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Exhibit (k)(2)
COLONIAL
Broker-Dealer Agreement
Basic Terms for Acting as a Broker-Dealer
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July 20, 1999
These basic terms ("Basic Terms") set forth the general terms and
conditions pursuant to which a broker-dealer identified in an Acceptance Letter
(together with its successors and assigns, a "BD") will act as a broker-dealer
for Municipal Auction Rate Cumulative Preferred ("Municipal Preferred") shares
issued by investment companies, now or hereafter organized, registered under the
Investment Company Act of 1940, as amended, as further identified by the Request
Letters (the "Trusts"), for which Colonial Management Associates, Inc.
("Adviser") is the investment adviser.
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Each Trust has issued or may issue shares of Municipal Preferred,
pursuant to its Declaration of Trust and By-Laws. A bank or trust company
specified in the Request Letter will act as the auction agent (the "Auction
Agent") of such Trust pursuant to authority granted it in the Auction Agency
Agreement.
The By-Laws of each Trust shall provide that, for each Subsequent
Rate Period of any series of Municipal Preferred of such Trust then outstanding,
the Applicable Rate for such series for such Subsequent Rate Period shall,
except under certain conditions, be the rate per annum that the Auction Agent of
such Trust advises results from implementation of the Auction Procedures for
such series. The Board of Trustees of each Trust shall adopt a resolution
appointing the Auction Agent as auction agent for purposes of the Auction
Procedures for each series of Municipal Preferred of such Trust.
The Auction Procedures of each Trust will require the participation
of one or more Broker-Dealers for each series of Municipal Preferred of such
Trust. BD will act as a Broker-Dealer for each series of Municipal Preferred of
each Trust identified in a Request Letter.
1. Definitions and Rules of Construction.
1.1. Terms Defined by Reference to By-Laws.
Capitalized terms not defined herein shall have the respective
meanings specified in the By-Laws of the relevant Trust.
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1.2. Terms Defined Herein.
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Acceptance Letter" shall mean the letter from Adviser to BD
pursuant to which the Adviser appoints BD as a Broker Dealer for each
series of Municipal Preferred issued by any Trust that has executed a
Request Letter.
(b) "Agreement", with respect to any Trust, shall mean the Basic
Terms, together with the Acceptance Letter and the Request Letter relating
to one or more series of Municipal Preferred of such Trust and any other
substantially similar agreement among such Trust, the Adviser, any Auction
Agent for such Trust and/or BD.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Agency Agreement", with respect to any Trust, shall
mean the Auction Agency Agreement between such Trust and the Auction Agent
relating to one or more series of Municipal Preferred of such Trust.
(e) "Auction Procedures", with respect to any Trust, shall mean the
auction procedures constituting Part II of Section 12.1 of the By-Laws of
such Trust as of the date of issuance of the Municipal Preferred shares of
such Trust.
(f) "Authorized Officer" of an Auction Agent shall mean each Senior
Vice President, Vice President, Assistant Vice President, Assistant
Treasurer and Assistant Secretary of such Auction Agent assigned to its
Corporate Trust and Agency Group and every other officer or employee of
such Auction Agent designated as an "Authorized Officer" for purposes of
the Agreement in a communication to BD.
(g) "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of the Agreement in a
communication to any Auction Agent.
(h) "By-Laws", with respect to any Trust, shall mean the By-Laws, as
amended and restated, of such Trust, a copy of which will be attached to
the Request Letter of such Trust.
(i) "Municipal Preferred" shall mean the preferred shares, no par
value, of any Trust designated as its "Municipal Auction Rate Cumulative
Preferred Shares" and bearing such further designation as to series as the
Board of Trustees of such Trust or any committee thereof shall specify, as
set forth in a Request Letter.
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(j) "Request Letter", with respect to any Trust, shall mean the
letter from such Trust to the Adviser and the Auction Agent for such Trust
pursuant to which such Trust appoints BD as a Broker-Dealer for each
series of Municipal Preferred of such Trust.
