
Broker-Dealer to provide the Auction Agent with a list of Persons who
such Broker-Dealer believes should remain Existing Holders after such
redemption based upon inquiries of those Persons such Broker-Dealer
believes are Beneficial Owners as a result of the most recent Auction
and with respect to each such Person, the number of shares of Municipal
Preferred of such series such Broker-Dealer believes are owned by such
Person after such redemption. In the absence of receiving any such
information from any Broker-Dealer, the Auction Agent may continue to
treat the Persons listed in its registry of Existing Holders as the
beneficial owner of the number of shares of Municipal Preferred of such
series shown in such registry.
(iii) The Auction Agent shall be required to register
a transfer of shares of Municipal Preferred of any series from an
Existing Holder of such shares of Municipal Preferred only if such
transfer is to another Existing Holder, or other Person if permitted by
the Trust, and only if such transfer is made (A) pursuant to an
Auction, (B) the Auction Agent has been notified in writing (I) in a
notice substantially in the form of Exhibit C to the Broker-Dealer
Agreements by a Broker-Dealer of such transfer or (II) in a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreements
by the Broker-Dealer of any Existing Holder, or other Person if
permitted by the Trust, that purchased or sold such shares of Municipal
Preferred in an Auction of the failure of such shares of Municipal
Preferred to be transferred as a result of such Auction or (C) pursuant
to procedures approved by the Trust that have been devised for the
purpose of determining the identities of Existing Holders in situations
where shares of Municipal Preferred may have been transferred without
compliance with any restriction on the transfer thereof set forth in
the Auction Procedures. The Auction Agent is not required to accept any
such notice for an Auction unless it is received by the Auction Agent
by 3:00 P.M., New York City time, 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 Persons who such Broker-Dealer believes should be
Existing Holders based upon inquiries of those Persons such
Broker-Dealer believes are Beneficial Owners as a result of the most
recent Auction and with respect to each such Person, the number of
shares of such series of Municipal Preferred such Broker-Dealer
believes to be owned by such Person. The Auction Agent shall keep
confidential such registry of Existing Holders and shall not disclose
the identities of the Existing Holders of such shares of Municipal
Preferred to any Person other than the Trust and the Broker-Dealer that
provided such information.
8
6
2.3 Information Concerning Rates.
(a) The Rate Multiple on the date of the Agreement is set
forth in the Request and Acceptance Letter. If there is any change in
the credit rating of Municipal Preferred by either of the rating
agencies (or substitute or successor rating agencies) referred to in
the definition of "Rate Multiple" resulting in any change in the Rate
Multiple for Municipal Preferred after the date of the Request and
Acceptance Letter, the Trust shall notify the Auction Agent in writing
of such change in the Rate Multiple prior to 12:00 Noon, New York City
time, on the Business Day prior to the next Auction Date for any series
of Municipal Preferred succeeding such change. If the Trust designates
all or a portion of any dividend on shares of any series of Municipal
Preferred to consist of net capital gains or other income taxable for
Federal income tax purposes, it will indicate, in its notice in the
form of Exhibit I hereto to the Auction Agent pursuant to Section 2.6
hereof, the Rate Multiple for such series to be in effect for the
Auction Date on which the dividend rate for such dividend is to be
fixed. In determining the Maximum Rate for any series of Municipal
Preferred 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 Rate Multiple
for Municipal Preferred of which it has most recently received notice
from the Trust (or, in the absence of such notice, the percentage set
forth in the Request and Acceptance Letter), except that if the Trust
shall have notified the Auction Agent of a Rate Multiple to be in
effect for an Auction Date in accordance with the preceding sentence,
the Rate Multiple in effect for the next succeeding Auction Date of any
series of Municipal Preferred shall be, unless the Trust notifies the
Auction Agent of a change in the Rate Multiple for such succeeding
Auction Date pursuant to this Section 2.3(a), the Rate Multiple that
was in effect on the first preceding Auction Date for Municipal
Preferred with respect to which the dividend, the rate for which was
fixed on such Auction Date, did not include any net capital gains or
other income taxable for Federal income tax purposes.
