FORM OF MASTER BROKER-DEALER AGREEMENT
between
THE BANK OF NEW YORK
and
----------
dated as of May [ ], 2004
relating to
Preferred Shares ("Preferred Shares")
of
EACH OF THE XXXXX & STEERS FUNDS LISTED HEREIN
MASTER BROKER-DEALER AGREEMENT
Broker-Dealer Agreement dated as of _______, 2004, is between The Bank of
New York, a New York banking corporation (the "Auction Agent") (not in its
individual capacity, but solely as agent of the registered investment companies,
which are Maryland corporations, listed in Exhibit A hereto, as the same may be
amended from time to time (individually, a "Fund", and together, the "Funds,"
unless indicated otherwise), pursuant to authority granted to it in the various
Auction Agency Agreements between each of the Funds and the Auction Agent (the
"Auction Agency Agreements") and BROKER-DEALER (together with its successors and
assigns, "BD").
The Funds have duly authorized and issued, or intend to issue in different
series shares of Auction Rate Cumulative Preferred Shares, in the case of the
Series M shares and Series W shares of Xxxxx & Steers Advantage Income Realty
Fund, Inc. and Taxable Auction Market Preferred Shares (the "AMPS") or other
auction market preferred stock in the case of the other Funds, all with a par
value of $.001 per share and a liquidation preference of $25,000 per share
(together, the "Preferred Shares"), pursuant to the Funds' Articles
Supplementary (as defined below).
The Funds' Articles Supplementary provides that for each subsequent
Dividend Period of Preferred Shares then outstanding, the Applicable Rate for
each series of Preferred Shares for each subsequent Dividend Period shall be
equal to the rate per annum that results from an Auction for Outstanding shares
of each Series on the respective Auction Date therefor next preceding the period
from and after the Date of Original Issue to and including the last day of the
initial Dividend Period. The Boards of Directors of the Funds have adopted
resolutions appointing The Bank of New York as Auction Agent for purposes of the
Auction Procedures, and pursuant to Section 2.5 of the Auction Agency
Agreements, the Funds have requested and directed the Auction Agent to execute
and deliver this Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Articles Supplementary.
Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary of each Fund.
1.2 Terms Defined Herein.
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Articles Supplementary" shall mean the Articles Supplementary
for Preferred Shares of each of the Funds specifying the powers,
preferences and rights of the Preferred Shares filed in the
office of the State Department of Assessments and Taxation of
Maryland.
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(b) "Auction" shall have the meaning specified in Section 2.1 of the
Auction Agency Agreement.
(c) "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Articles Supplementary.
(d) "Authorized Officer" of the Auction Agent shall mean each Vice
President, Assistant Vice President and Assistant Treasurer of
the Auction Agent and every other officer or employee of the
Auction Agent designated as an "Authorized Officer" for purposes
of this Agreement in a written communication to BD.
(e) "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of this Agreement in a
communication to the Auction Agent.
(f) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a
Broker-Dealer.
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.
II. NOTIFICATION OF DIVIDEND.
The provisions contained in Section 4 of Part I of the Articles
Supplementary concerning the notification of a Special Dividend Period will be
followed by the Auction Agent and BD, 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.
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III. THE AUCTION.
3.1 Purpose; Incorporation by Reference of Auction Procedures.
(a) On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of
determining the Applicable Rate for each series of Preferred
Shares, for each Dividend Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be
deemed to be a part of this Agreement to the same extent as if
such provisions were set forth fully herein.
(c) BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under
this Agreement. BD understands that other Persons meeting the
requirements specified in the definition of "Broker-Dealer"
contained in Section 17 of Part I of the Articles Supplementary
may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Fund, by notice to BD and all other
Broker Dealers, may prohibit all Broker-Dealers from submitting
Bids in Auctions for their own accounts, provided that
Broker-Dealers may continue to submit Hold Orders and Sell
Orders.
3.2 Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone or other
electronic means of communication acceptable to the parties of
the Maximum Rate in effect on such Auction Date.
