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SUPPLEMENTAL INDENTURE OF TRUST
by and between
ENERGY INCOME AND GROWTH FUND,
as Issuer
and
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee
Authorizing the Issuance of
$[________________]
Energy Income and Growth Fund
Auction Rate Fund Notes
Series A
Dated as of [___________], 2005
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TABLE OF CONTENTS
SECTION HEADING PAGE
ARTICLE I DEFINITIONS AND USE OF PHRASES.........................................................1
Section 1.01. Definitions............................................................................1
Section 1.02. Interpretation........................................................................10
ARTICLE II NOTE DETAILS, FORM OF NOTES, REDEMPTION OF NOTES AND USE OF PROCEEDS OF
NOTES.................................................................................10
Section 2.01. General Terms.........................................................................10
Section 2.02. Interest..............................................................................11
Section 2.03. Redemption............................................................................13
Section 2.04. Designation of Rate Period............................................................17
Section 2.05. Restrictions on Transfer..............................................................18
Section 2.06. 1940 Act Energy Notes Asset Coverage..................................................19
Section 2.07. Energy Notes Basic Maintenance Amount.................................................19
Section 2.08. Certain Other Restrictions............................................................19
Section 2.09. Compliance Procedures for Asset Maintenance Tests.....................................19
Section 2.10. Delivery of Notes.....................................................................20
Section 2.11. Trustee's Authentication Certificate..................................................21
ARTICLE III GENERAL PROVISIONS....................................................................21
Section 3.01. Date of Execution.....................................................................21
Section 3.02. Laws Governing........................................................................21
Section 3.03. Severability..........................................................................21
Section 3.04. Exhibits..............................................................................22
ARTICLE IV APPLICABILITY OF INDENTURE............................................................22
APPENDIX A - AUCTION PROCEDURES
APPENDIX B - FORM OF NOTES
APPENDIX C - FORM OF TRUSTEE AUTHENTICATION CERTIFICATE
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SUPPLEMENTAL INDENTURE OF TRUST
THIS SUPPLEMENTAL INDENTURE OF TRUST (this "Supplemental Indenture")
dated as of [__________], 2005, is by and between ENERGY INCOME AND GROWTH FUND,
a voluntary association with transferable shares, commonly referred to as a
"Massachusetts business trust," established and existing under the laws of the
Commonwealth of Massachusetts (the "Issuer") and Deutsche Bank Trust Company
Americas, a national banking association duly organized and operating under the
laws of the United States of America (together with its successors, the
"Trustee"), as successor trustee hereunder (all capitalized terms used in these
preambles, recitals and granting clauses shall have the same meanings assigned
thereto in Article I hereof);
W I T N E S S E T H:
WHEREAS, the Issuer has previously entered into an Indenture dated as
of ___________, 2005 (the "Original Indenture," and together with this
Supplemental Indenture, the "Indenture"), between the Issuer and the Trustee;
WHEREAS, the Issuer desires to enter into this Supplemental Indenture
in order to issue Energy Notes pursuant to the terms of the Original Indenture,
including Section 301 thereof;
WHEREAS, the Issuer represents that it is duly established and existing
as a Massachusetts business trust and that by proper action it has duly
authorized the issuance of $[___________] of its Auction Rate Fund Notes, Series
A (the "Series A Energy Notes" or the "Energy Notes"), and it has by proper
action authorized the execution and delivery of this Supplemental Indenture;
WHEREAS, the Energy Notes constitute Securities as defined in the
Indenture;
WHEREAS, the Trustee has agreed to accept the trusts herein contained
upon the terms herein set forth; and
NOW, THEREFORE, it is mutually covenanted and agreed as follows:
ARTICLE I
DEFINITIONS AND USE OF PHRASES
Section 1.01. Definitions. All words and phrases defined in Article I of