(b)(i) On each Auction Date for any series of Municipal
Preferred, the Auction Agent shall determine the Maximum Rate for such
series. The Maximum Rate for any series of Municipal Preferred on any
Auction Date shall be:
(A) in the case of any Auction Date which is not the
Auction Date immediately prior to the first day of any proposed Special
Rate Period designated by the Trust pursuant to Section 4 of Part I of
Section 12.1 of the Bylaws, the product of (1) the Reference Rate on
such Auction Date for the next Rate Period of such series and (2) the
Rate Multiple on such Auction Date, unless such series has or had a
Special Rate Period (other than a Special Rate Period of 28 Rate Period
Days or fewer) and an Auction at which Sufficient Clearing Bids existed
has not yet occurred for a Minimum Rate Period of such series after
such Special Rate Period, in which case the higher of:
9
7
(1) the dividend rate on shares of such
series for the then-ending Rate Period; and
(2) the product of (x) the higher of (I) the
Reference Rate on such Auction Date for a Rate Period
equal in length to the then-ending Rate Period of
such series, if such then ending Rate Period was 364
Rate Period Days or fewer, or the Treasury Note Rate
on such Auction Date for a Rate Period equal in
length to the then-ending Rate Period of such series,
if such then ending Rate Period was more than 364
Rate Period Days, and (II) the Reference Rate on such
Auction Date for a Rate Period equal in length to
such Special Rate Period of such series, if such
Special Rate Period was 364 Rate Period Days or
fewer, or the Treasury Note Rate on such Auction Date
for a Rate Period equal in length to such Special
Rate Period, if such Special Rate Period was more
than 364 Rate Period Days and (y) the Rate Multiple
on such Auction Date; or
(B) in the case of any Auction Date which is the
Auction Date immediately prior to the first day of any proposed Special
Rate Period designated by the Trust pursuant to Section 4 of Part I of
Section 12.1 of the Bylaws, the product of (1) the highest of (x) the
Reference Rate on such Auction Date for a Rate-Period equal in length
to the then-ending Rate Period of such series, if such then-ending Rate
Period was 364 Rate Period Days or fewer, or the Treasury Note Rate on
such Auction Date for a Rate Period equal in length to the then-ending
Rate Period of such Rate Period, if such then-ending Rate Period was
more than 364 Rate Period Days, (y) the Reference Rate on such Auction
Date for the Special Rate Period for which the Auction is being held if
such Special Rate Period is 364 Rate Period Days or fewer or the
Treasury Note Rate on such Auction Date for the Special Rate Period for
which the Auction is being held if such Special Rate Period is more
than 364 Rate Period Days, and (z) the Reference Rate on such Auction
Date for Minimum Rate Periods and (2) the Rate Multiple on such Auction
Date.
Not later than 9:30 A.M. on each Auction Date the Auction Agent shall notify the
Trust and the Broker-Dealers of the Maximum Rate so determined and the "AA"
Composite Commercial Paper Rate(s), the Taxable Equivalent of the Short-Term
Municipal Bond Rate(s), Treasury Note Rate(s) and Treasury Bill Rate(s), as the
case may be, used to make such determination.
(ii) From and after a Failure to Deposit by the Trust
during any Rate Period of any series of Municipal Preferred, until such
failure is cured and a Late Charge (as defined in paragraph (a) of
Section 2.7), is paid, in accordance with subparagraph (e)(i) of
Section 2 of Part I of Section 12.1 of the Bylaws, on the first day of
each Rate Period of such series the Auction Agent shall determine the
Treasury Note Rate for such Rate Period of more than 364 Rate Period
Days and the Reference Rate for Rate Periods of 364 Rate Period Days or
fewer. Not later
10
8
than 9:30 A.M. on each such first day, the Auction Agent shall notify
the Trust of the applicable Reference Rate and Treasury Note Rate.
(iii) If any "AA" Composite Commercial Paper Rate,
Taxable Equivalent of the Short-Term Municipal Bond Rate, Treasury Note
Rate or Treasury Bill Rate, as the case may be, is not quoted on an
interest or bond equivalent, as the case may be, basis, the Auction
Agent shall convert the quoted rate to the interest or bond equivalent
thereof as set forth in the definition of such rate in the Bylaws if
the rate obtained by the Auction Agent is quoted on a discount basis,
or if such rate is quoted on a basis other than an interest or bond
equivalent or discount basis the Auction Agent shall convert the quoted
rate to an interest or bond equivalent rate after consultation with the
Trust 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 Trust so that the Trust 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 Trust shall promptly advise the Auction
Agent of any such selection.
(v) If any Treasury Note Rate or Treasury Bill 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 Trust so that the Trust 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 Trust
shall promptly advise the Auction Agent of any such selection.
(c) The maximum marginal tax rate referred to in the
definition of "Rate Multiple" in the Bylaws is referred to in this
Agreement as the "Highest Marginal Rate." The Highest Marginal Rate on
the date of the Agreement is set forth in the Request and Acceptance
Letter. If there is any change in the Highest Marginal Rate, the Trust
shall notify the Auction Agent in writing of such change prior to 12:00
Noon, New York City time, on the Business Day prior to the next Auction
Date for Municipal Preferred succeeding such change. In determining the
Maximum Rate for any series of Municipal Preferred on any Auction Date,
the Auction Agent shall be entitled to rely on the Highest Marginal
Rate of which it has most recently received notice from the Trust (or,
in the absence of such notice, the percentage set forth in the Request
and Acceptance Letter).
