Exhibit 99.K4
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AUCTION AGENT AGREEMENT
between
PREFERRED INCOME STRATEGIES FUND, INC.
and
THE BANK OF NEW YORK
Dated as of , 2003
Relating to
AUCTION MARKET PREFERRED STOCK
("AMPS"),
Series A, Series B, Series C, Series D and Series E
of
PREFERRED INCOME STRATEGIES FUND, INC.
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THIS AUCTION AGENT AGREEMENT, dated as of , 2003, is between
PREFERRED INCOME STRATEGIES FUND, INC., a Maryland corporation (the
"Company"), and THE BANK OF NEW YORK, a New York banking corporation.
The Company proposes to duly authorize and issue ____ shares of Auction
Market Preferred Stock, Series A ("Series A AMPS"), with ____ shares of
Auction Market Preferred Stock, Series B ("Series B AMPS"), ____ shares of
Auction Market Preferred Stock, Series C ("Series C AMPS"), ____ shares of
Auction Market Preferred Stock, Series D ("Series D AMPS") and ____ shares
of Auction Market Preferred Stock, Series E ("Series E AMPS"), all with a
par value of $.10 per share and a liquidation preference of $25,000 per share
plus an amount equal to accumulated but unpaid dividends (whether or not
earned or declared), pursuant to the Company's Articles Supplementary (as
defined below). The Series A AMPS, Series B AMPS, Series C AMPS, Series D AMPS
and Series E AMPS are sometimes referred to together herein as the "AMPS." A
separate Auction (as defined below) will be conducted for each series of AMPS.
The Company desires that The Bank of New York perform certain duties as agent
in connection with each Auction of shares of AMPS (in such capacity, the
"Auction Agent"), and as the transfer agent, registrar, dividend disbursing
agent and redemption agent with respect to the shares of AMPS (in such
capacity, the "Paying Agent"), upon the terms and conditions of this
Agreement, and the Company hereby appoints The Bank of New York 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 Company and the Auction Agent agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1. Terms Defined by Reference to Articles Supplementary.
Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.
1.2. Terms Defined Herein.
As used herein 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, other xxxx Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, made known to the Auction Agent
to be controlled by, in control of, or under common control with,
the Company 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) "Articles Supplementary" shall mean the Articles Supplementary
of the Company, establishing the powers, preferences and rights of
the AMPS, filed on ___________, 2003 with the State Department of
Assessments and Taxation of the State of Maryland.
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(d) "Auction" shall have the meaning specified in Section 2.1
hereof.
(e) "Auction Procedures" shall mean the Auction Procedures that are
set forth in Paragraph 10 of the Articles Supplementary.
(f) "Authorized Officer" shall mean each Senior Vice President, Vice
President, Assistant Vice President, Trust Officer, and Assistant
Secretary and Assistant Treasurer 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 Company.
(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) "Company Officer" shall mean the Chairman and Chief Executive
Officer, 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 Company and
every other officer or employee of the Company designated as a
"Company Officer" for purposes hereof in a notice from the Company
to the Auction Agent.
(i) "Holder" shall be a holder of record of one or more shares of
AMPS, listed as such in the stock register maintained by the Paying
Agent pursuant to Section 4.6 hereof.
(j) "Settlement Procedures" shall mean the Settlement Procedures
attached as Exhibit A to the Broker-Dealer Agreement.
1.3. Rules of Construction.
Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor
shall they affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to
New York City time.
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II. THE AUCTION.
2.1. Purpose; Incorporation by Reference of Auction
Procedures and Settlement Procedures.
(a) The Articles Supplementary provide that the Applicable Rate on
shares of Series A AMPS, Series B AMPS, Series C AMPS, Series D AMPS
and Series E AMPS, 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 Company advises results from
implementation of the Auction Procedures. The Board of Directors of
the Company has adopted a resolution appointing The Bank of New York
as Auction Agent for purposes of the Auction Procedures. The Auction
Agent hereby accepts such appointment and agrees that, on each
Auction Date, it shall follow the procedures set forth in this
Section 2 and the Auction Procedures for the purpose of determining
the Applicable Rate for the AMPS 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 Company 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 Company 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 purchasing
shares of AMPS. 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 Company 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 Company 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.
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(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 (vii) 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 paragraph 2 of the Articles
Supplementary concerning Special Dividend Periods and the
notification of a Special Dividend Period will be followed by the
Company and, to the extent applicable, the Auction Agent, and the
provisions contained therein are incorporated herein by reference in
their entirety and shall be deemed to be a part of this Agreement to
the same extent as if such provisions were set forth fully herein.
