XXXX XXXXXXX PREFERRED INCOME FUND
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AUCTION AGENCY AGREEMENT
dated as of [October ], 2002
Relating to
Auction Preferred Shares
Series M, Series T, Series W, Series TH and Series F
of
XXXX XXXXXXX PREFERRED INCOME FUND
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DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of [October
], 2002, is by and between Xxxx Xxxxxxx Preferred Income Fund, a Massachusetts
business trust (the "Trust") and Deutsche Bank Trust Company Americas, a New
York banking corporation.
The Trust proposes to issue an aggregate of 10,400 preferred shares, no
par value per share, liquidation preference $25,000 per share, designated as
Auction Preferred Shares, Series M, Series T, Series W, Series TH and Series F
(collectively, the "Auction Preferred Shares" or "APS"), pursuant to the By-Laws
of the Trust (as defined below).
The Trust desires that Deutsche Bank Trust Company Americas perform
certain duties as agent in connection with each Auction (as defined below) (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 Trust hereby appoints Deutsche Bank Trust Company Americas as
said Auction Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Trust and the Auction Agent agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined By Reference to the By-Laws.
Capitalized terms not defined herein shall have the respective meanings
specified in the By-Laws.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository that will act on behalf of a Bidder.
(b) "Agreement" shall mean the Auction Agency Agreement relating to one
or more series of APS.
(c) "APS" shall mean the preferred shares, Series M, Series T, Series
W, Series TH and Series F, no par value per share, of the Trust designated as
its "Auction Preferred Shares" and bearing such further designation as to series
as the Board of Trustees of the Trust or any committee thereof shall specify.
(d) "Auction" shall have the meaning specified in Section 2.1 hereof.
(e) "Auction Procedures" shall mean the auction procedures constituting
Section 8.9 of the By-Laws.
(f) "Authorized Officer" of the Auction Agent shall mean each Vice
President, Assistant Vice President, and Associate of the Auction Agent assigned
to its Corporate Trust and Agency Group and every other officer or employee of
the Auction Agent designated as an "Authorized Officer" for purposes hereof in a
communication to the Trust.
(g) "Broker-Dealer Agreement" shall mean each agreement between the
Auction Agent and a Broker-Dealer substantially in the form attached hereto as
Exhibit A.
(h) "By-Laws" shall mean the By-Laws of the Trust, as the same may be
amended, supplemented or modified from time to time.
(i) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit B.
(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 Vice President, 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 to the Auction Agent.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of the Agreement:
(a) words importing the singular number shall include the plural number
and vice versa.
(b) the captions and headings herein are solely for convenience of
reference and shall not constitute a part of the Agreement nor shall they affect
its meaning, construction or effect.
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(c) the words "hereof", "herein", "hereto" and other words of similar
import refer to the Agreement as a whole.
(d) all references herein to a particular time of day shall be to New
York City time.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement
Procedures.
(a) The Board of Trustees of the Trust has adopted a resolution
appointing Deutsche Bank Trust Company Americas as Auction Agent for purposes of
the Auction Procedures. The Auction Agent hereby accepts such appointment and
agrees that, on each Auction Date for a series of APS, it shall follow the
procedures set forth in this Section 2 and the Auction Procedures for the
purpose of determining the Applicable Rate for any Subsequent Rate Period of any
series of APS for which the Applicable Rate is to be determined by such auction.