11
9
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 Trust, 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 Trust and
Broker-Dealers of the applicable
Maximum Rate and the Reference
Rate(s) and Treasury Note 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 2(a) of the
Auction Procedures. Submission
Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations
pursuant to Section 3(a) of the
Auction Procedures.
By approximately 3:00 P.M. Auction Agent advises Trust of
results of Auction as provided in
Section 3(b) of the Auction
Procedures.
Submitted Bids and Submitted Sell Orders are accepted and rejected and shares of
Municipal Preferred are allocated as provided in Section 4 of the Auction
Procedures. The Auction Agent gives notice of the Auction results as set forth
in paragraph (a) of the Settlement Procedures.
The Auction Agent shall follow the notification procedures set forth in
paragraph (a) of the Settlement Procedures.
2.5 Designation of Special Rate Period.
(a) The Bylaws will provide that, subject to the Trust's
option to designate a Special Rate Period as referred to in paragraph
(b) of this Section 2.5, (i) each Rate Period of any series of
Municipal Preferred will be a Minimum Rate
12
10
Period (a duration of seven days, subject to certain exceptions) and
(ii) each Rate Period following a Rate Period of any series of
Municipal Preferred that is other than a Minimum Rate Period will be a
Minimum Rate Period. Not less than 10 nor more than 20 days prior to
the last day of any such Rate Period that is not a Minimum Rate Period,
(i) the Trust shall deliver to the Auction Agent a notice of the
Auction Date of the next succeeding Auction for such series in the form
of Exhibit C hereto and (ii) the Auction Agent shall deliver such
notice by first-class mail, postage prepaid, to each Existing Holder of
shares of such series at the address set forth for such Existing Holder
in the records of the Auction Agent and to the Broker-Dealers for such
series as promptly as practicable after its receipt of such notice from
the Trust.
(b) Pursuant to the Bylaws, the Trust may, at its option,
designate a Special Rate Period for any series of Municipal Preferred
in the manner described in Section 4 of Part I of Section 12.1 of the
Bylaws.
(i) If the Board of Trustees proposes to designate
any succeeding Subsequent Rate Period of any series of Municipal
Preferred as a Special Rate Period, (A) the Trust shall deliver to the
Auction Agent a notice of such proposed Special Rate Period in the form
of Exhibit D hereto not less than 20 (or such lesser number of days as
may be agreed to from time to time by the Auction Agent) nor more than
30 days prior to the first day of such proposed Special Rate Period and
(B) the Auction Agent on behalf of the Trust shall deliver such notice
by first-class mail, postage prepaid, to each Existing Holder of shares
of such series of Municipal Preferred at the address set forth for such
Existing Holder in the records of the Auction Agent and to the
Broker-Dealers for such series as promptly as practicable after its
receipt of such notice from the Trust.
(ii) If the Board of Trustees determines to designate
such succeeding Subsequent Rate Period as a Special Rate Period, (A)
the Trust shall deliver to the Auction Agent a notice of such
determination in the form of Exhibit E hereto not later than 11:00
A.M., New York City time, on the second Business Day next preceding the
first day of such proposed Special Rate Period (or such later time or
date, or both, as may be agreed to by the Auction Agent) and (B) the
Auction Agent shall deliver such notice to the Broker-Dealers for such
series not later than 3:00 P.M., New York City time, on such second
Business Day (or, if the Auction Agent has agreed to a later time or
date, as promptly as practicable thereafter).
(iii) If the Trust shall deliver to the Auction Agent
a notice not later than 11:00 A.M., New York City time, on the second
Business Day next preceding the first day of such proposed Special Rate
Period (or such later time or date, or both, as may be agreed to by the
Auction Agent) stating that the Trust has determined not to exercise
its option to designate such succeeding Subsequent Rate Period as a
Special Rate Period, in the form of Exhibit F hereto, or shall fail to
timely deliver either such notice or a notice in the form of Exhibit E
hereto, the
13
11
Auction Agent shall deliver a notice in the form of Exhibit F hereto to
the Broker-Dealers for such series not later than 3:00 P.M., New York
City time, on such second Business Day (or, if the Auction Agent has
agreed to a later time or date, as promptly as practicable thereafter).
Such change in the length of any Rate Period shall not occur if (1) an Auction
for shares of such series shall not be held on such Auction Date for any reason
or (2) an Auction for shares of such series shall be held on such Auction Date
but Sufficient Clearing Bids for shares of such series shall not exist in such
Auction.
