Exhibit k(2)
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REAL ESTATE INCOME FUND INC.
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AUCTION AGENCY AGREEMENT
dated as of September __, 2002
Relating to
Taxable Auction Rate Preferred Stock
of
Real Estate Income Fund Inc.
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DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
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This Auction Agency Agreement (this "Agreement"), dated as of
September __, 2002, is between Real Estate Income Fund Inc. (the "Fund") and
Deutsche Bank Trust Company Americas, a New York corporation.
The Fund proposes to issue 2,600 shares of preferred stock, par value
$.001 per share, liquidation preference $25,000 per share, designated as Series
M Taxable Auction Rate Preferred Stock (the "Preferred Shares"), pursuant to the
Fund's Articles Supplementary (as defined below).
The Fund desires that Deutsche Bank Trust Company Americas perform
certain duties as agent in connection with each Auction 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:
1. Definitions and Rules of Construction.
1.1. Terms Defined by Reference to the Articles Supplementary.
Capitalized terms not defined herein shall have the respective
meanings specified in the Articles Supplementary.
1.2. Terms Defined Herein.
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean such Person's agent member
of the Securities Depository that will act on behalf of a Bidder.
(b) "Articles Supplementary" shall mean the Articles Supplementary
Creating and Fixing the Rights of Taxable Auction Rate Preferred Stock filed by
the Fund in the office of the State Department of Assessments and Taxation of
the State of Maryland.
(c) "Auction" shall have the meaning specified in Section 2.1 hereof.
(d) "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Articles Supplementary.
(e) "Authorized Officer" shall mean each Managing 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) "Fund Officer" shall mean the 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 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.
(h) "Holder" shall be a holder of record of one or more Preferred
Shares, listed as such in the share register maintained by the Paying Agent
pursuant to Section 4.6 hereof.
(i) "Interest Equivalent" means a yield on a 360-day basis of a
discount basis security which is equal to the yield on an equivalent
interest-bearing security.
1.3. Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of similar
import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
2. The Auction.
2.1. Purpose; Incorporation by Reference of Auction Procedures.
(a) The Articles Supplementary provide that the Applicable Rate on the
Preferred Shares for each Dividend Period therefore after the initial Dividend
Period shall be the rate per annum that a commercial bank, trust company or
other financial institution appointed by the Fund advises results from the
implementation of the Auction Procedures. The Board of Directors of the Fund has
adopted a resolution appointing Deutsche Bank Trust Company
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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 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 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. Not later than five Business Days prior to
any Auction Date for which any change in such list of Broker-Dealers is to be
effective, the 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, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of such
change to the Broker-Dealers not later than the earlier of 9:15 A.M. on the new
Auction Date or 9:15 A.M. on the old Auction Date.
(c) The provisions contained in Section 4 of Part I of the Articles
Supplementary concerning Special Dividend Periods and the notification of a
Special Dividend 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
`AA' Financial Composite Commercial Paper Rate or the Treasury Index Rate, as
the case may be, and the Maximum Rate. If the `AA' Financial Composite
Commercial Paper Rate or the Treasury Index Rate, as the case may be, is not
quoted on an interest basis but is quoted on a discount basis, the Auction Agent
shall convert the quoted rate to an `interest equivalent', or, if the rate
obtained by the Auction Agent is not quoted on an interest or discount basis,
the Auction Agent shall convert the quoted rate to an interest rate after
consultation with the Fund as to the method of such conversion. Not later than
9:30 A.M. on each Auction Date, the Auction Agent shall
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notify the Fund and the Broker-Dealers of the `AA' Financial Composite
Commercial Paper Rate or the Treasury Index Rate, as the case may be, so
determined and of the Maximum Rate.
