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EXHIBIT 2(k)(1)
AUCTION AGENT AGREEMENT
between
▇▇▇▇▇▇ STRATEGIC MUNICIPAL INCOME TRUST
and
BANKERS TRUST COMPANY
Dated as of _________, 1999
Relating to
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES
of
▇▇▇▇▇▇ STRATEGIC MUNICIPAL INCOME TRUST
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TABLE OF CONTENTS
Page
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I. DEFINITIONS AND RULES OF CONSTRUCTION................................................................... 1
1.1 Terms Defined by Reference to the Certificate......................................................... 1
1.2 Terms Defined Herein.................................................................................. 1
1.3 Rules of Construction................................................................................. 2
II. THE AUCTION............................................................................................. 2
2.1 Purpose; Incorporation by Reference of Auction Procedures
and Settlement Procedures............................................................................. 2
2.2 Preparation for Each Auction; Maintenance of Registry of Existing Holders............................. 3
2.3 Auction Schedule...................................................................................... 6
2.4 Notice of Auction Results............................................................................. 6
2.5 Broker-Dealers........................................................................................ 6
2.6 Ownership of Shares of Municipal Preferred and Submission of Bids by the Trust and its Affiliates..... 7
2.7 Access to and Maintenance of Auction Records.......................................................... 7
III. THE AUCTION AGENT AS PAYING AGENT....................................................................... 8
3.1 The Paying Agent...................................................................................... 8
3.2 The Trust's Notices to the Paying Agent............................................................... 8
3.3 The Trust to Provide Funds for Dividends, Redemptions and Additional Dividends........................ 8
3.4 Disbursing Dividends, Redemption Price and Additional Dividends....................................... 9
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR........................................................ 9
4.1 Original Issue of Stock Certificates.................................................................. 9
4.2 Registration of Transfer or Exchange of Shares........................................................ 9
4.3 Removal of Legend..................................................................................... 10
4.4 Lost, Stolen or Destroyed Stock Certificates.......................................................... 10
4.5 Disposition of Canceled Certificates; Record Retention................................................ 10
4.6 Stock Register........................................................................................ 11
4.7 Return of Funds....................................................................................... 11
V. REPRESENTATIONS AND WARRANTIES.......................................................................... 11
5.1 Representations and Warranties of the Trust........................................................... 11
5.2 Representations and Warranties of the Auction Agent................................................... 12
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VI. THE AUCTION AGENT....................................................................................... 12
6.1 Duties and Responsibilities........................................................................... 12
6.2 Rights of the Auction Agent........................................................................... 13
6.3 Compensation, Expenses and Indemnification............................................................ 13
VII. MISCELLANEOUS........................................................................................... 14
7.1 Term of Agreement..................................................................................... 14
7.2 Communications........................................................................................ 14
7.3 Entire Agreement...................................................................................... 15
7.4 Benefits.............................................................................................. 15
7.5 Amendment; Waiver..................................................................................... 15
7.6 Successors and Assigns................................................................................ 15
7.7 Severability.......................................................................................... 16
7.8 Execution in Counterparts............................................................................. 16
7.9 Governing Law......................................................................................... 16
7.10 Limitation of Liability............................................................................... 16
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THIS AUCTION AGENT AGREEMENT, dated as of ________, 1999, is
between ▇▇▇▇▇▇ STRATEGIC MUNICIPAL INCOME TRUST (the "Trust") and BANKERS TRUST
COMPANY, a New York banking corporation.
The Trust proposes to issue one series of preferred shares of
beneficial interest (2,800 shares of Series T), par value $.01 per share,
liquidation preference $25,000 per share, designated Municipal Auction Rate
Cumulative Preferred Shares (the "Municipal Preferred"), pursuant to the Trust's
Certificate. The Trust desires that Bankers Trust Company perform certain duties
as agent in connection with each Auction of shares of Municipal Preferred (in
such capacity, the "Auction Agent"), and as the transfer agent, registrar,
dividend disbursing agent and redemption agent with respect to the shares of
Municipal Preferred (in such capacity, the "Paying Agent"), upon the terms and
conditions of this Agreement, and the Trust hereby appoints Bankers Trust
Company as said Auction Agent and Paying Agent in accordance with those terms
and conditions (hereinafter generally referred to as the "Auction Agent," except
in Sections 3 and 4 below).
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the Trust and the Auction Agent agree as
follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Certificate.
Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.
1.1 Terms Defined Herein.
As used herein and in the Settlement Procedures (as defined below), the
following terms shall have the following meanings, unless the context otherwise
requires:
(a) "Affiliate" shall mean any Person made known to the Auction Agent to
be controlled by, in control of, or under common control with, the Trust or its
successors.
(b) "Agent Member" of any Person shall mean such Person's agent member of
the Securities Depository that will act on behalf of a Bidder.
(c) "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 Certificate.
(e) "Authorized Officer" shall mean each Managing Director, Vice
President, Assistant Vice President, Assistant Treasurer and Assistant Secretary
of the Auction Agent and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes hereof in a written
communication from the Auction Agent to the Trust.
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(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) "Certificate" shall mean the Certificate of Designation for Preferred
Shares of the Trust dated _______ ____, 1999 specifying the powers, preferences
and rights of the shares of Municipal Preferred.
(h) "Holder" shall be a holder of record of one or more shares of
Municipal Preferred, listed as such in the share register maintained by the
Paying Agent pursuant to Section 4.6 hereof.
(i) "Settlement Procedures" shall mean the Settlement Procedures attached
as Exhibit C to the Trust's Statement of Additional Information.
(j) "Trust 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 Trust and every other
officer or employee of the Trust designated as a "Trust Officer" for purposes
hereof in a notice from the Trust to the Auction Agent.
1.2 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural number
and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of similar
import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
II. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement
Procedures.
(a) The Certificate provides that the Applicable Rate on shares of each
series of Municipal Preferred, as the case may be, for each Dividend Period
therefor after the initial Dividend Period shall be the rate per annum that a
commercial bank, trust company or other financial institution appointed by the
Trust advises results from implementation of the Auction Procedures. The Board
of Trustees of the Trust has adopted a resolution appointing Bankers Trust
Company as Auction Agent for purposes of the Auction Procedures. The Auction
Agent hereby accepts such appointment and agrees that, on each Auction Date, it
shall follow the
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procedures set forth in this Section 2 and the Auction Procedures for the
purpose of determining the Applicable Rate for the Municipal Preferred for the
next Dividend Period therefor. Each periodic operation of such procedures is
hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and in the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part hereof to the same extent as if such provisions
were set forth fully herein.
2.2 Preparation for Each Auction; Maintenance of Registry of Existing Holders.
(a) Pursuant to Section 2.5 hereof, the Trust shall not designate any
Person to act as a Broker-Dealer without the prior written approval of the
Auction Agent (which approval shall not be withheld unreasonably). As of the
date hereof, the Trust shall provide the Auction Agent with a list of the
Broker-Dealers previously approved by the Auction Agent and shall cause to be
delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by each such Broker-Dealer. The Auction Agent
shall keep such list current and accurate and shall indicate thereon, or on a
separate list, the identity of each Existing Holder, if any, whose most recent
Order was submitted by a Broker-Dealer on such list and resulted in such
Existing Holder continuing to hold or purchase shares of Municipal Preferred.
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 Trust 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 Trust shall cause to be delivered to the
Auction Agent for execution by the Auction Agent a Broker-Dealer Agreement
signed by such Broker-Dealer. The Auction Agent shall have entered into a
Broker-Dealer Agreement with each Broker-Dealer prior to the participation of
any such Broker-Dealer in any Auction.
(b) In the event that the Auction Date for any Auction shall be changed
after the Auction Agent shall have given the notice referred to in clause (vi)
of Paragraph (a) of the Settlement Procedures, the Auction Agent, by such means
as the Auction Agent deems practicable, shall give notice of such change to the
Broker-Dealers not later than the earlier of 9:15 A.M. on the new Auction Date
or 9:15 A.M. on the old Auction Date.
(c) The provisions contained in Section 4 of Part I of the Certificate
concerning Special Rate Periods and the notification of a Special Rate Period
will be followed by the Trust 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) Except as otherwise provided in Section 4 of Part I of the
Certificate, whenever the Trust intends to include any net capital gain or other
income taxable for Federal income tax purposes in any dividend on shares of
Municipal Preferred, the Trust will notify the Auction Agent of the amount to be
so included not later than the Dividend Payment Date next preceding the Auction
Date on which the Applicable Rate for such dividend is to be established.