2.6 Allocation of Taxable Income.
The Trust shall, in the case of a Minimum Rate Period or a
Special Rate Period of 28 Rate Period Days or fewer, and may, in the case of any
other Special Rate Period, designate all or a portion of any dividend on shares
of any series of Municipal Preferred to consist of net capital gains or other
income taxable for Federal income tax purposes by delivering to the Auction
Agent a notice in the form of Exhibit I hereto of such designation not later
than the Dividend Payment Date for such series next preceding the Auction Date
on which the dividend rate for such dividend is to be fixed. The Auction Agent
will deliver such notice to the Broker-Dealers for such series on the Business
Day following its receipt of such notice from the Trust. Within two Business
Days after any Auction Date involving the allocation of income taxable for
Federal income tax purposes, the Auction Agent shall notify each Broker-Dealer
for the related series 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 Municipal Preferred during any Rate Period thereof
(other than any Special Rate Period of more than 364 Rate Period Days
or any Rate Period succeeding any Special Rate Period of more than 364
Rate Period Days during which a Failure to Deposit occurred that has
not been cured), but, 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 Section 2.7(c) hereof and the Trust shall have paid to
the Auction Agent a late charge (a "Late Charge") equal to the sum of
(1) 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 shares, an amount computed by multiplying (x)
200% of the Reference Rate for the Rate Period during which such
Failure to Deposit occurs on the Dividend Payment Date for such
Dividend Period by (y) 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
14
12
Section 2.7(c) hereof (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 360, and applying the rate obtained
against the aggregate liquidation preference of the outstanding shares
of Municipal Preferred and (2) if such Failure to Deposit consisted of
the failure timely to pay to the Auction Agent the Redemption Price of
the shares of Municipal Preferred, if any, for which Notice of
Redemption has been given by the Trust, an amount computed by
multiplying (x) 200% of the Reference Rate 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 is not cured in accordance with Section 2.7(c)
hereof (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 360, and applying the rate obtained against the aggregate
liquidation preference of the outstanding shares of Municipal Preferred
to be redeemed,
then the Auction Agent shall deliver a notice in the form of Exhibit G hereto by
first-class mail, postage prepaid, to the Broker-Dealers for such series not
later than one Business Day after its receipt of the payment from the Trust
curing such Failure to Deposit and such Late Charge.
(b) If:
(i) any Failure to Deposit shall have occurred with
respect to shares of Municipal Preferred during any Rate Period thereof
(other than any Special Rate Period of more than 364 Rate Period Days
or any Rate Period succeeding any Special Rate Period of more than 364
Rate Period Days during which a Failure to Deposit occurred but has not
been cured), and, 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 not have been cured in
accordance with Section 2.7(c) hereof or the Trust shall not have paid
the applicable Late Charge to the Auction Agent; or
(ii) any Failure to Deposit shall have occurred with
respect to shares of Municipal Preferred during a Special Rate Period
thereof of more than 364 Rate Period Days, or during any Rate Period
thereof succeeding any Special Rate Period of more than 364 Rate Period
Days during which a Failure to Deposit occurred that has not been
cured, and, prior to 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, such Failure to Deposit shall not have been cured
in accordance with Section 2.7(c) hereof or the Trust shall not have
paid the applicable Late Charge to the Auction Agent in accordance with
Section 2(e)(i)(D) of Section 12.1 of the Bylaws (such Late Charge, for
purposes of this clause (b)(ii) of this Section 2.7, to be calculated
by using, as the Reference Rate, the Reference Rate applicable to a
Rate Period (x) consisting of more than 182 Rate Period Days and
15
13
(y) commencing on the date on which the Rate Period during which
Failure to Deposit occurs commenced);
then the Auction Agent shall deliver a notice in the form of Exhibit H hereto to
the Broker-Dealers for such series not later than one Business Day after the
receipt of the payment from the Trust curing such Failure to Deposit and such
Late Charge.
(c) A Failure to Deposit with respect to shares of Municipal
Preferred shall have been cured (if such Failure to Deposit is not
solely due to the willful failure to the Trust to make the required
payment to the Auction Agent) with respect to any Rate Period if,
within the respective time periods described immediately above, the
Trust shall have paid to the Auction Agent (i) all accumulated and
unpaid dividends on the shares of Municipal Preferred and (ii) without
duplication, the Redemption Price for the shares of Municipal
Preferred, if any, for which Notice of Redemption has been mailed;
provided, however, that the foregoing clause (ii) shall not apply to
the Trust's failure to pay the Redemption Price in respect of shares of
Municipal Preferred when the related Notice of Redemption provides that
redemption of such shares is subject to one or more conditions
precedent and each such condition precedent shall not have been
satisfied at the time or times and in the manner specified in such
Notice of Redemption.