(d) (i) On each Auction Date, the Auction Agent shall determine the
Reference Rate and the Maximum Applicable 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 paragraph 1 of the Articles
Supplementary; 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 Company as to the method of such conversion. Not later than 9:30
A.M. on each Auction Date, the Auction Agent shall notify the
Company and the Broker-Dealers of the Reference Rate so determined
and of the Maximum Applicable 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 Company so that the Company 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 Company promptly shall advise the
Auction Agent of any such selection. If the Company 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 AMPS by either of the rating agencies
(or Substitute Rating Agency or successor rating agency) referred to
in the definition of the Maximum Applicable Rate, thereby resulting
in any change in the corresponding applicable percentage for the
AMPS, as set forth in said definition (the "Percentage"), the
Company shall notify the Auction Agent in writing of such change in
the Percentage prior to 9:00 A.M. on the Auction Date for AMPS next
succeeding such change. The Percentage for the AMPS on the date of
this Agreement is as specified in paragraph 10(a)(vii) of the
Articles Supplementary. The Auction Agent shall be
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entitled to rely on the last Percentage of which it has received
notice from the Company (or, in the absence of such notice, the
Percentage set forth in the preceding sentence) in determining the
Maximum Applicable Rate as set forth in Section 2.2(e)(i) hereof.
(e) The Auction Agent shall maintain by series a current registry of
the Existing Holders of the shares of each series of AMPS for
purposes of each Auction. The Company shall use its best 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 each series of AMPS, and the
Broker-Dealer of each such Existing Holder through which such
Existing Holder purchased such shares. The Auction Agent may rely
upon, as evidence of the identities of the Existing Holders, such
list, the results of each Auction and notices from any Existing
Holder, the Agent Member of any Existing Holder or the Broker-Dealer
of any Existing Holder with respect to such Existing Holder's
transfer of any shares of AMPS to another Person.
(f) In the event of any partial redemption of any series of AMPS,
upon notice by the Company 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 with respect to shares of such
series of AMPS being partially redeemed, 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 such series
of AMPS of each such Existing Holder, if any, to be redeemed by the
Company, 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 such series of AMPS shown in
the Auction Agent's registry of Existing Holders.
(iii) The Auction Agent shall register a transfer of the ownership
of shares of a series of AMPS from an Existing Holder to another
Existing Holder, or to another Person if permitted by the Company,
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
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transfer made on the registry of the Existing Holders of any shares
of AMPS 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 AMPS and the seller failed to
deliver such shares or (ii) sold any shares of AMPS 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(c) 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 any series
of AMPS. 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 Company,
provided that the Auction Agent reserves the right to disclose any
such information if it is advised by its counsel that its failure to
do so would be unlawful.
2.3. Auction Schedule.
The Auction Agent shall conduct Auctions in accordance with the schedule set
forth below. Such schedule may be changed by the Auction Agent with the
consent of the Company, which consent shall not be withheld unreasonably. The
Auction Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.
Time Event
By 9:30 A.M. Auction Agent advises the Company and the
Broker-Dealers of the Reference Rate and
the Maximum Applicable Rate as set forth in
Section 2.2(e)(i) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in Paragraph 10(c)(i) of the
Articles Supplementary. Submission deadline
is 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent makes determinations pursuant
to Paragraph 10(d)(i) of the Articles
Supplementary.
By approximately Auction Agent advises the Company of the
3:00 P.M. results of the Auction as provided in
Paragraph 10(d)(ii) of the Articles
Supplementary.
Submitted Bids and Submitted Sell Orders
are accepted and rejected in whole or in
part and shares of AMPS allocated as
provided in Paragraph 10(e) of the Articles
Supplementary.
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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 Company
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 or 28-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 the series of AMPS for which the Auction is
conducted and (ii) in the case of any Special Dividend Period, the
amount determined by mutual consent of the Company and the
Broker-Dealers pursuant to Section 3.5 of the Broker-Dealer
Agreements. The Auction Agent shall apply such moneys as set forth
in Section 3.5 of the Broker-Dealer Agreements and shall thereafter
remit to the Company any remaining funds paid to the Auction Agent
pursuant to this Section 2.5(a).
(b) The Company shall not designate any Person to act as a
Broker-Dealer, or permit a 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
Company may designate an Affiliate or Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated 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 Company.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from time to
time shall enter into such Broker-Dealer Agreements as the Company
shall request.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6. Ownership of Shares of AMPS and Submission of Bids
by the Company and its Affiliates.