Whenever the Auction Agent receives such notice from the Trust, it will in turn
notify each Broker-Dealer, who, on or prior to such Auction Date, in accordance
with its Broker-Dealer Agreement, will notify its Beneficial Owners and
Potential Beneficial Owners of shares of
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Municipal Preferred believed by it to be interested in submitting an Order in
the Auction to be held on such Auction Date.
(ii) If the Trust makes a retroactive Taxable Allocation, the
Trust, within 90 days (and generally within 60 days) after the end of its fiscal
year for which a retroactive Taxable Allocation is made, will provide notice
thereof to the Auction Agent and to each Holder (initially the Securities
Depository) during such fiscal year at such Holder's address as the same appears
or last appeared on the stock books of the Trust. The Trust, within 30 days
after such notice is given to the Auction Agent, will pay to the Auction Agent
(who then will distribute to such Holders), out of funds legally available
therefor, a cash amount equal to the aggregate additional dividend with respect
to all retroactive Taxable Allocations made to such Holders during the fiscal
year in question.
(e) (i) On each Auction Date, the Auction Agent shall determine the
Reference Rate and the Maximum Rate. If the Reference Rate is not quoted on an
interest basis but is quoted on a discount basis, the Auction Agent shall
convert the quoted rate to an Interest Equivalent, as set forth in Section 1 of
Part I of the Certificate; 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 Trust as to the
method of such conversion. Not later than 9:30 A.M. on each Auction Date, the
Auction Agent shall notify the Trust and the Broker-Dealers of the Reference
Rate so determined and of the Maximum Rate.
(ii) If the Reference Rate is the applicable "AA" Composite
Commercial Paper Rate and such rate is to be based on rates supplied by
Commercial Paper Dealers and one or more of the Commercial Paper Dealers shall
not provide a quotation for the determination of the applicable "AA" Composite
Commercial Paper Rate, the Auction Agent immediately shall notify the 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 promptly shall advise the Auction Agent of any such
selection. If the Trust does not select any such Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers, then the rates shall be supplied
by the remaining Commercial Paper Dealer or Commercial Paper Dealers.
(iii) If, after the date of this Agreement, there is any
change in the prevailing rating of Municipal Preferred by S&P or Moody's (or
substitute or successor rating agencies), thereby resulting in any change in the
corresponding applicable percentage for the Municipal Preferred, as set forth in
the definition of Maximum Rate (the "Percentage"), the Trust shall notify the
Auction Agent in writing, of such change in the Percentage prior to 9:00 A.M. on
the Auction Date for Municipal Preferred next succeeding such change. The
Percentage for the Municipal Preferred on the date of this Agreement is ______%.
The Auction Agent shall be entitled to rely on the last Percentage of which it
has received notice from the Trust (or, in the absence of such notice, the
Percentage set forth in the preceding sentence) in determining the Maximum Rate
as set forth in Section 2.2(e)(i) hereof.
(f) (i) The Auction Agent shall maintain a current registry of
the Existing Holders of the shares of Municipal Preferred for purposes of each
Auction. The Trust shall use its best
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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 Municipal Preferred, 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 or Holder's transfer of any shares of Municipal
Preferred to another Person.
(ii) In the event of any partial redemption of Municipal
Preferred, upon notice by the Trust to the Auction Agent of such partial
redemption, the Auction Agent promptly shall request the Securities Depository
to notify the Auction Agent of the identities of the Agent Members (and the
respective numbers of shares) from the accounts of which shares have been called
for redemption and the person or department at such Agent Member to contact
regarding such redemption, and at least two Business Days prior to the Auction
preceding the date of redemption, the Auction Agent shall request each Agent
Member so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose shares are to be redeemed) the number
of shares of Municipal Preferred of each such Existing Holder, if any, to be
redeemed by the Trust provided that the Auction Agent has been furnished with
the name and telephone number of a person or department at such Agent Member
from which it is to request such information. In the absence of receiving any
such information with respect to an Existing Holder, from such Existing Holder's
Agent Member or otherwise, the Auction Agent may continue to treat such Existing
Holder as having ownership of the number of shares of Municipal Preferred shown
in the Auction Agent's registry of Existing Holders.