Each periodic operation of such procedures is hereinafter referred to as an
"Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
2.2 Preparation for Each Auction; Maintenance of Registry of Beneficial Owners.
(a) Not later than seven days prior to the first Auction Date for the
first series of APS subject to an Auction, the Trust shall provide the Auction
Agent with a list of the Broker-Dealers. Not later than seven days prior to any
Auction Date for any series of APS for which any change in such list of
Broker-Dealers is to be effective, the Trust will notify the Auction Agent in
writing of such change and, if any such change involves the addition of a
Broker-Dealer to such list, shall cause to be delivered to the Auction Agent for
execution by the Auction Agent a Broker-Dealer Agreement signed by such
Broker-Dealer; provided, however, that if the Trust proposes to designate any
Special Rate Period of any series of APS pursuant to Section 8.4(c) of the
By-Laws, not later than 11:00 A.M. on the Business Day immediately preceding the
Auction immediately preceding the first day of such Rate Period (or by such
later time or date, or both, as may be agreed to by the Auction Agent), the
Trust shall provide the Auction Agent with a list of the Broker-Dealers for such
series and a manually signed copy of each Broker-Dealer Agreement or a new
Schedule A to a Broker-Dealer Agreement (which Schedule A shall replace and
supersede any previous Schedule A to such Broker-Dealer Agreement) with each
Broker-Dealer for such series. The Auction Agent shall have entered into a
Broker-Dealer Agreement with each Broker-Dealer prior to the participation of
any such Broker-Dealer in any Auction.
(b) In the event that any Auction Date for any series of APS shall be
changed after the Auction Agent shall have given the notice referred to in
paragraph (a) of the Settlement Procedures, or after the notice referred to in
Section 2.3 hereof, if applicable, the Auction Agent, by such means as the
Auction Agent deems practicable, shall give notice of such change to the
Broker-Dealers for such series not later than the earlier of either 9:15 A.M. on
the new Auction Date or 9:15 A.M. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a registry of the beneficial
owners of the APS of each series who shall constitute Existing Holders of APS of
such series for purposes of Auctions. The Auction Agent shall indicate thereon
the identity of the respective Broker-Dealer of each Existing Holder on whose
behalf such Broker-Dealer submitted the most recent Order in any Auction which
resulted in such Existing Holder continuing to hold or purchasing APS of such
series. The Auction Agent shall keep such registry current and accurate based on
the information provided to it from time to time by the Broker-Dealer. The Trust
shall provide or cause to be provided to the Auction Agent at or prior to the
Date of Original Issue of the APS of each series a list of the initial Existing
Holders of the shares of each such series of APS, the number of shares purchased
by each such Existing Holder and the respective Broker-Dealer of each such
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Existing Holder or the affiliate thereof through which each such Existing Holder
purchased such shares. The Auction Agent may rely upon, as conclusive evidence
of the identities of the Existing Holders of APS of any series, (A) such list,
(B) the results of Auctions, (C) notices from any Broker-Dealer as described in
the first sentence of Section 2.2(c)(iii) hereof and (D) the results of any
procedures approved by the Trust that have been devised for the purpose of
determining the identities of Existing Holders in situations where APS may have
been transferred without complying with any restrictions on the transfer thereof
as set forth in the Auction Procedures.
(ii) In the event of any partial redemption of any series of APS, the
Auction Agent shall, at least two Business Days prior to the next Auction for
such series, request each Broker-Dealer to provide the Auction Agent with a list
of Persons who such Broker-Dealer believes are Existing Holders after giving
effect to such redemption based upon inquiries of the Persons reflected in such
Broker-Dealer's records as Beneficial Owners as a result of the most recent
Auction and with respect to each such Person, the number of APS of such series
such Broker-Dealer believes are owned by such Person after giving effect to such
redemption. In the absence of receiving any such information from any
Broker-Dealer, the Auction Agent may continue to treat the Persons listed in its
registry of Existing Holders as the beneficial owner of the number of APS of
such series shown in such registry.
(iii) The Auction Agent shall be required to register a transfer of APS
of any series from an Existing Holder of such APS only if such transfer is to
another Existing Holder, or other Person if permitted by the Trust, and only if
such transfer is made (A) pursuant to an Auction, or (B) the Auction Agent has
been notified in writing (I) in a notice substantially in the form of Exhibit B
to the Broker-Dealer Agreements by a Broker-Dealer of such transfer or (II) in a
notice substantially in the form of Exhibit C to the Broker-Dealer Agreements by
the Broker-Dealer of any Existing Holder, or other Person if permitted by the
Trust, that purchased or sold such APS in an Auction of the failure of such APS
to be transferred as a result of such Auction. The Auction Agent is not required
to accept any notice described in clause (B) of the preceding sentence for an
Auction unless the Auction Agent receives it by 3:30 P.M. on the Business Day
preceding such Auction.