(k) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit A.
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 each 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 such Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof", "herein", "hereto", and other words of
similar import refer to such Agreement as a whole.
(d) All references herein to a particular time of day shall be to
New York City time.
2. The Auction.
2.1. Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The provisions of the Auction Procedures of any Trust will be
followed by the Auction Agent of such Trust for the purpose of determining the
Applicable Rate for any Subsequent Rate Period of any series of Municipal
Preferred of such Trust for which the Applicable Rate is to be determined by an
Auction. Each periodic operation of such procedures is hereinafter referred to
as an "Auction."
(b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their entirety
and shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of, and
limitations and restrictions placed upon, a Broker-Dealer under each Agreement
for each series of Municipal Preferred. BD understands that other Persons
meeting the requirements specified in the definition of "Broker-Dealer"
contained in the Auction Procedures may execute Agreements and participate as
Broker-Dealers in Auctions.
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2.2. Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for any series of
Municipal Preferred, the Auction Agent for such series shall advise the
Broker-Dealers for such series by telephone of the Maximum Rate therefor and the
Reference Rate(s) and Treasury Note Rate(s), as the case may be, used in
determining such Maximum Rate.
(b) In the event that any Auction Date for any series of Municipal
Preferred shall be changed after the Auction Agent for such series has given the
notice referred to in clause (vi) of paragraph (a) of the Settlement Procedures,
or after the notice referred to in Section 2.5(a) hereof, if applicable, such
Auction Agent, by such means as such Auction Agent deems practicable, shall give
notice of such change to BD, if it is a Broker-Dealer for such series, 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) For purposes of maintaining its list of Existing Holders, the
Auction Agent for any series of Municipal Preferred from time to time may
request any Broker-Dealer to provide such Auction Agent with a list of Persons
who such Broker-Dealer believes should be Existing Holders based upon inquiries
of those Persons such Broker-Dealer believes are Beneficial Owners as a result
of the most recent Auction and with respect to each such Person, the number of
shares of such series of Municipal Preferred such Broker-Dealer believes are
owned by such Person. BD shall comply with any such request relating to a series
of Municipal Preferred in respect of which BD was named a Broker-Dealer, and the
Auction Agent shall keep confidential any such information so provided by BD and
shall not disclose any information so provided by BD to any Person other than
the Trust and BD.
(d) BD agrees to maintain a list of customers relating to a series
of Municipal Preferred and to use its best efforts, subject to existing laws and
regulations, to contact the customers on such list whom BD believes may be
interested in participating in the Auction on each Auction Date, as a Potential
Holder or a Potential Beneficial Owner, for the purposes set forth in the
Auction Procedures. Nothing herein shall require BD to submit an Order for any
customer in any Auction.
(e) The Auction Agent's registry of Existing Holders of shares of a
series of Municipal Preferred shall be conclusive and binding on BD. BD may
inquire of the Auction Agent between 3:00 P.M. on the Business Day preceding an
Auction for shares of a series of Municipal Preferred and 9:30 A.M. on the
Auction Date for such Auction to ascertain the number of shares of such series
in respect of which the Auction Agent has determined BD to be an Existing
Holder. If BD believes it is the Existing Holder of fewer shares of such series
than specified by the Auction Agent in response to BD's inquiry, BD may so
inform the Auction Agent of that belief. BD shall not, in its capacity as
Existing Holder of shares of such series, submit Orders in such Auction in
respect of shares of such series covering in the aggregate more than the number
of shares of such series specified by the Auction Agent in response to BD's
inquiry.
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2.3. Auction Schedule; Method of Submission of Orders.
(a) Each Trust and the Auction Agent for such Trust shall conduct
Auctions for Municipal Preferred in accordance with the schedule set forth
below. Such schedule with respect to any series of Municipal Preferred of any
Trust may be changed by the Auction Agent for such series with the consent of
such Trust, which consent shall not be unreasonably withheld. Such Auction Agent
shall give written notice of any such change to each Broker-Dealer of such
series. Such notice shall be given prior to the close of business on the
Business Day next preceding the first Auction Date on which such change shall be
effective.