the Indenture shall have the same meaning in this Supplemental Indenture, except
as otherwise appears in this Article. In addition, the following terms have the
following meanings in this Supplemental Indenture unless the context clearly
requires otherwise:
"AA Composite Commercial Paper Rate" on any date means (i) the interest
equivalent of the 30-day rate, in the case of a Rate Period which is a Standard
Rate Period or shorter, or the 180-day rate, in the case of all other Rate
Periods on commercial paper on behalf of issuers whose corporate bonds are rated
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"AA" by S&P, or the equivalent of such rating by another nationally recognized
rating agency, as announced by the Federal Reserve Bank of New York for the
close of business on the Business Day immediately preceding such date; or (ii)
if the Federal Reserve Bank of New York does not make available such a rate,
then the arithmetic average of the interest equivalent of such rates on
commercial paper placed on behalf of such issuers, as quoted on a discount basis
or otherwise by the Commercial Paper Dealers to the Auction Agent for the close
of business on the Business Day immediately preceding such date (rounded to the
next highest .001 of 1%). If any Commercial Paper Dealer does not quote a rate
required to determine the "AA" Composite Commercial Paper Rate, such rate shall
be determined on the basis of the quotations (or quotation) furnished by the
remaining Commercial Paper Dealers (or Dealer), if any, or, if there are no such
Commercial Paper Dealers, by the Auction Agent. For purposes of this definition,
(A) "Commercial Paper Dealers" shall mean (1) Citigroup Global Markets Inc.,
Xxxxxx Brothers Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and
Xxxxxxx Sachs & Co.; (2) in lieu of any thereof, its respective Affiliate or
successor; and (3) in the event that any of the foregoing shall cease to quote
rates for commercial paper of issuers of the sort described above, in
substitution therefor, a nationally recognized dealer in commercial paper of
such issuers then making such quotations selected by the Corporation, and (B)
"interest equivalent" of a rate stated on a discount basis for commercial paper
of a given number of days' maturity shall mean a number equal to the quotient
(rounded upward to the next higher one-thousandth of 1%) of (1) such rate
expressed as a decimal, divided by (2) the difference between (x) 1.00 and (y) a
fraction, the numerator of which shall be the product of such rate expressed as
a decimal, multiplied by the number of days in which such commercial paper shall
mature and the denominator of which shall be 360.
"Affiliate" means any person controlled by, in control of or
under common control with the Trust; provided that no Broker-Dealer
controlled by, in control of or under common control with the Issuer
shall be deemed to be an Affiliate nor shall any corporation or any
person controlled by, in control of or under common control with such
corporation one of the trustees, directors or executive officers of
which is also a Trustee of the Issuer be deemed to be an Affiliate
solely because such Trustee, director or executive officer is also a
Trustee of the Issuer.
"Agent Member" means a member of or participant in the
Securities Depository that will act on behalf of a Bidder.
"All Hold Rate" means 80% of the "AA" Composite Commercial
Paper Rate.
"Applicable Rate" means, with respect to each series of Energy
Notes for each Rate Period (i) if Sufficient Clearing Orders exist for
the Auction in respect thereof, the Winning Bid Rate, (ii) if
Sufficient Clearing Orders do not exist for the Auction in respect
thereof, the Maximum Applicable Rate, (iii) in the case where all the
Energy Notes of a series are the subject of Hold Orders for the Auction
in respect thereof, the All Hold Rate, and (iv) if an Auction is not
held for any reason (including the circumstance where there is no
Auction Agent or Broker-Dealer), the Maximum Rate.
"Asset Coverage Cure Date" has the meaning set forth in
Section 2.03(a)(ii).
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"Auction" means each periodic operation of the procedures set
forth under "Auction Procedures."
"Auction Agent" means Deutsche Bank Trust Company Americas
unless and until another commercial bank, trust company, or other
financial institution appointed by a resolution of the Board of
Trustees enters into an agreement with the Issuer to follow the Auction
Procedures for the purpose of determining the Applicable Rate.
"Auction Date" means the first Business Day next preceding the
first day of a Rate Period for each series of Energy Notes.