(d) The Auction Agent may, but shall have no obligation to, request the
Broker-Dealers, as set forth in the Broker-Dealer Agreements, to provide the
Auction Agent with a list of Persons who such Broker-Dealer believes are
Existing Holders based upon inquiries of those Persons such Broker-Dealer's
records indicate are Beneficial Owners as a result of the most recent Auction
and with respect to each such Person, the number of shares of such series of APS
such Broker-Dealer believes to be owned by such Person. The Auction Agent shall
keep confidential such registry of Existing Holders and shall not disclose the
identities of the Existing Holders of such APS to any Person other than the
Trust and the Broker-Dealer that provided such information; provided, however,
that the Auction Agent reserves the right and is authorized to disclose any such
information if (A) it is ordered to do so by a court of competent jurisdiction
or a regulatory body, judicial or quasi-judicial agency or authority having the
authority to compel such disclosure, (B) it is advised by its counsel that its
failure to do so would be unlawful or (C) failure to do so would expose the
Auction Agent to loss, liability, claim, damage or expense for which it has not
received indemnity or security satisfactory to it.
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 unreasonably withheld. The
Auction Agent shall give written notice of any such change to each
Broker-Dealer. Such notice shall be given prior to the close of business on the
Business Day immediately preceding the first Auction Date on which any such
change shall be effective.
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Time Event
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By 9:30 A.M. Auction Agent advises the Trust and Broker-Dealers of
the applicable Maximum Rate and the "AA" Financial Composite
Commercial Paper Rate used in determining such Maximum Rate
as set forth in Section 2.7 hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information communicated to it by
Broker-Dealers asprovided in Section 8.9(b) of the Auction
Procedures. Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant
to Section 8.9(c) of the Auction Procedures.
By approximately 3:30 P.M. Auction Agent advises Trust of results
of Auction as provided in Section 8.9(c) of the Auction
Procedures.
Submitted Bids and Submitted Sell Orders are accepted and
rejected and APS allocated as provided in Section 8.9(d) of
the Auction Procedures. Auction Agent gives notice of Auction
results as set forth Section 2.4 hereof.
The Auction Agent shall follow the notification procedures set forth in
paragraph (a) of the Settlement Procedures.
2.4 Notice of Auction Results.
The Auction Agent will advise each Broker-Dealer who submitted a Bid or
Sell Order in an Auction whether such Bid or Sell Order was accepted or rejected
in whole or in part and of the Applicable Rate for the next Dividend Period for
the related APS 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 for any series of APS, the
Trust shall pay to the Auction Agent an amount in cash equal to the aggregate
fees payable to the Broker-Dealers for such series pursuant to Section 2.6 of
the Broker-Dealer Agreements for such series. The Auction Agent shall apply such
moneys as set forth in Section 2.6 of each such Broker-Dealer Agreement.
(b) The Trust shall notify the Auction Agent in writing prior to
selecting any Person 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, provided that at least one
Broker-Dealer Agreement would be in effect for each series of APS after such
termination.
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(d) Subject to the Auction Agent's having received notice of the
selection of the relevant Broker-Dealer pursuant to Section 2.5(b) hereof, the
Auction Agent shall from time to time enter into such Broker-Dealer Agreements
with one or more Broker-Dealers as the Trust shall request, and shall enter into
such schedules to any such Broker-Dealer Agreements as the Trust shall request,
which schedules, among other things, shall set forth the series of APS to which
such Broker-Dealer Agreement relates.
2.6 Special Rate Periods.
The provisions contained in Section 8.4(c) of the By-Laws 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.
2.7 Determination of Maximum Rate.
(a) (i) On each Auction Date, the Auction Agent shall determine the
Maximum Rate. If any "AA" Financial Composite Commercial Paper Rate is not
quoted on an interest equivalent basis, the Auction Agent shall convert the
quoted rate to the interest equivalent thereof as set forth in the definition of
such rate in the By-Laws if the rate obtained by the Auction Agent is quoted on
a discount basis, or if such rate is quoted on a basis other than an interest
equivalent or discount basis the Auction Agent shall convert the quoted rate to
an interest equivalent rate after consultation with the Trust as to the method
of such conversion.