Time Event
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By 9:30 A.M. Auction Agent for such series advises such Trust
and the Broker-Dealers for such series of the
applicable Maximum Rate and the Reference Rate(s)
and Treasury Note Rate(s), as the case may be,
used in determining such Maximum Rate as set forth
in Section 2.2(a) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Section
2(a) of the Auction Procedures of such Trust.
Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant to
Section 3(a) of the Auction Procedures of such
Trust.
By approximately 3:00 P.M. Auction Agent advises Trust of results of Auction
as provided in Section 3(b) of the Auction
Procedures of such Trust.
Submitted Bids and Submitted Sell Orders are
accepted and rejected and shares of such series of
Municipal Preferred allocated as provided in
Section 4 of the Auction Procedures of such Trust.
Auction Agent gives notice of Auction results as
set forth in Section 2.4(a) hereof.
(b) BD shall submit Orders to the appropriate Auction Agent in
writing substantially in the form attached hereto as Exhibit B. BD shall submit
a separate Order to such Auction Agent for each Potential Holder or Existing
Holder with respect to whom BD is submitting an Order and shall not otherwise
net or aggregate such Orders prior to their submission to such Auction Agent.
(c) BD shall deliver to the appropriate Auction Agent (i) a written
notice in substantially the form attached hereto as Exhibit C of transfers of
shares of Municipal Preferred to
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BD from 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
any shares of Municipal Preferred to be transferred to or by any Person that
purchased or sold shares of Municipal Preferred through BD pursuant to an
Auction. Such Auction Agent is not required to accept any such notice described
in clause (i) for an Auction unless it is received by the Auction Agent by 3:00
P.M. on the Business Day preceding such Auction.
(d) BD and other Broker-Dealers may submit Orders in Auctions for
their own accounts (including Orders for their own accounts where the Order is
placed beneficially for a customer) unless the relevant Trust shall have
notified BD and all other Broker-Dealers that they may no longer do so, in which
case Broker-Dealers may continue to submit Hold Orders and Sell Orders for their
own accounts.
(e) BD agrees to handle its customers' orders in accordance with its
duties under applicable securities laws and rules.
(f) To the extent that pursuant to Section 4 of the Auction
Procedures of any Trust, BD continues to hold, sells, or purchases a number of
shares that is fewer than the number of shares in an Order submitted by BD to
the Auction Agent in which BD designated itself as an Existing Holder or
Potential Holder in respect of customer Orders, BD shall make appropriate pro
rata allocations among its customers for which it submitted Orders of similar
tenor. If as a result of such allocations, any Beneficial Owner would be
entitled or required to sell, or any Potential Beneficial Owner would be
entitled or required to purchase, a fraction of a share of Municipal Preferred
on any Auction Date, BD shall, in such manner as it shall determine in its sole
discretion, round up or down the number of shares of Municipal Preferred to be
purchased or sold on such Auction Date by any Beneficial Owner or Potential
Beneficial Owner on whose behalf BD submitted an Order so that the number of
shares so purchased or sold by each such Beneficial Owner or Potential
Beneficial Owner on such Auction Date shall be whole shares of Municipal
Preferred.
2.4. Notices.
(a) On each Auction Date for any series of Municipal Preferred, the
Auction Agent for such series shall notify BD, if BD is a Broker-Dealer of such
series, by telephone of the results of the Auction as set forth in paragraph (a)
of the Settlement Procedures. By approximately 11:30 A.M. on the Business Day
next succeeding such Auction Date, the relevant Auction Agent shall confirm to
BD in writing the disposition of all Orders submitted by BD in such Auction.
(b) BD shall notify each Existing Holder, Potential Holder,
Beneficial Owner or Potential Beneficial Owner of shares of Municipal Preferred
with respect to whom BD has submitted an Order as set forth in paragraph (b) of
the Settlement Procedures and take such other action as is required of BD
pursuant to the Settlement Procedures.
