1
EXHIBIT 13(b)
--------------------------------------------------------------------------------
AUCTION AGENT AGREEMENT
between
MUNIYIELD NEW JERSEY FUND, INC.
and
IBJ XXXXXXXX BANK & TRUST COMPANY
Dated as of July 1, 1992
Relating to
Auction Market Preferred Stock(R)
("AMPS"(R))
of
MUNIYIELD NEW JERSEY FUND, INC.
--------------------------------------------------------------------------------
(R)Registered trademark of Xxxxxxx Xxxxx & Co., Inc.
1
2
THIS AUCTION AGENT AGREEMENT dated as of July 1, 1992, between
MUNIYIELD NEW JERSEY FUND, INC., a Maryland corporation (the "Company"), and
IBJ XXXXXXXX BANK & TRUST COMPANY, a New York banking corporation.
The Company proposes to duly authorize and issue 1,200 shares
of Auction Market Preferred Stock(R) (the "AMPS"), with a par value of $.10
per share and a liquidation preference of $50,000 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
Company desires that IBJ Xxxxxxxx Bank & Trust Company perform certain duties
as agent in connection with the Auction of shares of AMPS (the "Auction Agent")
and as the transfer agent, registrar, dividend disbursing agent and redemption
agent with respect to the shares of AMPS (the "Paying Agent") upon the terms
and conditions of this Agreement, and hereby appoints IBJ Xxxxxxxx Bank & Trust
Company as said Auction Agent and Paying Agent in accordance with those terms
and conditions (hereinafter generally referred to as the "Auction Agent" except
in Sections 3 and 4 below).
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the Company and the Auction Agent agree as
follows:
---------------
(R)Registered trademark of Xxxxxxx Xxxxx & Co., Inc.
1
3
1. Definitions and Rules of Construction.
1.A. Terms Defined by Reference to
Articles Supplementary
Capitalized terms not defined herein shall have the respective
meanings specified in the Articles Supplementary.
1.B. 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:
1. "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.
2. "Agent Member" of any Person shall mean such Person's agent
member of the Securities Depository who is identified as such in such
Person's Purchaser's Letter.
3. "Articles Supplementary" shall mean the Articles
Supplementary of the Company, establishing the powers, preferences and
rights of the AMPS, filed on June 25, 1992, in the Office of the State
Department of Assessments and Taxation of the State of Maryland.
4. "Auction" shall have the meaning specified in Section 2.1
hereof.
5. "Auction Procedures" shall mean the Auction Procedures
that are set forth in Paragraph 11 of the Articles Supplementary.
6. "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.
7. "Broker-Dealer Agreement" shall mean each agreement
between the Auction Agent and a Broker-Dealer substantially in the
form attached hereto as Exhibit A.
8. "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.
9. "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.
2
4
10. "Purchaser's Letter" shall mean a letter addressed to the
Company, the Auction Agent and a Broker-Dealer, substantially in the
form attached to the Broker-Dealer Agreement as Exhibit A.
11. "Settlement Procedures" shall mean the Settlement
Procedures attached to the Broker- Dealer Agreement as Exhibit B.
1.C. 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:
1. Words importing the singular number shall include the
plural number and vice versa.
2. 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.
3. The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.
4. All references herein to a particular time of day shall be
to New York City time.
2. The Auction.
2.A. Purpose; Incorporation by Reference of Auction
Procedures and Settlement Procedures.
1. The Articles Supplementary provide that the Applicable
Rate on shares AMPS 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 IBJ Xxxxxxxx Bank & Trust Company as Auction Agent for
purposes of the Auction Procedures. The Auction Agent hereby accepts
such appointment and agrees that, on each Auction Date, it shall
follow the 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."
2. 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.B. Preparation for Each Auction; Maintenance
of Registry of Beneficial Owners.
3
5
1. Pursuant to Section 2.5 hereof, the Company shall not
designate any Person to act as a Broker-Dealer without prior written
approval of the Auction Agent (which approval shall not be withheld
unreasonably). At the time of closing of the initial issuance and sale
of the AMPS (the "Closing"), 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 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.
2. 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.