(ii) If any "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
such "AA" Financial Composite Commercial Paper Rate, the Auction Agent shall
immediately notify the Trust so that the Trust can determine whether to select a
substitute Commercial Paper Dealer or substitute Commercial Paper Dealers to
provide the quotation or quotations not being supplied by any Commercial Paper
Dealer or Commercial Paper Dealers. The Trust shall promptly advise the Auction
Agent of any such selection.
2.8 Ownership of Shares of APS.
The Trust shall notify the Auction Agent if the Trust or any affiliate
of the Trust acquires any APS of any series. Neither the Trust nor any affiliate
of the Trust shall submit any Order in any Auction for APS, except as set forth
in the next sentence. Any Broker-Dealer that is an affiliate of the Trust may
submit Orders in Auctions, but only if such Orders are not for its own account.
For purposes of this Section 2.8, a Broker-Dealer shall not be deemed to be an
affiliate of the Trust solely because one or more of the directors or executive
officers of such Broker-Dealer or of any Person controlled by, in control of or
under common control with such Broker-Dealer is also a director of the Trust.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 2.8.
2.9 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Trust, its agents, independent
public accountants and counsel and the Broker-Dealers, access at reasonable
times during normal business hours to review and make extracts or copies of all
books, records, documents and other information concerning the conduct and
results of Auctions (at no cost to the Auction Agent), provided that any such
agent, accountant, counsel or Broker-Dealer 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 two years after such Auction, and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder.
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3. The Auction Agent as Dividend and Redemption Price Disbursing Agent.
The Auction Agent, as dividend and redemption price disbursing agent,
shall pay to the Holders of APS of any series (i) on each Dividend Payment Date
for such series, dividends on the APS of such series, (ii) on any date fixed for
redemption of APS of any series, the Redemption Price of any shares of such
series called for redemption and (iii) any Late Charge related to any payment of
dividends or Redemption Price, in each case after receipt of the necessary funds
from the Trust with which to pay such dividends, Redemption Price or Late
Charge. The amount of dividends for any Rate Period for any series of APS to be
paid by the Auction Agent to the Holders of such shares of such series will be
determined by the Trust as set forth in Sections 8.4 and 8.9 of the By-Laws with
respect to such series. The Redemption Price of any shares to be paid by the
Auction Agent to the Holders will be determined by the Trust as set forth in
Sections 8.4, 8.6 and 8.9 of the By-Laws with respect to such series. The Trust
shall notify the Auction Agent in writing of a decision to redeem shares of any
series of APS at least five days prior to the date a notice of redemption is
required to be mailed to the Holders of the shares to be redeemed by Section 8.6
of the By-Laws. Such notice by the Trust to the Auction Agent shall contain the
information required by paragraph (c) of Section 8.6 of the By-Laws to be stated
in the notice of redemption required to be mailed by the Trust to such Holders.
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Stock or Shares Certificates.
Upon the Date of Original Issue of each series of APS, one or more
certificates representing all of the shares of such series issued on such date
shall be issued by the Trust and, at the request of the Trust, registered in the
name of Cede & Co. and countersigned by the Auction Agent.
4.2 Registration of Transfer of Shares.
Shares of each series of APS may be registered solely in the name of
the Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares.
All requests for removal of legends on APS of any series indicating
restrictions on transfer shall be accompanied by an opinion of counsel stating
that such legends may be removed and such shares freely transferred, such
opinion to be delivered under cover of a letter from a Trust Officer authorizing
the Auction Agent to remove the legend on the basis of said opinion.
4.4 Lost Stock or Share Certificates.
The Auction Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed upon the
fulfillment of such requirements as shall be deemed appropriate by the Trust and
the Auction Agent, subject at all times to provisions of law, the Declaration of
Trust and By-Laws governing such matters and resolutions adopted by the Trust
with respect to lost securities. The Auction Agent may issue new certificates in
exchange for and upon the cancellation of mutilated certificates. Any request by
the Trust to the Auction Agent to issue a replacement or new certificate
pursuant to this Section 4.4 shall be deemed to be a representation and warranty
by the Trust to the Auction Agent that such issuance will comply with such
provisions of law and the By-Laws and resolutions of the Trust.