(b) The Auction Agent from time to time may, but shall not be
obligated to, request BD to provide it with a list of the
respective customers BD believes are Beneficial Owners of shares
of each series of Preferred Shares. BD shall comply with any such
request, and the Auction Agent shall keep confidential any such
information, including information received as to the identity of
Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than a Fund; and such
information shall not be used by the Auction Agent or its
officers, employees, agents or representatives for any purpose
other than such purposes as are described herein; 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. In the event that the
Auction Agent is required to disclose
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information in accordance with the foregoing sentence, it shall
provide written notice of such requirement to BD as promptly as
practicable. The Auction Agent shall, subject to the terms of the
Auction Agency Agreement, transmit any list of customers BD
believes are Beneficial Owners of shares of each series of
Preferred Shares and information related thereto only to its
officers, employees, agents or representatives who need to know
such information for the purposes of acting in accordance with
this Agreement, and the Auction Agent shall prevent the
transmission of such information to others and shall cause its
officers, employees, agents and representatives to abide by the
foregoing confidentiality restrictions; provided, however, that
the Auction Agent shall have no responsibility or liability for
the actions of any of its officers, employees, agents or
representatives after they have left the employ of the Auction
Agent.
3.3 Auction Schedule; Method of Submission of Orders.
(a) The Funds and the Auction Agent shall conduct Auctions for each
series of Preferred Shares in accordance with the schedule set
forth below. Such schedule may be changed at any time by the
Auction Agent with the consent of the Fund, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice
of any such change to BD. 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 Funds and the
Broker-Dealers of the Maximum Rate as set forth in
Section 3.2(a) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated to
it by Broker-Dealers as provided in Section 3(a) of
Part II of the Articles Supplementary. Submission
Deadline is 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent makes determinations pursuant to
Section 4(a) of Part II of the Articles
Supplementary.
By approximately 3:30 P.M. Auction Agent advises the Funds of the results of
the Auction as provided in Section 4(b) of Part II
of the Articles Supplementary. Submitted Bids and
Submitted Sell Orders will be accepted and rejected
in whole or in part and shares of Preferred Shares
are allocated as provided in Section 5 of Part II
of the Articles Supplementary.
Auction Agent shall give notice of the Auction
results as set forth in Section 3.4(a) hereof.
The Auction Agent will follow the Bond Market Association's Market Practice
U.S. Holiday Recommendations for shortened trading days for the bond markets
(the "BMA Recommendation") unless the Auction Agent is instructed otherwise. In
the event of a BMA Recommendation on an Auction Date, the Submission Deadline
will be 11:30 a.m., instead of 1:00 p.m., and as a result the notice set forth
in Section 3.3 will occur earlier.
(b) BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or
prior to each Auction Date for the purposes set forth in Section
2 of Part II of the Articles Supplementary.
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(c) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit B. BD shall
submit separate Orders to the Auction Agent for each Potential
Beneficial Owner or Beneficial Owner on whose behalf BD is
submitting an Order and shall not net or aggregate the Orders of
Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit C, of
transfers of shares of any series of Preferred Shares, made
through BD by an Existing Holder to another Person other than
pursuant to an Auction, and (ii) a written notice, substantially
in the form attached hereto as Exhibit D, of the failure of
Preferred Shares to be transferred to or by any Person that
purchased or sold shares of any series of Preferred Shares
through BD pursuant to an Auction. The Auction Agent is not
required to accept any notice delivered pursuant to the terms of
the foregoing sentence with respect to 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.
3.4 Notice of Auction Results.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone or other electronic means acceptable to the parties. On
the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders
submitted by BD in the Auction held on such Auction Date.
(b) BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has
submitted an Order, and take such other action as is required of
BD.
If any Beneficial Owner or Existing Holder selling shares of any series of
Preferred Shares in an Auction fails to deliver such shares, the Broker-Dealer
of any Person that was to have purchased shares of any series of Preferred
Shares in such Auction may deliver to such Person a number of whole shares of
the series of Preferred Shares that is less than the number of shares that
otherwise was to be purchased by such Person. In such event, the number of
shares of the series of Preferred Shares to be so delivered shall be determined
by such Broker-Dealer. Delivery of such lesser number of shares shall constitute
good delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of shares of any series of Preferred Shares which
represents 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 terms
of Section 3.3(d) hereof. The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 3.4(b).