3. With respect to each Dividend Period that is a
Special Dividend Period, the Company may, at its sole option and to
the extent permitted by law, by telephonic and written notice (a
"Request for Special Dividend Period") to the Auction Agent and to
each Broker-Dealer, request that the next succeeding Dividend Period
for the AMPS will be a number of days (other than seven), evenly
divisible by seven, and not fewer than seven nor more than 364 in the
case of a Short Term Dividend Period or one whole year or more but not
greater than five years in the case of a Long Term Dividend Period,
specified in such notice, provided that for any Auction occurring
after the initial Auction, the Company may not give a Request for
Special Dividend Period (and any such request shall be null and void)
unless the Company has received written confirmation from S&P that
such action would not impair the rating then assigned to the AMPS by
S&P and unless sufficient Clearing Bids were made in the last
occurring Auction and unless full cumulative dividends, any amounts
due with respect to mandatory redemptions and any Additional Dividends
payable prior to such date have been paid in full. Such Request for
Special Dividend Period, in the case of a Short Term Dividend Period,
shall be given on or prior to the fourth Business Day but not more
than seven Business Days prior to an Auction Date for the AMPS and, in
the case of a Long Term Dividend Period, shall be given on or prior to
the 14th day but not more than 28 days prior to the Auction Date for
the AMPS. Upon receiving such Request for Special Dividend Period,
the Broker-Dealers shall jointly determine whether given the factors
set forth in Paragraph 2(c)(iii) of the Articles Supplementary it is
advisable that the Company issue a Notice of Special Dividend Period
for the AMPS as contemplated by such Request for Special
4
6
Dividend Period and the Optional Redemption Price of the AMPS during
such Special Dividend Period and the Specific Redemption Provisions
and shall give the Company and the Auction Agent written notice (a
"Response") of such determination by no later than the third Business
Day prior to such Auction Date. If the Broker-Dealer(s) shall not give
the Company and the Auction Agent a Response by such third Business
Day or if the Response states that given the factors referred to above
it is not advisable that the Company give a Notice of Special Dividend
Period (as defined below) for the AMPS, the Company may not give a
Notice of Special Dividend Period in respect of such Request for
Special Dividend Period. In the event the Response indicates that it
is advisable that the Company give a Notice of Special Dividend Period
for the AMPS, the Company may by no later than the second Business Day
prior to such Auction Date give a notice (a "Notice of Special
Dividend Period") to the Auction Agent, the Securities Depository and
each Broker-Dealer, which notice will specify (i) the duration of the
Special Dividend Period, (ii) the optional Redemption Price as
specified in the related Response and (iii) the Specific Redemption
Provisions, if any, as specified in the related Response. The Company
shall not give a Notice of Special Dividend Period, or, if such Notice
of Special Dividend Period shall have already been given, shall give
telephonic and written notice (a "Notice of Revocation") to the
Auction Agent, each Broker-Dealer, and the Securities Depository on or
prior to the Business Day prior to the relevant Auction Date if (x)
either the 1940 Act AMPS Coverage is not satisfied or the company
shall fail to maintain S&P Eligible Assets and Xxxxx'x Eligible Assets
each with an aggregate Discounted Value at least equal to the AMPS
Basic Maintenance Amount in each case on each of the two Valuation
Dates immediately preceding the Business Day prior to the relevant
Auction Date on an actual basis and on a pro forma basis giving effect
to the proposed Special Dividend Period (using as a pro forma dividend
rate with respect to such Special Dividend Period the dividend rate
which the Broker-Dealers shall advise the Company is an approximately
equal rate for securities similar to the AMPS with an equal dividend
period), provided that in calculating the aggregate Discounted Value
of Xxxxx'x Eligible Assets for this purpose, the Xxxxx'x Exposure
Period shall be deemed to be one week longer, (y) sufficient funds for
the payment of dividends payable on the immediately succeeding
Dividend Payment Date have not been irrevocably deposited with the
Auction Agent by the close of business on the third Business Day
preceding the related Auction Date or (z) the Broker-Dealer(s) jointly
advise the Company that after consideration of the factors referred to
above they have concluded that it is advisable to give a Notice of
Revocation. If the company is prohibited from giving a Notice of
Special Dividend Period as a result of the factors enumerated in
clause (x), (y) or (z) of the preceding sentence or if the Company
gives a Notice of Revocation with respect to a Notice of Special
Dividend Period, the next succeeding Dividend Period will be a 7-day
Dividend Period. In addition, in the event sufficient Clearing Bids
are not made in any Auction or an Auction is not held for any reason,
the next succeeding Dividend Period will be a 7-day Dividend Period
and the Company may not again give a Notice of Special Dividend Period
(and any such attempted notice shall be null and void) until
sufficient Clearing Bids have been made in an Auction with respect to
a 7-day Dividend Period.