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4.5 Disposition of Cancelled Certificates; Record Retention.
The Auction Agent shall retain all stock or share certificates which
have been cancelled in transfer or exchange and all accompanying documentation
in accordance with applicable rules and regulations of the Securities and
Exchange Commission for two calendar years. The Trust shall also undertake to
furnish to the Securities and Exchange Commission and to the Board of Governors
of the Federal Reserve System, upon demand, at either the principal office or at
any regional office, complete, correct and current hard copies of any and all
such records.
4.6 Stock or Record Books.
For so long as the Auction Agent is acting as the transfer agent for
any series of APS pursuant to the Agreement, it shall maintain a stock or record
book containing a list of the Holders of the APS of each such series. In case of
any request or demand for the inspection of the stock or record books of the
Trust or any other books in the possession of the Auction Agent, the Auction
Agent will notify the Trust and secure instructions as to permitting or refusing
such inspection. The Auction Agent reserves the right, however, to exhibit the
stock or record books or other books to any Person if (a) it is ordered to do so
by a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure, (b) it is advised by its counsel that its failure to do so would be
unlawful or (c) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity or
security satisfactory to it.
4.7 Return of Funds.
Any funds deposited with the Auction Agent hereunder by the Trust for
any reason, including but not limited to redemption of APS of any series, that
remain unpaid after sixty days shall be repaid to the Trust upon the written
request of the Trust.
5. Representations and Warranties.
5.1 Representations and Warranties of the Trust.
The Trust represents and warrants to the Auction Agent that:
(a) the Trust is a duly organized and existing business trust in good
standing under the laws of the State of its organization and has full trust
power or all requisite power to execute and deliver the Agreement and to
authorize, create and issue the APS of each series, and the APS of each series
when issued, will be duly authorized, validly issued, fully paid and
nonassessable;
(b) the Agreement has been duly and validly authorized, executed and
delivered by the Trust and constitutes the legal, valid and binding obligation
of the Trust;
(c) the form of the certificate evidencing the APS of each series
complies or will comply with all applicable laws of the State of its
organization;
(d) when issued, the APS of each series will have been duly registered
under the Securities Act of 1933, as amended, and no further action by or before
any governmental body or authority of the United States or of any state thereof
is required in connection with the execution and delivery of the Agreement or
will have been required in connection with the issuance of APS of each series;
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(e) the execution and delivery of the Agreement and the issuance and
delivery of the APS of each series do not and will not conflict with, violate or
result in a breach of, the terms, conditions or provisions of, or constitute a
default under, the Declaration or the By-Laws of the Trust, any law or
regulation, any order or decree of any court or public authority having
jurisdiction, or any mortgage, indenture, contract, agreement or undertaking to
which the Trust is a party or by which it is bound the effect of which conflict,
violation, default or breach would be material to the Trust or the Trust and its
subsidiaries taken as a whole; and
(f) no taxes are payable upon or in respect of the execution of the
Agreement or the issuance of the APS of any series.
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
New York and has the corporate power to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal,
valid and binding obligation of the Auction Agent, enforceable against
the Auction Agent in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles.
6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust hereunder
and owes no fiduciary duties to any Person, other than the Trust, by reason of
the Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth in the Agreement, and no implied covenants
or obligations shall be read into the Agreement against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered, or omitted or for any
error of judgment made by it in the performance of its duties under the
Agreement. The Auction Agent shall not be liable for any error of judgment made
in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely and shall be protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
in good faith by it to be genuine. The Auction Agent shall not be liable for
acting upon any telephone communication authorized hereby which the Auction
Agent believes in good faith to have been given by the Trust or by a
Broker-Dealer. The Auction Agent may record telephone communications with the
Trust or with the Broker-Dealers or both.