2.8 Broker-Dealers.
(a) Not later than 12:00 Noon, New York City time, on each
Auction Date for any series of Municipal Preferred, the Trust shall pay
to the Auction Agent an amount in cash equal to the aggregate fees
payable to the Broker-Dealers for such series pursuant to Section 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 Trust 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.
(c) The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed by the Trust, provided
that at least one Broker-Dealer Agreement would be in effect for each
series of Municipal Preferred 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 Trust
shall request, and shall enter into such schedules to any such
Broker-Dealer Agreements as the Trust shall request, which schedules,
among
16
14
other things, shall set forth the series of Municipal Preferred to
which such Broker-Dealer Agreement relates.
2.9 Ownership of Shares of Municipal Preferred.
The Trust shall notify the Auction Agent if the Trust or any
affiliate of the Trust acquires any shares of Municipal Preferred of any series.
Neither the Trust nor any affiliate of the Trust shall submit any Order in any
Auction for Municipal Preferred, except as set forth in the next sentence. Any
Broker-Dealer that is an affiliate of the Trust 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 Trust
solely because one or more of the directors or executive officers of such
Broker-Dealer or of any Person controlled by, in control of or under common
control with such Broker-Dealer is also a director of the Trust. 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 Trust, afford to the Trust 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.
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 shares of Municipal Preferred of any series
(i) on each Dividend Payment Date for such series, dividends on the shares of
Municipal Preferred of such series, (ii) on any date fixed for redemption of
shares of Municipal Preferred of any series, the Redemption Price of any shares
of such series called for redemption and (iii) any Late Charge related to any
payment of dividends or Redemption Price, in each case after receipt of the
necessary Trusts from the Trust with which to pay such dividends, Redemption
Price or Late Charge. The amount of dividends for any Rate Period for any series
of Municipal Preferred to be paid by the Auction Agent to the Holders of such
shares of such series will be determined by the Trust as set forth in Section 2
of Part I of Section 12.1 of the Bylaws with respect to such series. The
Redemption Price of any shares to be paid by the Auction Agent to the Holders
will be determined by the Trust as set forth in Section 11 of Part I of Section
12.1 of the Bylaws with respect to such series. The Trust shall notify the
Auction Agent in writing of a decision to redeem shares of any series of
Municipal Preferred at least five days prior to the date a Notice of Redemption
is required to be mailed to the Holders of the shares to be redeemed by
paragraph (c) of Section 11 of Part I of Section 12.1 of the
17
15
Bylaws. Such notice by the Trust to the Auction Agent shall contain the
information required by paragraph (c) of Section 11 of Part I of Section 12.1 of
the Bylaws to be stated in the Notice of Redemption required to be mailed by the
Trust to such Holders.
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Stock or Shares Certificates.
Upon the Date of Original Issue of each series of Municipal
Preferred, one or more certificates representing all of the shares of such
series issued on such date shall be issued by the Trust and, at the request of
the Trust, registered in the name of Cede & Co.
and countersigned by the Auction Agent.
4.2 Registration of Transfer of Shares.
Shares of each series of Municipal Preferred shall be
registered solely in the name of the Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares.
All requests for removal of legends on shares of Municipal
Preferred of any series indicating restrictions on transfer shall be accompanied
by an opinion of counsel stating that such legends may be removed and such
shares freely transferred, such opinion to be delivered under cover of a letter
from a Trust Officer authorizing the Auction Agent to remove the legend on the
basis of said opinion.
4.4 Lost Stock or Share Certificates.
The Auction Agent shall issue and register replacement
certificates for certificates represented to have been lost, stolen or destroyed
upon the fulfillment of such requirements as shall be deemed appropriate by the
Trust and the Auction Agent, subject at all times to provisions of law, the
Bylaws of the Trust governing such matters and resolutions adopted by the Trust
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 Trust 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 Trust to the Auction Agent that such issuance will comply with such
provisions of law and the Bylaws and resolutions of the Trust.
4.5 Disposition of Cancelled Certificates;
18
16
Record Retention.
The Auction Agent shall retain all stock or share certificates
which have been cancelled in transfer or exchange and all accompanying
documentation in accordance with applicable rules and regulations of the
Securities and Exchange Commission for two calendar years. Upon the expiration
of this two-year period, the Auction Agent shall deliver to the Trust the
cancelled certificates and accompanying documentation. The Trust shall also
undertake to furnish to the Securities and Exchange Commission and to the Board
of Governors of the Federal Reserve System, upon demand, at either the principal
office or at any regional office, complete, correct and current hard copies of
any and all such records. Thereafter such records shall not be destroyed by the
Trust without the concurrence of the Auction Agent.