4.a. Except as otherwise provided in Paragraph 2(f) of
the Articles Supplementary, whenever the Company intends to include
any net capital gains or other taxable income in any dividend on
shares of AMPS, the Company will notify the Auction
5
7
Agent of the amount to be so included at least five Business Days
prior to the Auction Date on which the Applicable Rate for such
dividend is to be established. Whenever the Auction Agent receives
such notice from the company, it will in turn notify each
Broker-Dealer, who, on or prior to such Auction Date, in accordance
with its Broker-Dealer Agreement, will notify its Existing Holders and
Potential Holders believed to be interested in submitting an Order in
the Auction to be held on such Auction Date.
b. If the Company makes a Retroactive Taxable Allocation,
the company will, within 90 days (and generally within 60 days) after
the end of its fiscal year for which a Retroactive Taxable Allocation
is made provide notice thereof to the Auction Agent and to each holder
of shares (initially the Securities Depository) during such fiscal year
at such holder's address as the same appears or last appeared on the
stock books of the Company. The Company will, within 30 days after such
notice is given to the Auction Agent, pay to the Auction Agent (who
will then distribute to such holders of shares of AMPS), out of funds
legally available therefor, a cash amount equal to the aggregate
Additional Dividend with respect to all Retroactive Taxable Allocations
made to such holders during the fiscal year in question.
5.a. 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 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 shall immediately 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 shall promptly 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 or successor rating agencies) 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
6
8
as specified in paragraph 11(a)(vii) of the Articles Supplementary.
The Auction Agent shall be 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.
6.a. The Auction Agent shall maintain a current registry
of the beneficial owners of the shares of AMPS who shall constitute
the Existing Holders 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 days following the date of Closing a list of the
initial Existing Holders of the 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.
b. In the event of any partial redemption of any AMPS, upon
notice by the Company to the Auction Agent of such partial redemption,
the Auction Agent shall promptly 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 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
AMPS of each such Existing Holder, if any, to be redeemed by the
Company; provided 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. If necessary to procure
such information, the Auction Agent shall deliver to each Agent Member
a facsimile copy of the Purchaser's Letter of each Existing Holder
represented by such Agent Member, which authorizes and instructs such
Agent Member to release such information to the Auction Agent. 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 the
beneficial owner of the number of shares of AMPS shown in the Auction
Agent's registry of beneficial owners.
c. The Auction Agent shall register a transfer of the
beneficial ownership of shares of AMPS from an Existing Holder to
another Person only if such transfer is made to a Person that has
delivered a signed Purchaser's Letter to the Auction Agent and only if
(A) such transfer is pursuant to an Auction or (B) such transfer is
made other than pursuant to an Auction, the Auction Agent has been
notified in writing in a notice substantially in the form of Exhibit D
to the Broker-Dealer Agreements, by such Existing Holder, the Agent
Member of such Existing Holder, or the Broker-Dealer of such Existing
Holder of such transfer. 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
7
9
P.M. on the Business Day next preceding the applicable Auction Date.
The Auction Agent shall rescind a transfer made on the registry of the
beneficial owners of any shares of AMPS if the Auction Agent has been
notified in writing in a notice substantially in the form of Exhibit E
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.
7. 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 Existing Holders of shares 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 (i) be unlawful
or (ii) expose it to liability, unless the Company or the relevant
Broker-Dealer shall have offered indemnification satisfactory to the
Auction Agent.
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 unreasonably
withheld. 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.
8
10
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 11(c)(i) of the
Articles Supplementary. Submission deadline is 1:00 P.M.
Not earlier than Auction Agent makes determination 1:00 P.M. pursuant to
1:00 P.M. Paragraph 11(d)(i) of the Articles Supplementary.
By approximately Auction Agent advises Company of results of Auction as
3:00 P.M. provided in Paragraph 11(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 11(e) of the Articles
Supplementary.
By approximately 10:00 A.M. Auction Agent gives notice of Auction results as set forth
on the next succeeding in Section 2.4 hereof.