(iii) The Auction Agent shall register a transfer of the
ownership of shares of Municipal Preferred from an Existing Holder to another
Existing Holder, or to another Person if permitted by the Trust, only if (A)
such transfer is made pursuant to an Auction or (B) if such transfer is made
other than pursuant to an Auction, the Auction Agent has been notified of such
transfer in writing in a notice substantially in the form of Exhibit C to the
Broker-Dealer Agreements, by such Existing Holder or by the Agent Member of such
Existing Holder. The Auction Agent is not required to accept any notice of
transfer delivered for an Auction unless it is received by the Auction Agent by
3:00 P.M. on the Business Day next preceding the applicable Auction Date. The
Auction Agent shall rescind a transfer made on the registry of the Existing
Holders of any shares of Municipal Preferred if the Auction Agent has been
notified in writing, in a notice substantially in the form of Exhibit D to the
Broker-Dealer Agreement, by the Agent Member or the Broker-Dealer of any Person
that (i) purchased any shares of Municipal Preferred and the seller failed to
deliver such shares or (ii) sold any shares of Municipal Preferred and the
purchaser failed to make payment to such Person upon delivery to the purchaser
of such shares.
(g) The Auction Agent may request that the Broker Dealers, as set forth
in Section 3.2(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 shares of Municipal Preferred. 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 Trust,
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.
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2.3 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 withheld unreasonably. The
Auction Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.
Time Event
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By 9:30 A.M. Auction Agent advises the Trust and the
Broker-Dealers of the Reference Rate and the
Maximum Rate as set forth in Section
2.2(e)(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 Part II of the
Certificate. Submission deadline is 1:00
P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant
to Section 3(a) of Part II of the
Certificate.
By approximately 3:00 P.M. Auction Agent advises the Trust of the
results of the Auction as provided in
Section 3(b) of Part II of the Certificate.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part
and shares of Municipal Preferred allocated
as provided in Section 4 of Part II of the
Certificate.
Auction Agent gives 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 as set forth in Paragraph (a) of the
Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 12:00 noon on each Auction Date, the Trust shall pay
to the Auction Agent in Federal Funds or similar same-day funds an amount in
cash equal to (i) in the case of any Auction Date immediately preceding a 7-day
Dividend Period, the product of (A) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (B) -1/4 of 1%, times (C) $25,000 times (D) the sum of the
aggregate number of outstanding shares of Municipal Preferred for which the
Auction is conducted and (ii) in the case of any Special Rate Period, the amount
determined by mutual consent of the Trust 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
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Broker-Dealer Agreements and shall thereafter remit to the Trust any remaining
funds paid to the Auction Agent pursuant to this Section 2.5(a).
(b) The Trust shall not designate any Person to act as a Broker-Dealer,
or permit an Existing Holder or a Potential Beneficial Owner to participate in
Auctions through any Person other than a Broker-Dealer, without the prior
written approval of the Auction Agent, which approval shall not be withheld
unreasonably. The Trust may designate an Affiliate or ________________ 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 Trust.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from time to
time shall enter into such Broker-Dealer Agreements as the Trust shall request.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6 Ownership of Shares of Municipal Preferred and Submission of Bids by
the Trust and its Affiliates.
Neither the Trust nor any Affiliate of the Trust may submit any Sell
Order or Bid, directly or indirectly, in any Auction, except that an Affiliate
of the Trust that is a Broker-Dealer may submit a Sell Order or Bid on behalf of
a Beneficial Owner or a Potential Beneficial Owner. The Trust shall notify the
Auction Agent if the Trust or, to the best of the Trust's knowledge, any
Affiliate of the Trust becomes a Beneficial Owner of any shares of Municipal
Preferred. Any shares of Municipal Preferred redeemed, purchased or otherwise
acquired (i) by the Trust shall not be reissued, except in accordance with the
requirements of the Securities Act of 1933, as amended, or (ii) by its
Affiliates shall not be transferred (other than to the Trust). 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 Trust, its agents, independent
public accountants and counsel, access at reasonable times during normal
business hours to review and make extracts or copies (at the Trust's sole cost
and expense) of all books, records, documents and other information concerning
the conduct and results of Auctions, provided that any such agent, accountant or
counsel shall furnish the Auction Agent with a letter from the Trust requesting
that the Auction Agent afford such person access. The Auction Agent shall
maintain records relating to any Auction for a period of at least two years
after such Auction (unless requested by the Trust to maintain such records for
such longer period not in excess of four years, then for such longer period),
and such records, in reasonable detail, shall accurately and fairly reflect the
actions taken by the Auction Agent hereunder. The Trust agrees to keep
confidential any information regarding the customers of any Broker-Dealer
received from the Auction Agent in connection with this Agreement or any
Auction, and shall not disclose such information or permit the disclosure of
such information without the prior written consent of the applicable
Broker-Dealer to anyone except such agent, accountant or counsel engaged to
audit or review the results of Auctions as
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permitted by this Section 2.7, provided that the Trust reserves the right to
disclose any such information if it is advised by its counsel that its failure
to do so would (i) be unlawful or (ii) expose it to liability, unless the
Broker-Dealer shall have offered indemnification satisfactory to the Trust. Any
such agent, accountant or counsel, before having access to such information,
shall agree to keep such information confidential and not to disclose such
information or permit disclosure of such information without the prior written
consent of the applicable Broker-Dealer, provided that such agent, accountant or
counsel may reserve the right to disclose any such information if it is advised
by its counsel that its failure to do so would (i) be unlawful or (ii) expose it
to liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to such agent, accountant or counsel.