4.6 Stock or Record Books.
For so long as the Auction Agent is acting as the transfer
agent for any series of Municipal Preferred pursuant to the Agreement, it shall
maintain a stock or record book containing a list of the Holders of the shares
of Municipal Preferred of each such series. In case of any request or demand for
the inspection of the stock or record books of the Trust or any other books in
the possession of the Auction Agent, the Auction Agent will notify the Trust and
secure instructions as to permitting or refusing such inspection. The Auction
Agent reserves the right, however, to exhibit the stock or record books or other
books to any Person 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
Trust for any reason, including but not limited to redemption of shares of
Municipal Preferred of any series, that remain unpaid after ninety days shall be
repaid to the Trust upon the written request of the Trust, together with
interest, if any, earned thereon.
5. Representations and Warranties of the Trust.
The Trust represents and warrants to the Auction Agent that:
(a) the Trust is a duly organized and existing business trust
in good standing under the laws of the State of its incorporation or
organization and has full corporate power or all requisite power to
execute and deliver the Agreement and to authorize, create and issue
the shares of Municipal Preferred of each series, and the shares of
Municipal Preferred of each series when issued, will be duly
authorized, validly issued, fully paid and nonassessable;
(b) the Agreement has been duly and validly authorized,
executed and delivered by the Trust and constitutes the legal, valid
and binding obligation of the Trust;
19
17
(c) the form of the certificate evidencing the shares of
Municipal Preferred of each series complies or will comply with all
applicable laws of the State of its incorporation or organization;
(d) when issued, the shares of Municipal Preferred of each
series will have been duly registered under the Securities Act of 1933,
as amended, and no further action by or before any governmental body or
authority of the United States or of any state thereof is required in
connection with the execution and delivery of the Agreement or will
have been required in connection with the issuance of the shares of
Municipal Preferred of each series;
(e) the execution and delivery of the Agreement and the
issuance and delivery of the shares of Municipal Preferred of each
series do not and will not conflict with, violate or result in a breach
of the terms, conditions or provisions of, or constitute a default
under, the Agreement and Declaration of Trust (as amended to date) or
the Bylaws of the Trust, any law or regulation, any order or decree of
any court or public authority having jurisdiction, or any mortgage,
indenture, contract, agreement or undertaking to which the Trust is a
party or by which it is bound the effect of which conflict, violation,
default or breach would be material to the Trust or the Trust and its
subsidiaries taken as a whole; and
(f) no taxes are payable upon or in respect of the execution
of the Agreement or the issuance of the shares of Municipal Preferred
of any series.
6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any Person, other than the
Trust, by reason of the Agreement.
(b) The Auction Agent undertakes to perform such duties and
only such duties as are specifically set forth in the Agreement, and no
implied covenants or obligations shall be read into the Agreement
against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered, or
omitted or for any error of judgment made by it in the performance of
its duties under the Agreement. 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.
20
18
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
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 hereby which the Auction Agent believes in
good faith to have been given by the Trust or by a Broker-Dealer. The
Auction Agent may record telephone communications with the Trust or
with the Broker-Dealers or 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.
6.3 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity
or adequacy of the Agreement, the Broker-Dealer Agreements or the shares of
Municipal Preferred 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.
6.4 Compensation, Expenses and Indemnification.
(a) The Trust shall pay the Auction Agent from time to time
reasonable compensation for all services rendered by it under the
Agreement and the Broker-Dealer Agreements.
(b) The Trust shall reimburse the Auction Agent upon its
request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Auction Agent in accordance with any
provision of the Agreement and the Broker-Dealer Agreements (including
the reasonable compensation and the
21
19
expenses and disbursements of its agents and counsel), except any
expense or disbursement attributable to its negligence or bad faith.
(c) The Trust 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.
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of the Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Trust may terminate the
Agreement at any time by so notifying the Auction Agent, provided that
the Trust has entered into an agreement in substantially the form of
the Agreement with a successor Auction Agent. The Auction Agent may
terminate the Agreement upon written notice to the Trust on the date
specified in such notice, which date shall be no earlier than 45 days
after the date of delivery of such notice.
(b) Except as otherwise provided in this paragraph (b), the
respective rights and duties of the Trust and the Auction Agent under
the Agreement with respect to any series of Municipal Preferred shall
cease upon termination of the Agreement with respect to such series.
The Trust's representations, warranties, covenants and obligations to
the Auction Agent under Sections 5 and 6.4 hereof shall survive the
termination of the Agreement with respect to any series of Municipal
Preferred. Upon termination of the Agreement with respect to any series
of Municipal Preferred, the Auction Agent shall, at the Trust's
request, promptly deliver to the Trust copies of all books and records
maintained by it with respect to Municipal Preferred in connection with
its duties hereunder.