Business Day
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 New York Clearing House or
similar next-day funds an amount in cash equal to (i) in the case of
any Auction Date immediately preceding a 7-day Dividend Period or
Short-Term 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) $50,000, times (D) the sum of the
aggregate number of Outstanding Shares of AMPS for which the Auction
is conducted and (ii) in the case of any Long Term Dividend Period,
the amount determined by mutual consent of
9
11
the Company and the Broker-Dealers pursuant to Section 3.5 of the
Broker-Dealer Agreements. In lieu of making such payment in New York
Clearing House or similar next-day funds, the Company may make such
payment by noon on the Business Day immediately following the Auction
Date in the form of Federal funds or similar same-day funds. 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 without the prior written approval of the Auction
Agent, which written approval shall not be unreasonably withheld. The
Company may designate an Affiliate and 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
shall from time to time 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 Company and 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 an Existing Holder or Potential Holder. The Company shall notify
the Auction Agent if the Company or, to the best of the Company's knowledge,
any Affiliate of the Company becomes an Existing Holder of any shares of AMPS.
Any shares of AMPS redeemed, purchased or otherwise acquired (i) by the Company
shall not be reissued 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 shall, in reasonable detail, accurately and
fairly reflect the actions taken by the Auction Agent hereunder. The Company
agrees to keep any information regarding the customers of any Broker-Dealer
received from the Auction Agent in connection with this Agreement or any
Auction confidential and shall not disclose such information or permit the
disclosure of such information without the prior written consent of the
10
12
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.
3. The Auction Agent as Paying Agent.
3.1 Paying Agent.
The Board of Directors of the Company has adopted a resolution
appointing IBJ Xxxxxxxx Bank & Trust Company as transfer agent, registrar,
dividend disbursing agent and redemption agent for the Company in connection
with any shares of AMPS (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 as
Paying Agent with respect to the shares of AMPS and as set forth in this
Section 3.
3.2 The Company's Notices to Paying Agent.
Whenever any shares of AMPS are to be redeemed, the Company shall
promptly deliver to the Paying Agent the Notice of Redemption, which will be
mailed by the Company to each Holder, at least five days prior to the date such
Notice of Redemption is required to be mailed by the Articles Supplementary.
The Paying Agent shall have no responsibility to confirm or verify the accuracy
of any such notice.
3.3 Company to Provide Funds for Dividends,
Redemptions and Additional Dividends.
a. Not later than noon, on the Business Day immediately
preceding each Dividend Payment Date, the Company shall deposit with
the Paying Agent an aggregate amount of New York Clearing House or
similar next-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. In lieu of making such
deposit in New York Clearing House or similar next-day funds, the
Company may make such deposit by noon on each Dividend Payment Date in
the form of Federal funds or similar same-day funds.
b. If the Company shall give the Notice of Redemption
then, by noon of the Business Day immediately preceding the date fixed
for redemption, the Company shall deposit in trust with the Paying
Agent an aggregate amount of New York Clearing House or similar next-
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
11
13
redemption price to the Holders of shares of AMPS called for
redemption upon surrender of the certificate or certificates therefor.
In lieu of making such deposit in New York Clearing House or similar
next-day funds, the Company may make such deposit by noon on the date
fixed for redemption in the form of Federal funds or similar same-day
funds.
c. If the Company provides notice to the Auction Agent
of a Retroactive Taxable Allocation, the Company shall, within 30 days
after such notice is given and by noon of the Business Day immediately
preceding the date fixed for payment of an Additional Dividend,
deposit in trust with the Paying Agent an aggregate amount of New York
Clearing House or similar next-day funds equal to such Additional
Dividend and shall give the Paying Agent irrevocable instructions and
authority to pay the Additional Dividends to Holders (or former
Holders) of AMPS entitled thereto. In lieu of making such deposit in
New York Clearing House or similar next-day funds, the Company may
make such deposit by noon on the date fixed for payment of an
Additional Dividend in the form of Federal funds or similar same-day
funds.
3.4 Disbursing Dividends, Redemption Price
and Additional Dividends.
After receipt of the New York Clearing House or similar next-day funds
(or Federal funds or similar same-day funds) and instructions from the Company
described in Sections 3.3(a), (b) and (c) above, the Paying Agent shall pay to
the Holders (or former Holders) entitled thereto (i) on each corresponding
Dividend Payment Date, dividends on the AMPS, (ii) on any date fixed for
redemption, the redemption price of any shares of AMPS called for redemption
and (iii) on the date fixed for payment of an Additional Dividend, such
Additional Dividend. The amount of dividends for any Dividend Period to be paid
by the Paying Agent to Holders will be determined by the 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 amount of Additional Dividends to be paid by the Paying Agent in the event
of a Retroactive Taxable Allocation to Holders will be determined by the
Company pursuant to Paragraph 2(e) 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 the 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 the Notice of Redemption.