III. THE AUCTION AGENT AS PAYING AGENT.
3.1 The Paying Agent.
The Board of Trustees of the Trust has adopted a resolution appointing
Bankers Trust Company as transfer agent, registrar, dividend disbursing agent
and redemption agent for the Trust in connection with any shares of Municipal
Preferred (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 Certificate which are specified herein with
respect to the shares of Municipal Preferred and as set forth in this Section 3.
3.2 The Trust's Notices to the Paying Agent.
Whenever any shares of Municipal Preferred are to be redeemed, the
Trust promptly shall deliver to the Paying Agent a Notice of Redemption, which
will be mailed by the Paying Agent to each Holder at least five Business Days
prior to the date such Notice of Redemption is required to be mailed pursuant to
the Certificate. The Paying Agent shall have no responsibility to confirm or
verify the accuracy of any such Notice.
3.3 The Trust to Provide Funds for Dividends, Redemptions and Additional
Dividends.
(a) Not later than noon on each Dividend Payment Date, the Trust shall
deposit with the Paying Agent an aggregate amount of Federal Funds or similar
same-day funds equal to the declared dividends to be paid to Holders on such
Dividend Payment Date, and shall give the Paying Agent irrevocable instructions
to apply such funds to the payment of such dividends on such Dividend Payment
Date.
(b) If the Trust shall give a Notice of Redemption, then by noon of the
date fixed for redemption, the Trust shall deposit in trust with the Paying
Agent an aggregate amount of Federal Funds or similar same-day funds sufficient
to redeem such shares of Municipal Preferred called for redemption and shall
give the Paying Agent irrevocable instructions and authority to pay the
redemption price to the Holders of shares of Municipal Preferred called for
redemption upon surrender of the certificate or certificates therefor.
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3.4 Disbursing Dividends, Redemption Price and Additional Dividends.
After receipt of the Federal Funds or similar same-day funds and
instructions from the Trust 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 shares of Municipal
Preferred, (ii) on any date fixed for redemption, the redemption price of any
shares of Municipal Preferred called for redemption and (iii) on the date fixed
for payment of an additional dividend, such additional dividend. The amount of
dividends for any Dividend Period to be paid by the Paying Agent to Holders will
be determined by the Trust as set forth in Section 2 of Part I of the
Certificate. The redemption price to be paid by the Paying Agent to the Holders
of any shares of Municipal Preferred called for redemption will be determined as
set forth in Section 11 of Part I of the Certificate. The amount of additional
dividends to be paid by the Paying Agent in the event of a retroactive Taxable
Allocation to Holders will be determined by the Trust pursuant to Section 3 of
Part I of the Certificate. The Trust shall notify the Paying Agent in writing of
a decision to redeem any shares of Municipal Preferred on or prior to the date
specified in Section 3.2 above, and such notice by the Trust to the Paying Agent
shall contain the information required to be stated in a Notice of Redemption
required to be mailed by the Paying Agent to such Holders. The Paying Agent
shall have no duty to determine the redemption price and may rely on the amount
thereof set forth in a Notice of Redemption.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Original Issue of Stock Certificates.
On the Date of Original Issue for any share of Municipal Preferred, one
certificate for each series, if any, of Municipal Preferred shall be issued by
the Trust and registered in the name of Cede & Co., as nominee of the Securities
Depository, and countersigned by the Paying Agent. The Trust will give the
Auction Agent prior written notice and instruction as to the issuance and
redemption of Municipal Preferred.