(ii) If the `AA' Financial 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
the applicable `AA' Financial Composite Commercial Paper Rate, the Auction Agent
immediately shall notify the Fund so that the Fund can determine whether to
select a substitute Commercial Paper Dealer or substitute Commercial Paper
Dealers to provide the quotation or quotations not being supplied by any
Commercial Paper Dealer or Commercial Paper Dealers. The Fund promptly shall
advise the Auction Agent of any such selection. If the Fund does not select any
such substitute Commercial Paper Dealer or substitute Commercial Paper Dealers,
then the rates shall be supplied by the remaining Commercial Paper Dealer or
Commercial Paper Dealers.
(e) (i) The Auction Agent shall maintain a current registry of the
Existing Holders of the Preferred Shares for purposes of each individual
Auction. The Fund shall use commercially reasonable efforts to provide or cause
to be provided to the Auction Agent within ten Business Days following the date
of the Closing a list of the initial Existing Holders of Preferred Shares, and
the Broker-Dealer of each such Existing Holder through which such Existing
Holder purchased such shares. The Auction Agent may rely upon, as evidence of
the identities of the Existing Holders, such list, the results of each Auction
and notices from any Existing Holder, the Agent Member of any Existing Holder or
the Broker-Dealer of any Existing Holder with respect to such Existing Holder's
transfer of any 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 B to the Broker-Dealer Agreements,
by such Existing Holder or by the Agent Member of such Existing Holder. The
Auction Agent is not required to accept any notice of transfer delivered for an
Auction unless it
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is received by the Auction Agent by 3:00 P.M. on the Business Day next preceding
the applicable Auction Date. The Auction Agent shall rescind a transfer made on
the registry of the Existing Holders of any Preferred Shares if the Auction
Agent has been notified in writing, in a notice substantially in the form of
Exhibit C 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.
The Auction Agent shall conduct Auctions for the Preferred Shares
weekly (usually on Monday) 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 the `AA' Financial
Composite Commercial Paper Rate or the
Treasury Index Rate, as the case may be,
and the Maximum Rate as set forth in
Section 2.2(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 3(a) of Part II of
the Articles Supplementary. Submission
deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent shall make determinations
pursuant to Section 4(a) of Part II of
the Articles supplementary.
By approximately 3:00 P.M. Auction Agent shall advise the Fund of
the results of the Auction as provided
in
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Section 4(b) of Part II of the
Articles Supplementary. 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 5 of
Part II of the Articles Supplementary.
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 shall notify Broker-Dealers of
the results of the Auction held on such date by telephone or through the Auction
Agent's Auction Processing System. 2.5. Broker-Dealers.
(a) Not later than 12:00 noon on each Dividend Payment Date, the Fund
shall pay to the Auction Agent in Federal Funds or similar same-day funds an
amount in cash equal to (i) in the case of any Auction Date immediately
preceding a 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 (calculated
by counting the first day of such Dividend Period but excluding the last day
thereof) and the denominator of which is 360, times (B) 1/4 of 1%, times (C)
$25,000 times (D) the sum of the aggregate number of outstanding Preferred
Shares for which the Auction is conducted and (ii) in the case of any Special
Dividend Period, the amount determined by mutual consent of the Fund and the
Broker-Dealers pursuant to Section 3.5 of the Broker-Dealer Agreements. The
Auction Agent shall apply such moneys as set forth in Section 3.5 of the
Broker-Dealer Agreements and shall thereafter remit to the Fund any remaining
funds paid to the Auction Agent pursuant to this Section 2.5(a).
(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. Notwithstanding the foregoing, the Fund may, without prior written
approval of the Auction Agent, designate an Affiliate or ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. 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.
(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.
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(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6. Ownership of Preferred Shares and Submission of Bids by The Fund and
its Affiliates.
The Fund shall notify the Auction Agent if to the best of the Fund's
knowledge, any Affiliate of the Fund becomes a Beneficial Owner of any Preferred
Shares, except as set forth in the next sentence. An Affiliate of the Fund that
is a Broker-Dealer may submit a Sell Order or Bid on behalf of a Beneficial
Owner or a Potential Beneficial Owner. For purposes of this Section 2.6, a
Broker-Dealer shall not be an affiliate solely because one or more of the
directors or executive officers of the Broker-Dealer or of any person controlled
by, in control of or under common control with such Broker-Dealer is a director
of the Fund. The Auction Agent shall have no duty or liability with respect to
enforcement of this Section 2.6.