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2.5. Designation of Special Rate Period.
(a) If any Trust delivers to its Auction Agent a notice of the
Auction Date for any series of Municipal Preferred of such Trust for a Rate
Period thereof that next succeeds a Rate Period that is not a Minimum Rate
Period in the form of Exhibit C to the Auction Agency Agreement, and BD is a
Broker-Dealer of such series, the Auction Agent shall deliver such notice to BD
as promptly as practicable after its receipt of such notice from such Trust.
(b) If the Board of Trustees of any Trust proposes to designate any
succeeding Subsequent Rate Period of any series of Municipal Preferred of such
Trust as a Special Rate Period and such Trust delivers to its Auction Agent a
notice of such proposed Special Rate Period in the form of Exhibit D to the
Auction Agency Agreement, and BD is a Broker-Dealer for such series, such
Auction Agent shall deliver such notice to BD as promptly as practicable after
its receipt of such notice from the Trust.
(c) If the Board of Trustees of any Trust determines to designate
such succeeding Subsequent Rate Period as a Special Rate Period, and such Trust
delivers to its Auction Agent a notice of such Special Rate Period in the form
of Exhibit E to the Auction Agency Agreement not later than 11:00 A.M. on the
second Business Day next preceding the first day of such Rate Period (or by such
later time or date, or both, as may be agreed to by such Auction Agent), and BD
is a Broker-Dealer for such series, such Auction Agent shall deliver such notice
to BD not later than 3:00 P.M. on such second Business Day (or, if such Auction
Agent has agreed to a later time or date, as promptly as practicable
thereafter).
(d) If any Trust shall deliver to its Auction Agent a notice not
later than 11:00 A.M. on the second Business Day next preceding the first day of
any Rate Period (or by such later time or date, or both, as may be agreed to by
such Auction Agent) stating that such Trust has determined not to exercise its
option to designate such succeeding Subsequent Rate Period as a Special Rate
Period, in the form of Exhibit F to the Auction Agency Agreement, or shall fail
to timely deliver either such notice or a notice in the form of Exhibit E to the
Auction Agency Agreement], and BD is a Broker-Dealer for such series, such
Auction Agent shall deliver a notice in the form of Exhibit F to the Auction
Agency Agreement to BD not later than 3:00 P.M. on such second Business Day (or,
if such Auction Agent has agreed to a later time or date, as promptly as
practicable thereafter).
2.6. Allocation of Taxable Income.
If any Trust delivers to its Auction Agent a notice in the form of
Exhibit I to the Auction Agency Agreement designating all or a portion of any
dividend on shares of any series of Municipal Preferred of such Trust to consist
of net capital gains or other income taxable for Federal income tax purposes,
and BD is a Broker-Dealer for such series, such Auction Agent shall deliver such
notice to BD on the Business Day following its receipt of such notice from such
Trust. On or prior to the Auction Date referred to in such notice, BD will
contact each of its customers that is a Beneficial Owner of shares of such
series of Municipal Preferred or a Potential Beneficial Owner of shares of such
series of Municipal Preferred interested in submitting an Order in the Auction
to be held on such Auction Date, and BD will notify such Beneficial Owners and
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Potential Beneficial Owners of the contents of such notice. BD will be deemed to
have notified such Beneficial Owners and Potential Beneficial Owners if, for
each of them, (i) BD makes a reasonable effort to contact such Beneficial Owner
or Potential Beneficial Owner by telephone, and (ii) upon failing to contact
such Beneficial Owner or Potential Beneficial Owner by telephone BD mails
written notification to such Beneficial Owner or Potential Beneficial Owner at
the mailing address indicated in the account records of BD.
The Auction Agent for any series of Municipal Preferred shall be
required to notify BD if it is a Broker-Dealer for such series within two
Business Days after each Auction of such series that involves an allocation of
income taxable for Federal income tax purposes as to the dollar amount per share
of such taxable income and income exempt from Federal income taxation included
in the related dividend.