4.2 Registration of Transfer or Exchange of Shares.
Except as provided in this Section 4.2, the shares of each series of
Municipal Preferred, if any, 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 Trust shall not have
selected a substitute Securities Depository acceptable to the Paying Agent prior
to such resignation, then upon such resignation, the shares of each series of
Municipal Preferred, if any, at the Trust's request, may be registered for
transfer or exchange, and new certificates thereupon shall be issued in the name
of the designated transferee or transferees, upon surrender of the old
certificate in form deemed by the Paying Agent properly endorsed for transfer
with (a) all necessary endorsers' signatures guaranteed in such manner and form
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 shares of Municipal Preferred
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are not held by the Securities Depository or its nominee, payments upon transfer
of shares in an Auction shall be made in Federal Funds or similar same-day funds
to the Auction Agent against delivery of certificates therefor.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing shares of Municipal Preferred 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 Trust 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 Trust and
by the Paying Agent, subject at all times to provisions of law, the Certificate
governing such matters and resolutions adopted by the Trust 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 Trust 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 Trust to the Paying Agent that such
issuance will comply with provisions of applicable law and the Certificate and
resolutions of the Trust.
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 Trust, shall afford to the Trust,
its agents and counsel access at reasonable times during normal business hours
to review and make extracts or copies (at the Trust's sole cost and expense) of
such certificates and accompanying documentation. Upon request by the Trust at
any time after the expiration of this two-year period, the Paying Agent shall
deliver to the Trust the canceled certificates and accompanying documentation.
The Trust, 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 Trust 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 Trust 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 Trust without
the approval of the Paying Agent, which approval shall not be withheld
unreasonably, but will be safely stored for possible future reference.
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4.6 Stock Register.
The Paying Agent shall maintain the stock register, which shall contain
a list of the Holders, the number of shares held by each Holder and the address
of each Holder. The Paying, Agent shall record in the stock register any change
of address of a Holder upon notice by such Holder. In case of any written
request or demand for the inspection of the stock register or any other books of
the Trust in the possession of the Paying Agent, the Paying Agent will notify
the Trust and secure instructions as to permitting or refusing such inspection.
The Paying Agent reserves the right, however, to exhibit the stock register or
other records to any person in case it is advised by its counsel that its
failure to do so would (i) be unlawful or (ii) expose it to liability, unless
the Trust shall have offered indemnification satisfactory to the Paying Agent.
4.7 Return of Funds.
Any funds deposited with the Paying Agent by the Trust for any reason
under this Agreement, including for the payment of dividends or the redemption
of Municipal Preferred, that remain with the Paying Agent after 12 months shall
be repaid to the Trust upon written request by the Trust.
V. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Trust.
The Trust represents and warrants to the Auction Agent that:
(i) the Trust is duly organized and is validly existing as a
business trust under the laws of the Commonwealth of Massachusetts, and has full
power to execute and deliver this Agreement and to authorize, create and issue
the shares of Municipal Preferred;
(ii) the Trust is registered with the SEC under the Investment
Company Act of 1940, as amended, as a closed-end, non-diversified, management
investment company;
(iii) this Agreement has been duly and validly authorized,
executed and delivered by the Trust and constitutes the legal, valid and binding
obligation of the Trust, enforceable against the Trust in accordance with its
terms, subject as to such enforceability to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equitable principles;
(iv) the form of the certificates evidencing the shares of
Municipal Preferred comply with all applicable laws of the Commonwealth of
Massachusetts;
(v) the shares of Municipal Preferred have been duly and
validly authorized by the Trust and, upon completion of the initial sale of the
shares of Municipal Preferred and receipt of payment therefor, will be validly
issued, fully paid and nonassessable by the Trust;
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(vi) at the time of the offering of the shares of Municipal
Preferred, the shares offered will be registered under the Securities Act of
1933, as amended, and no further action by or before any governmental body or
authority of the United States or of any state thereof is required in connection
with the execution and delivery of this Agreement or will be required in
connection with the issuance of the shares of Municipal Preferred, except such
action as required by applicable state securities laws;
(vii) the execution and delivery of this Agreement and the
issuance and delivery of the shares of Municipal Preferred 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 Amended and Restated Agreement
and Declaration of Trust or the Certificate, any order or decree of any court or
public authority having jurisdiction over the Trust, or any mortgage, indenture,
contract, agreement or undertaking to which the Trust is a party or by which it
is bound; and
(viii) no taxes are payable upon or in respect of the
execution of this Agreement or will be payable upon or in respect of the
issuance of the shares of Municipal Preferred.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Trust that:
(i) the Auction Agent is duly organized and is validly
existing as a banking corporation in good standing under the laws of the State
of New York, and has the corporate power to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal, valid and
binding obligation of the Auction Agent, enforceable against the Auction Agent
in accordance with its terms, subject 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.