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(b) The Auction Agent may consult with counsel of its choice and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder.
(e) The Auction Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, it being understood that the Auction Agent shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.
6.3 Compensation, Expenses and Indemnification.
(a) The Trust shall pay the Auction Agent an annual fee as compensation
for all services rendered by it under the Agreement and the Broker-Dealer
Agreements as the Trust and the Auction Agent have agreed to from time to time.
(b) The Trust shall reimburse the Auction Agent upon its request for
all reasonable out-of-pocket expenses, disbursements and advances incurred or
made by the Auction Agent in accordance with any provision of the Agreement and
the Broker-Dealer Agreements (including the compensation and the reasonable
expenses and disbursements of its agents (unless such agent is providing a
service for which the Auction Agent is already being compensated by the Trust)
and counsel), except any expense or disbursement attributable to its negligence
or bad faith. In no event shall the Auction Agent be responsible or liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit), even if the Auction Agent has
been advised of the likelihood of such loss or damage and regardless of the form
of action.
(c) The Trust shall indemnify the Auction Agent for and hold it
harmless against any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with its agency under the
Agreement and the Broker-Dealer Agreements, including the costs and expenses of
defending itself against any such claim or liability in connection with its
exercise or performance of any of its duties hereunder and thereunder.
6.4 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or
adequacy of the Agreement, the Broker-Dealer Agreements or the APS of any series
except that the Auction Agent hereby represents that the Agreement has been duly
authorized, executed and delivered by the Auction Agent and constitutes a legal
and binding obligation of the Auction Agent.
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7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of the Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Trust may terminate the
Agreement at any time by so notifying the Auction Agent, provided that the Trust
has entered into an agreement in substantially the form of the Agreement with a
successor Auction Agent. The Auction Agent may terminate the Agreement upon
written notice to the Trust on the date specified in such notice, which date
shall be no earlier than 45 days after the date of delivery of such notice.
(b) Except as otherwise provided in this paragraph (b), the respective
rights and duties of the Trust and the Auction Agent under the Agreement with
respect to any series of APS shall cease upon termination of the Agreement with
respect to such series. The Trust's representations, warranties, covenants and
obligations to the Auction Agent under Sections 5 and 6.4 hereof shall survive
the termination of the Agreement with respect to any series of APS. Upon
termination of the Agreement with respect to any series of APS, the Auction
Agent shall, at the Trust's request, promptly deliver to the Trust copies of all
books and records maintained by it with respect to APS in connection with its
duties hereunder and to any successor Auction Agent any funds then held by the
Auction Agent for the benefit of the Holders of APS or the Trust.
7.2 Communications.
Except for (i) communications authorized to be by telephone pursuant to
the Agreement or the Auction Procedures and (ii) communications in connection
with Auctions (other than those expressly required to be in writing), all
notices, requests and other communications to any party hereunder shall be in
writing (including telecopy or similar writing) and shall be given to such
party, addressed to it, at its address or telecopy number set forth below:
If to the Trust: Xxxx Xxxxxxx Preferred Income Fund
Xxxxx X. Xxxxxx
Senior Vice President, Secretary and
Chief Legal Officer
c/o Xxxx Xxxxxxx Advisers, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Auction Agent: Deutsche Bank Trust Company Americas
Auction Rate Securities
000 Xxxxx Xxx
Xxxxxx Xxxx, XX 00000
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
Each such notice, request or communication shall be effective when
delivered at the address specified herein. Communications shall be given on
behalf of the Trust by a Trust Officer and on behalf of the Auction Agent by
telephone (confirmed by telecopy or in writing) by an Authorized Officer.
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7.3 Entire Agreement.
The Agreement (including the Auction and Settlement Procedures
incorporated herein) contains the entire agreement between the parties relating
to, and superseding any prior agreement between the parties relating to, the
subject matter hereof, and there are no other representations, endorsements,
promises, agreements or understandings, oral, written or implied, between the
parties relating to the subject matter hereof except for agreements relating to
the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Trust, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) The Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to be
charged.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6 Successors and Assigns.
The Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and assigns of each of the Trust and
the Auction Agent.