"Auction Procedures" means the procedures for conducting
Auctions set forth in Appendix A hereto.
"Authorized Denominations" means $25,000 and any integral
multiple thereof.
"Beneficial Owner," with respect to each series of Energy
Notes, means a customer of a Broker-Dealer who is listed on the records
of that Broker-Dealer (or, if applicable, the Auction Agent) as a
holder of such series of Energy Notes.
"Bid" shall have the meaning specified in Appendix A hereto.
"Bidder" shall have the meaning in Appendix A hereto;
provided, however, that neither the Issuer nor any affiliate thereof
shall be permitted to be a Bidder in an Auction, except that any
Broker-Dealer that is an affiliate of the Issuer may be a Bidder in an
Auction, but only if the Orders placed by such Broker-Dealer are not
for its own account.
"Board of Trustees" or "Board" means the Board of Trustees of
the Issuer or any duly authorized committee thereof as permitted by
applicable law.
"Broker-Dealer" means any broker-dealer or broker-dealers, or
other entity permitted by law to perform the functions required of a
Broker-Dealer by the Auction Procedures, that has been selected by the
Issuer and has entered into a Broker-Dealer Agreement that remains
effective.
"Broker-Dealer Agreement" means an agreement among the Auction
Agent and a Broker-Dealer, pursuant to which such Broker-Dealer agrees
to follow the Auction Procedures.
"Business Day" means a day on which the New York Stock
Exchange is open for trading and which is not a Saturday, Sunday or
other day on which banks in the City of New York, New York are
authorized or obligated by law to close.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Commercial Paper Dealers" has the meaning set forth in the
definition of AA Composite Commercial Paper Rate.
"Commission" means the Securities and Exchange Commission.
"Date of Original Issue" means, with respect to the Energy
Notes, ____________, 2005.
"Default" has the meaning set forth in Section 2.02 hereof.
"Default Period" has the meaning set forth in Section 2.02
hereof.
"Default Rate" means the Reference Rate multiplied by three.
"Deposit Securities" means cash and any obligations or
securities, including short term money market instruments that are
Eligible Assets, rated at least AAA, A-2 or SP-2 by S&P, except that,
for purposes of Section 2.03(a)(i) hereof, such obligations or
securities shall be considered "Deposit Securities" only if they are
also rated at least P-2 by Moody's.
"Discount Factor" means the Moody's Discount Factor (if
Xxxxx'x is then rating the Energy Notes), Fitch Discount Factor (if
Fitch is then rating the Energy Notes) or an Other Rating Agency
Discount Factor, whichever is applicable.
"Discounted Value" means the quotient of the Market Value of
an Eligible Asset divided by the applicable Discount Factor, provided
that with respect to an Eligible Asset that is currently callable,
Discounted Value will be equal to the quotient as calculated above or
the call price, whichever is lower, and that with respect to an
Eligible Asset that is prepayable, Discounted Value will be equal to
the quotient as calculated above or the par value, whichever is lower.
"Eligible Assets" means Moody's Eligible Assets or Fitch's
Eligible Assets (if Moody's or Fitch are then rating the Energy Notes)
and/or Other Rating Agency Eligible Assets, whichever is applicable.
"Existing Holder," with respect to Energy Notes of a series,
shall mean a Broker-Dealer (or any such other Person as may be
permitted by the Issuer) that is listed on the records of the Auction
Agent as a holder of Energy Notes of such series.
"Fitch" means Fitch Ratings and its successors at law.
"Fitch Discount Factor" means the discount factors set forth
in the Fitch Guidelines for use in calculating the Discounted Value of
the Issuer's assets in connection with Fitch's ratings of Energy Notes.
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"Fitch Eligible Asset" means assets of the Issuer set forth in
the Fitch Guidelines as eligible for inclusion in calculating the
Discounted Value of the Issuer's assets in connection with Fitch's
ratings of Energy Notes.