VI. 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 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.
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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 Trust or by a Broker-Dealer.
The Auction Agent may record telephone communications with the Trust 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. The Auction Agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Trust.
(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 Trust 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 Trust and the Auction Agent, subject to adjustments if the
Municipal Preferred no longer are held of record by the Securities Depository or
its nominee or if there shall be such other change as shall increase materially
the Auction Agent's obligations hereunder or under the Broker-Dealer Agreements.
(b) The Trust 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 Trust 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.
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VII. MISCELLANEOUS.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Trust may terminate this
Agreement at any time by so notifying the Auction Agent, provided that if any
Municipal Preferred remain outstanding the Trust shall have entered into an
agreement with a successor auction agent. The Auction Agent may terminate this
Agreement upon prior notice to the Trust on the date specified in such notice,
which date shall be no earlier than 60 days after delivery of such notice. If
the Auction Agent resigns while any shares of Municipal Preferred remain
outstanding, the Trust shall use its best efforts to enter into an agreement
with a successor auction agent.
(b) Except as otherwise provided in this Section 7.1(b), the respective
rights and duties of the Trust and the Auction Agent under this Agreement shall
cease upon termination of this Agreement. The Trusts representations,
warranties, covenants and obligations to the Auction Agent under Sections 5 and
6.3 hereof shall survive the termination hereof. Upon termination of this
Agreement, the Auction Agent shall (i) resign as Auction Agent under the
Broker-Dealer Agreements, (ii) at the Trust's request, deliver promptly to the
Trust copies of all books and records maintained by it in connection with its
duties hereunder, and (iii) at the request of the Trust, transfer promptly to
the Trust or to any successor auction agent any funds deposited by the Trust
with the Auction Agent (whether in its capacity as Auction Agent or as Paying
Agent) pursuant to this Agreement which have not been distributed previously by
the Auction Agent in accordance with this Agreement.
7.2 Communications.
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be Given to such
party at its address or telecopier number set forth below:
If to the Trust, ▇▇▇▇▇▇ Strategic Municipal Income Trust
addressed to: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: _________________________
Telephone No.: _____________________
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If to the Auction Agent, Bankers Trust Company
addressed to: Corporate Trust and Agency Group
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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 Trust by a Trust 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 inferred,
between the parties relating to the subject matter hereof, except for agreements
relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the 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) This Agreement shall not be deemed or construed to be modified, amended,
rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged. The Trust shall notify the Auction Agent of any change in the
Certificate prior to the effective date of any such change. If any such change
in the Certificate materially increases the Auction Agent's obligations
hereunder, the Trust shall obtain the written consent to the Auction Agent prior
to the effective date of such change.
(b) Failure of either party hereto to exercise any right or remedy hereunder in
the event of a breach hereof by the other party shall not constitute a waiver of
any such right or remedy with respect to any subsequent breach.
7.6 Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of each of the
Trust 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.
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7.7 Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.9 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said state.
7.10 Limitation of Liability.
The name ▇▇▇▇▇▇ Strategic Municipal Income Trust refers to the
Trust and the Trustees of the Trust, as trustees but not individually or
personally, acting from time to time under the Trust's Amended and Restated
Agreement and Declaration of Trust dated February 27, 1989, as amended, which is
hereby referred to and a copy of which is on file at the office of the Secretary
of the Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of the Trust entered into in the name or on behalf thereof by any of
the Trustees, representatives or agents of the Trust are made not individually,
but in such capacities, and are not binding upon any of the Trustees, officers,
holders of shares of beneficial interest of the Trust or representatives of the
Trustees personally, but bind only the Trust assets, and all persons dealing
with the Trust must look solely to the Trust property for the enforcement of any
claims against the Trust.
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.
▇▇▇▇▇▇ STRATEGIC MUNICIPAL INCOME TRUST
By: _______________________________
Title:
BANKERS TRUST COMPANY
By: _______________________________
Title:
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