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 Disclosure of Information.
The Auction Agent agrees that it will not disclose or use any
"non-public personal information" about the Trust's shareholders other than such
uses or disclosures as are permitted by Regulation S-P under Section 504 of the
Xxxxx-Xxxxx Xxxxx Act ("Regulation S-P"). "Nonpublic personal information" about
a shareholder shall mean: (i) personally identifiable financial information;
(ii) any list, description, or other grouping of consumers that is derived from
using any personally identifiable information that is not publicly available;
and (iii) any other information that a customer or the transfer agent is
prohibited from using or disclosing pursuant to Regulation S-P.
7.9 Governing Law.
The Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Trust and the Auction Agent in accordance with its terms.
XXXX XXXXXXX PREFERRED INCOME FUND
By: __________________________________
Name
Title
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: __________________________________
Name
Title
EXHIBIT A
FORM OF
BROKER-DEALER AGREEMENT
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EXHIBIT B
SETTLEMENT PROCEDURES
The following summary of Settlement Procedures sets forth the
procedures expected to be followed in connection with the settlement of each
Auction and will be incorporated by reference in the Auction Agency Agreement
and each Broker-Dealer Agreement. Nothing contained in this Appendix constitutes
a representation by the Trust that in each Auction each party referred to herein
will actually perform the procedures described herein to be performed by such
party.
(a) On each Auction Date, the Auction Agent shall notify by telephone, or
through the Auction Agent's auction processing system, the Broker-Dealers that
participated in the Auction held on such Auction Date and submitted an Order on
behalf of any Existing Holder or Potential Holder of:
(i) the Applicable Rate fixed for the next succeeding Dividend Period;
(ii) whether Sufficient Clearing Bids existed for the determination of
the Applicable Rate;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer") submitted a
Bid or a Sell Order on behalf of an Existing Holder, the number of shares, if
any, of APS to be sold by such Existing Holder;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted a Bid
on behalf of a Potential Holder, the number of shares, if any, of APS to be
purchased by such Potential Holder;
(v) if the aggregate number of APS to be sold by all Existing Holders
on whose behalf such Broker-Dealer submitted a Bid or a Sell Order exceeds the
aggregate number of APS to be purchased by all potential Holders on whose behalf
such Broker-Dealer submitted a Bid, the name or names of one or more Buyer's
Broker-Dealers (and the name of the Agent Member, if any, of each such Buyer's
Broker-Dealer) acting for one or more purchasers of such excess number of APS
and the number of such shares to be purchased from one or more Existing Holders
on whose behalf such Broker-Dealer acted by one or more Potential Holders on
whose behalf each of such Buyer's Broker-Dealers acted;
(vi) if the aggregate number of APS to be purchased by all Potential
Holders on whose behalf such Broker-Dealer submitted a Bid exceeds the aggregate
number of APS to be sold by all Existing Holders on whose behalf such
Broker-Dealer submitted a Bid or a Sell Order, the name or names of one or more
Seller's Broker Dealers (and the name of the Agent Member, if any, of each such
Seller's Broker-Dealer) acting for one or more sellers of such excess number of
APS and the number of such shares to be sold to one or more Potential Holders on
whose behalf such Broker-Dealer acted by one or more Existing Holders on whose
behalf each of such Seller's Broker-Dealers acted; and
(vii) the Auction Date of the next succeeding Auction with respect to
the APS.