7.2 Communications.
Except for (i) communications authorized to be by telephone
pursuant to the Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party, addressed to it, at its address or telecopy number set forth below:
If to the Trust, [Name of Trust]
One Financial Center
22
20
Boston, MA 02111
Attention:
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Auction Agent, to the address or telecopy
number set forth in the
Request and Acceptance Letter,
or such other address or telecopy number as such party may hereafter 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 Trust by a Trust Officer and on
behalf of the Auction Agent by telephone (confirmed by telecopy or in writing)
by an Authorized Officer.
7.3 Entire Agreement.
The Agreement contains the entire agreement between the
parties relating to, and superseding any prior agreement between the parties
relating to, the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof except for agreements
relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person,
other than the Trust, the Auction Agent and their respective successors and
assigns, any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) The Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part,
except by a written instrument signed by a duly authorized
representative of the party to be charged.
(b) Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party
shall not constitute a waiver of any such right or remedy with respect
to any subsequent breach.
7.6 Successors and Assigns.
The Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and assigns of each of the
Trust and the Auction Agent.
23
21
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 Governing Law.
The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
If the Trust is a Massachusetts business trust, the following
provision is deemed to be included in the Basic Terms:
7.9 Declaration of Trust.
The Trust's Agreement and Declaration of Trust (as amended) is
on file with the Secretary of the Commonwealth of Massachusetts. This Agreement
has been executed on behalf of the Trust by the Vice President and Treasurer of
the Trust acting in such capacity and not individually, and the obligations of
the Trust set forth in this Agreement are not binding upon any of the Trust's
trustees, officers or shareholders individually, but are binding only upon the
assets and property of the Trust.
24
EXHIBIT A
FORM OF
BROKER-DEALER AGREEMENT
25
EXHIBIT B
SETTLEMENT PROCEDURES
26
EXHIBIT C
[NAME OF TRUST]
NOTICE OF AUCTION DATE FOR
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
("Municipal Preferred")
NOTICE IS HEREBY GIVEN that the Auction Date of the next Auction
for Series __ of the Trust's Municipal Preferred is scheduled to be
____________, 19__ and the next Dividend Payment Date for Series __ of the
Trust's Municipal Preferred will be _____________, 19__.
[A Failure to Deposit in respect of the Series __ Municipal
Preferred currently exists. If, prior to 12:00 noon, New York City time, on the
fourth Business Day preceding the next scheduled Auction Date of the Series __
Municipal Preferred, such Failure to Deposit is not cured or the applicable Late
Charge is not paid, the next Auction will not be held. Notice of the next
Auction for the Series __ Municipal Preferred will be delivered when such
Failure to Deposit is cured and the applicable Late Charge is paid.(1/)]
[NAME OF TRUST]
--------
(1/) Include this language if a Failure to Deposit exists.
27
EXHIBIT D
[NAME OF TRUST]
NOTICE OF PROPOSED CHANGE OF
LENGTH OF RATE PERIOD OF
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED STOCK [SHARES]
("Municipal Preferred")
[Name of Trust] (the "Trust") may exercise its option to designate
the Rate Period of its Series __ Municipal Preferred commencing [the first day
of the Special Rate Period] as a Special Rate Period.
By 11:00 A.M., New York City time, on the second Business Day
preceding the first day of such proposed Special Rate Period, the Trust will
notify _________________ of either (a) its determination to exercise such
option, designating the length of such Special Rate Period for such series or
(b) its determination not to exercise such option.
[NAME OF TRUST]
Dated:__________, 19__
28
EXHIBIT E
[NAME OF TRUST]
NOTICE OF CHANGE OF LENGTH OF RATE PERIOD
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
("Municipal Preferred")
NOTICE IS HEREBY GIVEN that [NAME OF TRUST] (the "Trust") has
determined to designate the Rate Period of its Series __ Municipal Preferred
commencing on [the first day of the Special Rate Period] as a Special Rate
Period.
The Special Rate Period will be __________ [Rate Period Days].
The Auction Date for the Special Rate Period is [the Business Day
next preceding the first day of such Special Rate Period].
As a result of the Special Rate Period designation, the amount of
dividends payable on Series __ Municipal Preferred during the Special Rate
Period will be based on a 360-day year.
The Special Rate Period shall not commence if (a) an Auction for
shares of Municipal Preferred shall not be held on such Auction Date for any
reason or (b) an Auction for shares of Municipal Preferred shall be held on such
Auction Date but Sufficient Clearing Bids for such shares shall not exist in
such Auction.
The scheduled Dividend Payment Dates for such series of Municipal
Preferred during such Special Rate Period will be ___________________.