2.7. Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Fund, 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 Auction Agent's Services hereunder. The Auction Agent shall maintain records
relating to any Auction for a period of at least two years after such Auction
(unless requested by the Fund to maintain such records for such longer period
not in excess of four years, then for such longer period), and such records, in
reasonable detail, shall accurately and fairly reflect the actions taken by the
Auction Agent hereunder. At the end of such period, if requested in writing, the
Auction Agent shall deliver such records to the Fund. 3. The Auction Agent as
Paying Agent.
3.1. The Paying Agent.
The Board of Directors of the Fund has adopted another resolution
appointing Deutsche Bank Trust Company Americas as auction agent, transfer
agent, dividend paying agent and registrar for the Fund in connection with any
Preferred Shares (in such capacity, the "Paying Agent"). The Paying Agent hereby
accepts such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Articles Supplementary which are specified
herein with respect to the 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 promptly
shall deliver to the Paying Agent a Notice of Redemption, which will be
delivered by the Paying Agent to each Holder within one business day of receipt.
The Paying Agent shall have no responsibility to confirm or verify the accuracy
of any such Notice.
3.3. The Fund to Provide Funds for Dividends and Redemptions.
(a) Not later than noon on each Dividend Payment Date, the Fund shall
deposit with the Paying Agent an aggregate amount of Federal Funds or similar
same-day funds
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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 12:00 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 called 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 therefore.
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 of Part I of the Articles Supplementary. 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 3 of Part I of the
Articles Supplementary. The Paying Agent shall have no duty to determine the
redemption price and may rely on the amount thereof set forth in a Notice of
Redemption.
4. The Paying Agent as Transfer Agent and Registrar.
4.1. Original Issue of Stock Certificates.
On the Date of Original Issue for any share of Preferred Shares, one
certificate for the 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.
Except as provided in this Section 4.2, the Preferred Shares shall be
registered solely in the name of the Securities Depository or its nominee. If
the Securities Depository shall give notice of its intention to resign as such,
and if the Fund shall not have selected a substitute Securities Depository
acceptable to the Paying Agent prior to such resignation, then upon such
resignation the Preferred Shares, at the Fund's request, may be registered for
transfer or exchange, and new certificates thereupon shall be issued in the name
of the designated transferee or transferees, upon surrender of the old
certificate in form deemed by the Paying Agent to be properly endorsed for
transfer with (a) all necessary endorsers' signatures guaranteed in such manner
and form and by such guarantor as the Paying Agent may reasonably require, (b)
such assurances as the Paying Agent shall deem necessary or appropriate to
evidence the genuineness and effectiveness of each necessary endorsement and (c)
satisfactory evidence of compliance with all applicable laws relating to the
collection of taxes in connection with any registration of transfer or exchange
or funds necessary for the payment of such taxes. If the certificate or
certificates for Preferred Shares are not held by the Securities Depository or
its nominee,
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payments upon transfer of shares in an Auction shall be made in Federal Funds or
similar same-day funds to the Auction Agent against delivery of certificates
therefore.
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 Stock Certificates.
The Paying Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed, upon the
fulfillment of such requirements as shall be deemed appropriate by the Fund and
by the Paying Agent, subject at all times to provisions of law, the Articles
Supplementary 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 Articles Supplementary and
resolutions of the Fund.
4.5. Disposition of Canceled Certificates; Record Retention.
The Paying Agent shall retain stock certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Securities and Exchange Commission
(the "SEC") 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 request by the Fund at
any time after the expiration of this two-year period, the Paying Agent shall
deliver to the Fund the canceled certificates and accompanying documentation.