3.5 Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Funds an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator
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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 (ii) 1/4 of 1%, times (iii) $25,000,
times (iv) the sum of (A) the aggregate number of shares of any series of
Preferred Shares placed by BD in the applicable Auction that were (x) the
subject of a Submitted Bid of a Beneficial Owner submitted by BD and continued
to be held as a result of such submission and (y) the subject of a Submitted Bid
of a Potential Beneficial Owner submitted by BD and were purchased as a result
of such submission plus (B) the aggregate number of shares of any series of
Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Articles Supplementary) submitted to the Auction
Agent by BD plus (C) the number of shares of any series of Preferred Shares
deemed to be subject to Hold Orders by Beneficial Owners pursuant to Section 2
of Part II of the Articles Supplementary that were acquired by BD for its own
account or were acquired by such Beneficial Owners through BD; and (b) in the
case of any Auction Date immediately preceding a Special Dividend Period of one
year or longer, that amount as mutually agreed upon by the Funds and BD, based
on the selling concession that would be applicable to an underwriting of fixed
or variable rate Preferred Shares with a similar final maturity or variable rate
dividend period, at the commencement of such Special Dividend Period.
For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired shares of any series of Preferred Shares through
BD transfers those shares to another Person other than pursuant to an Auction,
then the Broker-Dealer for the shares so transferred shall continue to be BD,
provided, however, that if the transfer was effected by, or if the transferee
is, a Broker-Dealer other than BD, then such Broker-Dealer shall be the
Broker-Dealer for such shares.
IV. MISCELLANEOUS.
4.1 Termination.
Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is BROKER-DEALER nor the Auction Agent may terminate this Agreement without
first obtaining the prior written consent of the Fund to such termination, which
consent shall not be withheld unreasonably. This Agreement shall automatically
terminate upon the redemption of all outstanding Preferred Shares or upon
termination of the Auction Agent Agreement.
4.2 Force Majeure
Neither party to this Agreement shall 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, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
acts of terrorism; interruptions, loss or malfunctions or utilities; computer
(hardware or software) or communications services; accidents; labor disputes;
acts of civil or military authority or governmental actions; it being understood
that the parties shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable
under the circumstances.
4.3 Participant in Securities Depository; Payment of Dividends in Same-Day
Funds.
(a) BD is, and shall remain for the term of this Agreement, a member
of, or a participant in, the Securities Depository (or an
affiliate of such a member or participant).
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(b) BD represents that it (or if BD does not act as Agent Member, one
of its affiliates) shall make all dividend payments on the shares
of any series of Preferred Shares available in same-day funds on
each Dividend Payment Date to customers that use BD (or its
affiliate) as Agent Member.
4.4 Agent Member.
At the date hereof, BD is a participant of the Securities Depository.
4.5 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 the 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 Auction Agent, addressed to: The Bank of New York
Corporate Trust Administration
000 Xxxxxxx Xxxxxx, Xxxxx 0X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group
- Auction Desk
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the BD, addressed to: Broker-Dealer
Address
Attention:
Telephone No.:
Facsimile No.:
or such other address or telecopier number as such party hereafter may
specify for such purpose by notice to the other party. Each such notice,
request or communication shall be effective when delivered at the address
specified herein. Communications shall be given on behalf of BD by a BD
Officer and on behalf of the Auction Agent by an Authorized Officer. BD may
record telephone communications with the Auction Agent.
4.6 Entire Agreement.
This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.
4.7 Benefits.
Nothing in this Agreement, express or implied, shall give to any person,
other than the Funds, the Auction Agent and BD and their respective successors
and permitted assigns, any benefit of any legal or equitable right, remedy or
claim under this Agreement.
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4.8 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.
(b) Failure of either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.
4.9 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 BD
and the Auction Agent. This Agreement may not be assigned by either party hereto
absent the prior written consent of the other party.
4.10 Severability.
If any clause, provision or section of this Agreement 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
remaining clause, provision or section hereof.
4.11 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.
4.12 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.
4.13 Jurisdiction.
The parties agree that all actions and proceedings arising out of this
Broker-Dealer Agreement or any of the transactions contemplated hereby shall be
brought in the County of New York, and, in connection with any such action or
proceeding, submit to the jurisdiction of, and venue in, such County. Each of
the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Agreement or the
transactions contemplated hereby.
[Signature pages follow]
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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.
THE BANK OF NEW YORK, as Auction Agent
By:
----------------------------------
Name:
Title:
BROKER-DEALER
By:
----------------------------------
Name:
Title:
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EXHIBIT A
LIST OF FUNDS
(revised May _, 2004)
Xxxxx & Steers Advantage Income Realty Fund, Inc.
Xxxxx & Steers Premium Income Realty Fund, Inc.
Xxxxx & Steers Quality Income Realty Fund, Inc.
Xxxxx & Steers REIT and Preferred Income Fund, Inc.
Xxxxx & Steers REIT and Utility Income Fund, Inc.
Xxxxx & Steers Select Utility Fund, Inc.