[Special Redemption Provisions, if any]
Attached hereto is a Municipal Preferred Basic Maintenance Report
showing that, as of the third Business Day next preceding such proposed Special
Rate Period, Moody's Eligible Assets (if ▇▇▇▇▇'▇ is rating such shares of
Municipal Preferred) and S&P Eligible Assets (if S&P is rating such shares of
Municipal Preferred) each have an aggregate Discounted Value at least equal to
the Municipal Preferred Basic Maintenance Amount as of such Business Day
(assuming for purposes of the foregoing calculation that (i) the Maximum Rate is
the Maximum Rate on such Business Day as if such Business Day were the Auction
Date for the proposed Special Rate Period, and (ii) the Moody's Discount
29
2
Factors applicable to Moody's Eligible Assets are determined by reference to the
first Moody's Exposure Period longer than the Moody's Exposure Period then
applicable to the Trust.)
[NAME OF TRUST]
Dated:_________________, 19____
30
EXHIBIT F
[NAME OF TRUST]
NOTICE OF DETERMINATION NOT TO CHANGE
LENGTH OF RATE PERIOD OF
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
("Municipal Preferred")
NOTICE IS HEREBY GIVEN that [NAME OF TRUST] (the "Trust") has
determined not to exercise its option to designate a Special Rate Period of its
Series __ Municipal Preferred and the next succeeding Rate Period of such series
will be a Minimum Rate Period of ___ Rate Period Days.
[NAME OF TRUST]
Dated: ______________, 19____
31
EXHIBIT G
[NAME OF TRUST]
NOTICE OF CURE OF
FAILURE TO DEPOSIT ON
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
("Municipal Preferred")
NOTICE IS HEREBY GIVEN that [NAME OF TRUST] (the "Trust") has cured
its Failure to Deposit and paid the applicable Late Charge with respect to its
Series __ Municipal Preferred. The dividend rate on the shares of Series __
Municipal Preferred for the current Dividend Period is ____% per annum, the
Dividend Payment Date for the current Dividend Period is scheduled to be
__________, 19__ and the next Auction Date is scheduled to be __________, 19__.
[NAME OF TRUST]
Dated: ______________, 19____
32
EXHIBIT H
[NAME OF TRUST]
NOTICE OF CURE OF
FAILURE TO DEPOSIT ON
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
("Municipal Preferred")
NOTICE IS HEREBY GIVEN that [NAME OF TRUST] (the "Trust") has cured
its Failure to Deposit and paid the applicable Late Charge with respect to its
Series __ Municipal Preferred. The next Auction Date for the Series __ Municipal
Preferred is scheduled to be on ______________19___.
[NAME OF TRUST]
Dated: ________________, 19___
33
EXHIBIT I
[NAME OF TRUST]
NOTICE OF
[CAPITAL GAINS] [AND] [TAXABLE ORDINARY INCOME](1/)
DIVIDEND FOR
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
("Municipal Preferred")
NOTICE IS HEREBY GIVEN that the amount of the dividend payable on
_______________, 19__ for Series __ of the Trust's Municipal Preferred will be
determined by the Auction to be held on _____________, 19__. Up to [$ A ](2/)
[$B ](3/) per share of the dividend payable on such date as determined by such
Auction will consist of [capital gains](2/) [ordinary income taxable for Federal
income tax purposes](3/). If the dividend amount payable on such date as
determined by such Auction is less than [$ A ](2/) [$ B ](3/) per share, the
entire amount of the dividend will consist of [capital gains](2/) [ordinary
income taxable for Federal income tax purposes](3/). [To the extent such
dividend amount exceeds [$ A ] per share, any excess up to [$ B ] per share will
consist of ordinary income taxable for Federal income tax purposes.](4/)
Accordingly, the aforementioned composition of the dividend payable on
_______________, 19__ should be considered in determining Orders to be submitted
with respect to the Auction to be held on _______________, 19___. The Rate
Multiple in effect for such Auction will be ____%.
[NAME OF TRUST]
--------
(1/) Include language with respect to capital gains, taxable ordinary income
or both, depending on the character of the designation to be made with
respect to the dividend(s).
(2/) Include bracketed material if a portion of the dividend will be
designated capital gains.
(3/) Include bracketed material if a portion of the dividend will be
designated ordinary income taxable for Federal income tax purposes and
no portion of the dividend will be designated capital gains.
(4/) Include bracketed material if a portion of the dividend will be
designated capital gains and a portion will be designated ordinary
income taxable for Federal income tax purposes.
34
2
(Footnotes continued)
A = the maximum amount of capital gains allocated to such series of
Municipal Preferred to be included in such dividend, divided by the
number of shares of Municipal Preferred.
B = the maximum amount of ordinary income taxable for Federal income tax
purposes allocated to such series of Municipal Preferred to be included
in such dividend, divided by the number of shares in such series.