The Fund, at its expense, shall retain such records for a minimum additional
period of at least four calendar years from the date of delivery of the records
to the Fund and shall make such records available during this period at any
time, or from time to time, for reasonable periodic, special, or other
examinations by representatives of the SEC. The Fund also shall undertake to
furnish to the SEC, 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. 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
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remain with the Paying Agent after 12 months shall be repaid to the Fund upon
written request by the Fund.
5. Representations and Warranties.
5.1. Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(i) the Fund is a duly incorporated and validly existing corporation
in good standing under the laws of the State of Maryland, and has full corporate
power to execute and deliver this Agreement and to authorize, create and issue
the Preferred Shares;
(ii) 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 as
to such enforceability to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general equitable principles;
(iii) the form of the certificates evidencing the Preferred Shares
comply with all applicable laws of the State of Maryland;
(iv) when issued, the shares of Preferred Shares 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 this
Agreement or will be required in connection with the issuance of the Preferred
Shares;
(v) 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 Articles of Incorporation (as amended by one or more Articles
Supplementary) or the By-Laws of the Fund, 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 breech would be
material to the Fund, taken as a whole; and
(vi) 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
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(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 as to such enforceability to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equitable principles.
6. The Auction Agent.
6.1. Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund hereunder
and owes no fiduciary duties to any 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.
6.2. Rights of the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any communication authorized hereby and any
written instruction, notice, request, direction, consent, report, certificate,
share certificate or other instrument, paper or document reasonably believed by
it to be genuine. The Auction Agent shall not be liable for acting upon any
telephone communication authorized hereby which the Auction Agent 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
written advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in 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.
6.3. Compensation, Expenses and Indemnification.
(a) The Fund shall pay to the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate writing
signed by the Fund and the Auction Agent,
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subject to adjustments if the Preferred Shares no longer are held of record by
the Securities Depository or its nominee or if there shall be such other change
as shall increase or decrease materially the Auction Agent's obligations
hereunder or under the Broker-Dealer Agreements.
(b) The 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 reasonable compensation, expenses and
disbursements of its agents and counsel), except any expense, disbursement or
advance attributable to its negligence or bad faith.
(c) The Fund shall indemnify the Auction Agent for, and hold it
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Auction Agent arising out of or in connection with
its agency under this Agreement and under the Broker-Dealer Agreements,
including the costs and expenses of defending itself against any claim of
liability in connection with its exercise or performance of any of its duties
hereunder and thereunder, except such as may result from its negligence or bad
faith.
7. Miscellaneous.
7.1. Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate this
Agreement 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;
provided, however, in the event that the Auction Agent has not been paid for its
services, such date shall be no earlier than 30 days after delivery of such
notice.
(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 with respect to Preferred Shares shall cease upon termination of this
Agreement. The Fund's representations, warranties, covenants and obligations to
the Auction Agent under Sections 5 and 6.3 hereof shall survive the termination
of the Agreement. Upon termination of this Agreement, the Auction Agent shall
(i) resign as Auction Agent under the Broker-Dealer Agreements, (ii) at the
Fund's request, deliver promptly to the Fund copies of all books and records
maintained by it in connection with its duties hereunder, and (iii) at the
request of the Fund, transfer promptly to the Fund or to any successor auction
agent any funds deposited by the Fund with the Auction Agent (whether in its
capacity as Auction Agent or as Paying Agent) pursuant to this Agreement which
have not been distributed previously by the Auction Agent in accordance with
this Agreement.
7.2. COMMUNICATIONS.
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other
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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, Real Estate Income Fund Inc.
addressed to: c/o Citi Fund Management Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Auction Agent, Deutsche Bank Trust Company Americas
addressed to: as Auction Agent
▇/▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: Auction Rate Securities
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 the parties hereto.
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(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6. Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of each of the
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 withheld unreasonably.
7.7. Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8. Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.9. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said state.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
REAL ESTATE INCOME FUND INC.
----------------------------------------
By:
Title:
DEUTSCHE BANK TRUST COMPANY AMERICAS
----------------------------------------
By:
Title:
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