Neither the Company nor any Affiliate of the Company may submit any Sell
Order or Bid, directly or indirectly, in any Auction, except that an Affiliate
of the Company that is a Broker-Dealer may submit a Sell Order or Bid on
behalf of a Beneficial Owner or a Potential Beneficial Owner. The Company
shall notify the Auction Agent if the Company or, to the best
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of the Company's knowledge, any Affiliate of the Company becomes a Beneficial
Owner of any shares of AMPS. Any shares of a series of AMPS redeemed,
purchased or otherwise acquired (i) by the Company 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
Company). 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 Company, its agents, independent
public accountants and counsel, access at reasonable times during normal
business hours to review and make extracts or copies (at the Company'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
Company 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 (unless requested by the Company 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 Company
agrees to keep confidential any information regarding the customers of any
Broker-Dealer received from the Auction Agent in connection with this
Agreement or any Auction, and shall not disclose such information or permit
the disclosure of such information without the prior written consent of the
applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this
Section 2.7, provided that the Company 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 Company. 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 Directors of the Company has adopted a resolution appointing
The Bank of New York as transfer agent, registrar, dividend disbursing agent
and redemption agent for the Company in connection with any shares of AMPS (in
such capacity, the "Paying Agent"). The Paying Agent hereby accepts such
appointment and agrees to act in accordance with its standard procedures and
the provisions of the Articles Supplementary which are specified herein with
respect to the shares of AMPS and as set forth in this Section 3.
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3.2. The Company's Notices to the Paying Agent.
Whenever any shares of AMPS are to be redeemed, the Company promptly
shall deliver to the Paying Agent a Notice of Redemption, which will be mailed
by the Company to each Holder at least five Business Days prior to the date
such Notice of Redemption is required to be mailed pursuant to the Articles
Supplementary. The Paying Agent shall have no responsibility to confirm or
verify the accuracy of any such Notice.
3.3. The Company to Provide Funds for Dividends and Redemptions.
(a) Not later than noon on each Dividend Payment Date, the Company
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 Company shall give a Notice of Redemption, then by noon
of the date fixed for redemption, the Company 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 AMPS
called for redemption and shall give the Paying Agent irrevocable
instructions and authority to pay the redemption price to the
Holders of shares of AMPS called for redemption upon surrender of
the certificate or certificates therefor.
3.4. Disbursing Dividends and Redemption Price.
After receipt of the Federal Funds or similar same-day funds and
instructions from the Company described in Sections 3.3(a) and (b) 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 AMPS
and (ii) on any date fixed for redemption, the redemption price of any shares
of AMPS called for redemption. The amount of dividends for any Dividend Period
to be paid by the Paying Agent to Holders will be determined by the Company as
set forth in Paragraph 2 of the Articles Supplementary. The redemption price
to be paid by the Paying Agent to the Holders of any shares of AMPS called for
redemption will be determined as set forth in Paragraph 4 of the Articles
Supplementary. The Company shall notify the Paying Agent in writing of a
decision to redeem any shares of AMPS on or prior to the date specified in
Section 3.2 above, and such notice by the Company to the Paying Agent shall
contain the information required to be stated in a Notice of Redemption
required to be mailed by the Company 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 AMPS, one certificate for
each series of AMPS shall be issued by the Company and registered in the name
of Cede & Co., as nominee of
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the Securities Depository, and countersigned by the Paying Agent. The Company
will give the Auction Agent prior written notice and instruction as to the
issuance and redemption of AMPS.
4.2. Registration of Transfer or Exchange of Shares.
Except as provided in this Section 4.2, the shares of each series of AMPS
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 Company 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 AMPS, at
the Company'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 as the
Paying Agent may require by a guarantor reasonably believed by the Paying
Agent to be responsible, (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 a series of AMPS
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 a series of AMPS 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 Company 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 Company
and by the Paying Agent, subject at all times to provisions of law, the
By-Laws of the Company governing such matters and resolutions adopted by the
Company 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 Company 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 Company to the Paying Agent
that such issuance will comply with provisions of applicable law and the
By-Laws and resolutions of the Company.
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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 for
two calendar years from the date of such cancellation. The Paying Agent, upon
written request by the Company, shall afford to the Company, its agents and
counsel access at reasonable times during normal business hours to review and
make extracts or copies (at the Company's sole cost and expense) of such
certificates and accompanying documentation. Upon request by the Company at
any time after the expiration of this two-year period, the Paying Agent shall
deliver to the Company the canceled certificates and accompanying
documentation. The Company, at its expense, shall retain such records for a
minimum additional period of four calendar years from the date of delivery of
the records to the Company 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 Securities and Exchange
Commission. The Company also shall undertake to furnish to the Securities and
Exchange Commission, upon demand, either at their 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 Company
without the approval of the Paying Agent, which approval shall not be withheld
unreasonably, but will be safely stored for possible future reference.