4. The Paying Agent as Transfer Agent and Registrar.
4.1 Original Issue of Stock Certificates.
On the Date of Original Issue, one certificate for the AMPS shall be
issued by the Company and registered in the name of Cede & Co., as nominee of
the Securities Depository, and countersigned by the Paying Agent.
12
14
4.2 Registration of Transfer or Exchange of Shares.
Except as provided in this Section 4.2, the shares of the 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 the AMPS may, at the Company's request, 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 certificates 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 to the collection of taxes in connection
with any registration of transfer and exchange or funds necessary for the
payment of such taxes. If the certificates for shares of AMPS are not held by
the Securities Depository or its nominee, payments upon transfer of shares in
an Auction shall be made in 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 transfer
from a certificate evidencing shares of AMPS shall be accompanied by an opinion
of counsel stating that such legend may be removed and such shares 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 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 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 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
such provisions of applicable law and the By-Laws and resolutions of the
Company.
4.5 Disposition of Cancelled Certificates; Record Retention.
The Paying Agent shall retain stock certificates which have been
cancelled 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 shall, upon written request from the Company, afford to the
Company, its agents and counsel access at reasonable times during normal
business hours to
13
15
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 cancelled certificates and accompanying
documentation. The Company shall, at its expense, 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 shall also undertake to furnish to the Securities and
Exchange Commission, upon demand, at either the 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 shall not be unreasonably withheld, 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 AMPS, that remain with the Paying Agent after 12 months
shall be repaid to the Company upon the written request of the Company.
5. Representations and Warranties.
(a) The Company represents and warrants to the Auction Agent that:
(i) the Company is a duly incorporated and validly
existing 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 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 non-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
14
16
such enforceability to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equitable principles;
(iv) the form of certificate evidencing the shares of AMPS
comply with all applicable laws of the State of Maryland;
(v) the shares of AMPS have been duly and validly
authorized by the Company and, upon completion of the initial sale of
the shares of such AMPS and receipt of payment therefor, will be
validly issued, fully paid and nonassessable;
(vi) the offering of the shares of AMPS has been
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 the issuance of the shares
of AMPS except as required by applicable state securities or insurance
laws, all of which have been taken;
(vii) the execution and delivery of this Agreement and the
issuance and delivery of the shares 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 the issuance of the shares of AMPS.
(b) 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.
6. 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 specifically set forth 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 or for any error of judgment made by it in the
performance of its duties under this Agreement. The Auction Agent
15
17
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 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 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 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 to in writing with
the Company.
(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 adequacy
of this Agreement, the Broker-Dealer Agreements or AMPS.
6.4 Compensation, Expenses and Indemnification.
(a) The Company shall pay the Auction Agent from time to
time such compensation for all services rendered by it under this
Agreement and the Broker-Dealer Agreements as shall be set forth in a
separate writing signed by the Company and the Auction Agent, subject
to adjustment if the AMPS are no longer held of record by the
Securities Depository or its nominee or if there shall be such other
change as shall materially increase 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 the Broker-Dealer Agreements (including the
reasonable compensation, expenses and disbursements of its agents and
16
18
counsel), except any expense, disbursement and advances 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 the Broker-Dealer
Agreements, including the costs and expenses of defending itself
against any claim or liability in connection with its exercise or
performance of any of its duties hereunder and thereunder, except such
as may result from its negligence or bad faith.
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it
shall be terminated as provided in this Section 7.1. The Company may
terminate this Agreement at any time by so notifying the Auction
Agent, provided that if any AMPS remain outstanding the Company has
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 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.
(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, promptly deliver 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,
promptly transfer to the Company or any successor auction agent any
funds deposited by the Company with the Auction Agent (whether in its
capacity as Auction Agent or Paying Agent) pursuant to this Agreement
which have not previously been distributed 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 addressed to it at its address, or telecopy number set forth
below:
17
19
If to the Company, MuniYield New Jersey Fund, Inc.
addressed: 000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to the Auction IBJ Xxxxxxxx Bank & Trust Company
Agent, addressed: Xxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Auction Window
Subcellar 1
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
or such other address or telecopy number as such party may hereafter 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 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, 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. 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 of
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.
18
20
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 unreasonably withheld.
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.
19
21
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.
MUNIYIELD NEW JERSEY FUND, INC.
By:
----------------------------------
Title: Treasurer
IBJ XXXXXXXX BANK & TRUST COMPANY
By:
----------------------------------
Title: Assistant Vice President