2.7. Failure to Deposit.
(a) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of any series of Municipal Preferred of any Trust during any Rate
Period thereof (other than any Special Rate Period of more than 364 Rate
Period Days or any Rate Period succeeding any Special Rate Period of more
than 364 Rate Period Days during which a Failure to Deposit occurred that
has not been cured), but, prior to 12:00 Noon, New York City time, on the
third Business Day next succeeding the date on which such Failure to
Deposit occurred, such Failure to Deposit shall have been cured in
accordance with Section 2.7 of the Auction Agency Agreement and such Trust
shall have paid to the Auction Agent for such series the applicable Late
Charge as described in Section 2.7 of the Auction Agency Agreement,
then, if BD is a Broker-Dealer for such series, such Auction Agent shall deliver
a notice in the form of Exhibit G to the Auction Agency Agreement by first-class
mail, postage prepaid, to BD not later than one Business Day after its receipt
of the payment from such Trust curing such Failure to Deposit and such Late
Charge.
(b) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of any series of Municipal Preferred of any Trust during any Rate
Period thereof (other than any Special Rate Period of more than 364 Rate
Period Days or any Rate Period succeeding any Special Rate Period of more
than 364 Rate Period Days during which a Failure to Deposit occurred but
has not been cured), and, prior to 12:00 Noon, New York City time, on the
third Business Day next succeeding the date on which such Failure to
Deposit occurred, such Failure to Deposit shall not have been cured as
described in Section 2.7 of the Auction Agency Agreement or such Trust
shall not have paid to the Auction Agent for such series the applicable
Late Charge described in Section 2.7 of the Auction Agency Agreement; or
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(ii) any Failure to Deposit shall have occurred with respect to
shares of any series of Municipal Preferred of any Trust during a Special
Rate Period thereof of more than 364 Rate Period Days, or during any Rate
Period thereof succeeding any Special Rate Period of more than 364 Rate
Period Days during which a Failure to Deposit occurred that has not been
cured, and, prior to 12:00 noon, New York City time, on the fourth
Business Day preceding the Auction Date for the Rate Period subsequent to
such Rate Period, such Failure to Deposit shall not have been cured as
described in Section 2.7 of the Auction Agency Agreement or such Trust
shall not have paid to the Auction Agent for such series the applicable
Late Charge described in Section 2.7 of the Auction Agency Agreement;
then such Auction Agent shall deliver a notice in the form of Exhibit H to the
Auction Agency Agreement to the Broker-Dealers for such series not later than
one Business Day after the receipt of the payment from such Trust curing such
Failure to Deposit and such Late Charge.
2.8. Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date for any series
of Municipal Preferred specified in, or on Exhibit A to, the Request Letter of
any Trust, the Auction Agent for such series shall pay to BD from moneys
received from such Trust an amount equal to the product of (a) (i) in the case
of any Auction Date immediately preceding a Rate Period of such series
consisting of 364 Rate Period Days or fewer, 1/4 of 1%, or (ii) in the case of
any Auction Date immediately preceding a Rate Period of such series consisting
of more than 364 Rate Period Days, such percentage as may be agreed upon by such
Trust and BD with respect to such Rate Period, times (b) a fraction, the
numerator of which is the number of Rate Period Days in the Rate Period therefor
beginning on such Business Day and the denominator of which is 365 if such Rate
Period consists of 7 Rate Period Days and 360 for all other Rate Periods, times
(c) $25,000 times (d) the sum of (i) the aggregate number of shares of such
series placed by BD in such Auction that were (A) the subject of Submitted Bids
of Existing Holders submitted by BD and continued to be held as a result of such
submission and (B) the subject of Submitted Bids of Potential Holders submitted
by BD and purchased as a result of such submission plus (ii) the aggregate
number of shares of such series subject to valid Hold Orders (determined in
accordance with paragraph (d) of Section 2 of the Auction Procedures) submitted
to the Auction Agent by BD plus (iii) the number of shares of Municipal
Preferred deemed to be subject to Hold Orders of Existing Holders pursuant to
paragraph (c) of Section 2 of the Auction Procedures of such Trust that were
acquired by BD for its own account or were acquired by BD for its customers who
are Beneficial Owners.