4.6. 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 Company in the possession of the Paying Agent, the Paying Agent will
notify the Company 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 Company shall have offered indemnification satisfactory
to the Paying Agent.
4.7. Return of Funds.
Any funds deposited with the Paying Agent by the Company for any reason
under this Agreement, including for the payment of dividends or the redemption
of shares of any series of AMPS, that remain with the Paying Agent after 12
months shall be repaid to the Company upon written request by the Company.
V. REPRESENTATIONS AND WARRANTIES.
5.1. Representations and Warranties of the Company.
The Company represents and warrants to the Auction Agent that:
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(i) the Company is duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Maryland, and has full power to execute and deliver this Agreement
and to authorize, create and issue the shares of each series of
AMPS;
(ii) the Company is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as
a closed-end, diversified, management investment company;
(iii) this Agreement has been duly and validly authorized, executed
and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company
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 forms of the certificates evidencing the shares of each
series of AMPS comply with all applicable laws of the State of
Maryland;
(v) the shares of each series of AMPS have been duly and validly
authorized by the Company and, upon completion of the initial sale
of the shares of such series of AMPS and receipt of payment
therefor, will be validly issued, fully paid and nonassessable;
(vi) at the time of the offering of the shares of each series of
AMPS, 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 each series of AMPS, except such action as required
by applicable state securities or insurance laws, all of which
action will have been taken;
(vii) the execution and delivery of this Agreement and the issuance
and delivery of the shares of each series of AMPS 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
Charter or the By-Laws of the Company, any law or regulation
applicable to the Company, any order or decree of any court or
public authority having jurisdiction over the Company, or any
mortgage, indenture, contract, agreement or undertaking to which the
Company 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 each series of AMPS.
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5.2. Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Company that 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.
VI. THE AUCTION AGENT.
6.1. Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Company
hereunder and owes no fiduciary duties to any Person except as
provided by this Agreement.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no
implied covenants or obligations shall be read into this Agreement
against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or
omitted by it or for any error of judgment made by it in the
performance of its duties under this Agreement. The Auction Agent
shall not be liable for any error of judgment made in good faith
unless the Auction Agent shall have been negligent in ascertaining
(or failing to ascertain) the pertinent facts.
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 believes in
good faith to have been given by the Company or by a Broker-Dealer.
The Auction Agent may record telephone communications with the
Company 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 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
Company.
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(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
6.3. Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or the
adequacy of this Agreement, the Broker-Dealer Agreements or the AMPS.
6.4. Compensation, Expenses and Indemnification.
(a) The Company 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 Company and the Auction
Agent, subject to adjustments if the AMPS 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 Company 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 Company 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 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.
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 Company may
terminate this Agreement at any time by so notifying the Auction
Agent, provided that if any AMPS remain outstanding the Company
shall have entered into an agreement in substantially the form of
this Agreement with a successor auction agent. The Auction Agent may
terminate this Agreement upon prior notice to the Company 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 AMPS remain outstanding, the Company shall use
its best efforts to enter into an agreement with a successor auction
agent containing substantially the same terms and conditions as this
Agreement.
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(b) Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Company and the Auction Agent
under this Agreement shall cease upon termination of this Agreement.
The Company's representations, warranties, covenants and obligations
to the Auction Agent under Sections 5 and 6.4 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 Company's request, deliver
promptly to the Company copies of all books and records maintained
by it in connection with its duties hereunder, and (iii) at the
request of the Company, transfer promptly to the Company or to any
successor auction agent any funds deposited by the Company 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 Company, Preferred Income Strategies Fund, Inc.
addressed to: 000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to the Auction The Bank of New York
Agent, addressed to: 000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Auction Desk
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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 Company by a Company
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
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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 Company, 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 Company shall notify the Auction
Agent of any change in the Articles Supplementary prior to the
effective date of any such change. If any such change in the
Articles Supplementary materially increases the Auction Agent's
obligations hereunder, the Company 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
Company and the Auction Agent. This Agreement may not be assigned by either
party hereto absent the prior written consent of the other party, which
consent shall not be withheld unreasonably.
7.7. Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
7.8. Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.9. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be
performed in said State.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
PREFERRED INCOME STRATEGIES
FUND, INC.
By:
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Name:
Title:
THE BANK OF NEW YORK
By:
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Name:
Title:
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