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(b) On each Auction Date, each Broker-Dealer that submitted an Order on behalf
of any Existing Holder or Potential Holder shall:
(i) in the case of a Broker-Dealer that is a Buyer's Broker-Dealer,
instruct each Potential Holder on whose behalf such Broker-Dealer submitted a
Bid that was accepted, in whole or in part, to instruct such Potential Holder's
Agent Member to pay to such Broker - Dealer (or its Agent Member) through the
Securities Depository the amount necessary to purchase the number of APS to be
purchased pursuant to such Bid against receipt of such shares and advise such
Potential Holder of the Applicable Rate for the next succeeding Dividend Period;
(ii) in the case of a Broker-Dealer that is a Seller's Broker-Dealer,
instruct each Existing Holder on whose behalf such Broker-Dealer submitted a
Sell Order that was accepted, in whole or in part, to instruct such Existing
Holder's Agent Member to deliver to such Broker-Dealer (or its Agent Member)
through the Securities Depository the number of APS to be sold pursuant to such
Order against payment therefor and advise any such Existing Holder that will
continue to hold APS of the Applicable Rate for the next succeeding Dividend
Period;
(iii) advise each Existing Holder on whose behalf such Broker-Dealer
submitted a Hold Order of the Applicable Rate for the next succeeding Dividend
Period;
(iv) advise each Existing Holder on whose behalf such Broker-Dealer
submitted an Order of the Auction Date for the next succeeding Auction; and
(v) advise each Potential Holder on whose behalf such Broker-Dealer
submitted a Bid that was accepted, in whole or in part, of the Auction Date for
the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a
Potential Holder or an Existing Holder shall, in such manner and at such time or
times as in its sole discretion it may determine, allocated any funds received
by it pursuant to (b)(i) above and any APS received by it pursuant to (b)(ii)
above among the Potential Holders, if any, on whose behalf such Broker-Dealer
submitted Bids, the Existing Holders, if any, on whose behalf such Broker-Dealer
submitted Bids that were accepted or Sell Orders, and any Broker-Dealer or
Broker-Dealers identified to it by the Auction Agent pursuant to (a)(v) or
(a)(vi) above.
(d) On each Auction Date:
(i) each Potential Holder and Existing Holder shall instruct its Agent
Member as provided in (b)(i) or (ii) above, as the case may be;
(ii) each Seller's Broker-Dealer which is not an Agent Member of the
Securities Depository shall instruct its Agent Member to (A) pay through the
Securities Depository to the Agent Member of the Existing Holder delivering
shares to such Broker-Dealer pursuant to (b)(ii) above the amount necessary to
purchase such shares against receipt of such shares, and (B) deliver such shares
through the Securities Depository to a Buyer's Broker-Dealer (or its Agent
Member) identified to such Seller's Broker-Dealer pursuant to (a)(v) above
against payment therefor; and
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(iii) each Buyer's Broker-Dealer which is not an Agent Member of the
Securities Depository shall instruct its Agent Member to (A) pay through the
Securities Depository to a Seller's Broker-Dealer (or its Agent Member)
identified pursuant to (a) (vi) above the amount necessary to purchase the
shares to be purchased pursuant to (b) (i) above against receipt of such shares,
and (B) deliver such shares through the Securities Depository to the Agent
Member of the purchaser thereof against payment therefor.
(e) On the day after the Auction Date:
(i) each Bidder's Agent Member referred to in (d) (i) above shall
instruct the Securities Depository to execute the transactions described under
(b) (i) or (ii) above, and the Securities Depository shall execute such
transactions;
(ii) each Seller's Broker-Dealer or its Agent Member shall instruct the
Securities Depository to execute the transactions described in (d) (ii) above,
and the Securities Depository shall execute such transactions; and
(iii) each Buyer's Broker-Dealer or its Agent Member shall instruct the
Securities Depository to execute the transactions described in (d) (iii) above,
and the Securities Depository shall execute such transactions.
(f) If an Existing Holder selling APS in an Auction fails to deliver
such shares (by authorized book-entry), a Broker-Dealer may deliver to the
Potential Holder on behalf of which it submitted a Bid that was accepted a
number of whole APS that is less than the number of shares that otherwise was to
be purchased by such Potential Holder. In such event, the number of APS to be so
delivered shall be determined solely by such Broker-Dealer. Delivery of such
lesser number of shares shall constitute good delivery. Notwithstanding the
foregoing terms of this paragraph (f), any delivery or non-delivery of shares
which shall represent any departure from the results of an Auction, as
determined by the Auction Agent, shall be of no effect unless and until the
Auction Agent shall have been notified of such delivery or non-delivery in
accordance with the provisions of the Auction Agent Agreement and the
Broker-Dealer Agreements.
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