For purposes of subclause (d)(iii) of the foregoing paragraph, if
any Existing Holder or Beneficial Owner who acquired shares of any series of
Municipal Preferred 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.
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2.9. Settlement.
(a) If any Existing Holder or Beneficial Owner with respect to whom
BD has submitted a Bid or Sell Order for shares of Municipal Preferred of any
series that was accepted in whole or in part fails to instruct its Agent Member
to deliver the shares of Municipal Preferred subject to such Bid or Sell Order
against payment therefor, BD, if it knows the identity of such Agent Member,
shall instruct such Agent Member to deliver such shares against payment therefor
and, if such Agent Member fails to comply with such instructions, BD may deliver
to the Potential Holder or Potential Beneficial Owner with respect to whom BD
submitted a Bid for shares of Municipal Preferred of such series that was
accepted in whole or in part a number of shares of Municipal Preferred of such
series that is less than the number of shares of Municipal Preferred of such
series specified in such Bid to be purchased by such Potential Holder or
Potential Beneficial Owner.
(b) Neither the Auction Agent nor the Trust shall have any
responsibility or liability with respect to the failure of an Existing Holder,
Beneficial Owner, Potential Holder or Potential Beneficial Owner or its
respective Agent Member to deliver shares of Municipal Preferred of any series
or to pay for shares of Municipal Preferred of any series sold or purchased
pursuant to the Auction Procedures or otherwise.
(c) Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event BD is an Existing Holder
with respect to shares of a series of Municipal Preferred and the Auction
Procedures provide that BD shall be deemed to have submitted a Sell Order in an
Auction with respect to such shares if BD fails to submit an Order in that
Auction with respect to such shares, BD shall have no liability to any Person
for failing to sell such shares pursuant to such a deemed Sell Order if (i) such
shares were transferred by the beneficial owner thereof without notification of
such transfer in compliance with the Auction Procedures or (ii) BD has indicated
to the Auction Agent pursuant to Section 2.2(e) of this Agreement that,
according BD's records, BD is not the Existing Holder of such shares.
(d) Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner of shares of a series of Municipal Preferred with respect to
whom a Broker-Dealer submitted a Bid to the Auction Agent for such shares that
was accepted in whole or in part, or submitted or is deemed to have submitted a
Sell Order for such shares that was accepted in whole or in part, fails to
instruct its Agent Member to deliver such shares against payment therefor,
partial deliveries of shares of Municipal Preferred that have been made in
respect of Potential Holders' or Potential Beneficial Owners' Submitted Bids for
shares of such series that have been accepted in whole or in part shall
constitute good delivery to such Potential Holders and Potential Beneficial
Owners.
(e) Notwithstanding the foregoing terms of this Section, any
delivery or non-delivery of shares of Municipal Preferred of any series which
represents any departure from the results of an Auction for shares of such
series, as determined by the Auction Agent, shall be of no effect for purposes
of the registry of Existing Holders maintained by the Auction Agent pursuant to
the Auction Agency Agreement unless and until the Auction Agent shall have been
notified of such delivery or non-delivery.
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(f) The Auction Agent shall have no duty or liability with respect
to enforcement of this Section 2.9.
3. The Auction Agent.
3.1. Duties and Responsibilities.
(a) Each Auction Agent is acting solely as agent for the Trusts with
whom such Auction Agent has entered into Request Letters and owes no fiduciary
duties to any other Person, other than such Trusts, by reason of the Agreements
to which such Auction Agent is a party.
(b) Each Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth in the Agreements to which it is a
party, and no implied covenants or obligations shall be read into such
Agreements against such Auction Agent.
(c) In the absence of bad faith or negligence on its part, each
Auction Agent shall not be liable for any action taken, suffered, or omitted or
for any error of judgment made by it in the performance of its duties under the
Agreements to which it is a party. Each Auction Agent shall not be liable for
any error of judgment made in good faith unless such Auction Agent shall have
been negligent in ascertaining the pertinent facts.
3.2. Rights of the Auction Agents.
(a) Each 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 believed in good faith
by it to be genuine. Each Auction Agent shall not be liable for acting upon any
telephone communication authorized by the Agreements to which it is a party that
such Auction Agent believes in good faith to have been given by the appropriate
Trust, by the Adviser or by a Broker-Dealer. Each Auction Agent may record
telephone communications with the Broker-Dealers.
(b) Each Auction Agent may consult with counsel of its choice and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) Each 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.
3.3. Auction Agents' Disclaimers.
Each Auction Agent makes no representation as to the validity or
adequacy of the Agreements to which it is a party, the Auction Agency Agreements
to which it is a party or the shares of Municipal Preferred of any series.
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4. Miscellaneous.
4.1. Termination.
Any party to any Agreement may terminate such Agreement at any time
on five days' notice to the other parties to such Agreement, provided that the
Trust party to such Agreement shall not terminate the Agreement unless at least
one Broker-Dealer Agreement would be in effect for each series of Municipal
Preferred of such Trust after such termination. Each Agreement shall
automatically terminate with respect to any series of Municipal Preferred with
respect to which the relevant Auction Agency Agreement has terminated.
4.2. Participant in Securities Depository; Payment of Dividends in
Same-Day Funds.
(a) BD is, and shall remain for the term of the Agreements, a member
of, or participant in, the Securities Depository (or an affiliate of such a
member or participant).
(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 Municipal
Preferred available in same-day funds on each Dividend Payment Date to customers
that use BD or affiliate as Agent Member.
4.3. Communications.
Except for (i) communications authorized to be by telephone by the
Agreement of any Trust or the Auction Procedures of such Trust 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
under such Agreement shall be in writing (including telecopy or similar writing)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to a Trust, [Name of Trust]
addressed: Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Adviser, Colonial Management Associates, Inc.
addressed: Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to BD, to the address or telecopy number as set forth in the Acceptance
Letter.
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If to an Auction Agent, to the address or telecopy number as set forth in
the Request Letter, or such other address or telecopy number as such party may
hereafter specify for such purpose by notice to the other parties. 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 an Auction Agent by an Authorized Officer of such
Auction Agent. BD may record telephone communications with any Auction Agent.
4.4. Entire Agreement.
Each Agreement contains the entire agreement among the parties
thereto relating to the subject matter thereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or implied, among the parties thereto relating to the subject matter
thereof. Each Agreement supersedes any prior agreement to which BD was a party
in respect of any Trust.
4.5. Benefits.
Nothing in any Agreement, express or implied, shall give to any
person, other than the Trust party to such Agreement, the Adviser, the Auction
Agent party to such Agreement and BD and their respective successors and
assigns, any benefit or any legal or equitable right, remedy or claim under such
Agreement.
4.6. Amendment; Waiver.
(a) Each 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 any party to any Agreement to exercise any right or
remedy thereunder in the event of a breach thereof by any other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
4.7. Successors and Assigns.
Each Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the respective successors and assigns of the Trust party to
such Agreement, the Adviser, the Auction Agent party to such Agreement and BD.
4.8. 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.
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4.9. Governing Law.
EACH AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
4.10. Declaration of Trust.
The Declaration of each Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts. Each Agreement to which a Trust that is a
Massachusetts business trust is a party has been duly executed on behalf of such
Trust by an officer of such Trust acting in such capacity and not individually,
and the obligations of such Trust set forth in such Agreement are not binding
upon any of such Trust's trustees, officers or shareholders individually, but
are binding only upon the assets and property of such Trust.