"Fitch Guidelines" mean the guidelines provided by Fitch, as
may be amended from time to time, in connection with Fitch's ratings of
Energy Notes.
"Energy Notes Basic Maintenance Amount" as of any Valuation
Date has the meaning set forth in the Rating Agency Guidelines.
"Energy Notes Series A" means the Series A of the Energy Notes
or any other Notes hereinafter designated as Series A of the Energy
Notes.
"Holder" means, with respect to Energy Notes, the registered
holder of notes of each series of Energy Notes as the same appears on
the books or records of the Issuer.
"Hold Order" shall have the meaning specified in Appendix A
hereto.
"Interest Default" has the meaning set forth in Section 2.02
hereof.
"Interest Payment Date" with respect to a series of Energy
Notes means any date on which interest is payable pursuant to Section
2.02 hereof.
"Mandatory Redemption Date" has the meaning set forth in
Section 2.03 hereof.
"Mandatory Redemption Price" has the meaning set forth in
Section 2.03 hereof.
"Market Value" means the fair market value of an asset of the
Issuer as computed as follows: readily marketable portfolio securities
listed on the New York Stock Exchange are valued, except as indicated
below, at the last sale price reflected on the consolidated tape at the
close of the New York Stock Exchange on the business day as of which
such value is being determined. If there has been no sale on such day,
the securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such day,
then the security is valued by such method as the Board of Trustees
shall determine in good faith to reflect its fair market value. Readily
marketable securities not listed on the New York Stock Exchange but
listed on other domestic or foreign securities exchanges or admitted to
trading on the National Association of Securities Dealers Automated
Quotations, Inc. ("Nasdaq") National List are valued in a like manner.
Portfolio securities traded on more than one securities exchange are
valued at the last sale price on the business day as of which such
value is being determined as reflected on the tape at the close of the
exchange representing the principal market for such securities. Readily
marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the investment
adviser to be over-the-counter, but excluding securities admitted to
trading on the Nasdaq National List, are valued at the mean of the
current bid and asked prices as reported by Nasdaq or, in the case of
securities not quoted by Nasdaq, the National Quotation Bureau or such
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other comparable source as the Trustees deem appropriate to reflect
their fair market value. However, certain fixed-income securities may
be valued on the basis of prices provided by a pricing service when
such prices are believed by the Board of Trustees to reflect the fair
market value of such securities. The prices provided by a pricing
service take into account institutional size trading in similar groups
of securities and any developments related to specific securities.
Where securities are traded on more than one exchange and also
over-the-counter, the securities will generally be valued using the
quotations the Board of Trustees believes reflect most closely the
value of such securities.
"Maximum Rate" means, on any date on which the Applicable Rate
is determined, the rate equal to the Applicable Percentage of the
applicable Reference Rate, subject to upward but not downward
adjustment in the discretion of the Board of Trustees after
consultation with the Broker-Dealers, provided that immediately
following any such increase the Issuer would be in compliance with the
Energy Notes Basic Maintenance Amount.
"Minimum Rate" means, on any Auction Date with respect to a
Rate Period of 28 days or fewer, 70% of the AA Composite Commercial
Paper Rate at the close of business on the Business Day next preceding
such Auction Date. There shall be no Minimum Rate on any Auction Date
with respect to a Rate Period of more than the Standard Rate Period.
"Moody's" means Xxxxx'x Investors Service, Inc., a Delaware
corporation, and its successors at law.
"Moody's Discount Factor" means the discount factors set forth
in the Moody's Guidelines for use in calculating the Discounted Value
of the Issuer's assets in connection with Moody's ratings of Energy
Notes.
"Moody's Eligible Assets" means assets of the Issuer set forth
in the Moody's Guidelines as eligible for inclusion in calculating the
Discounted Value of the Issuer's assets in connection with Moody's
ratings of Energy Notes.
"Moody's Guidelines" mean the guidelines provided by Moody's,
as may be amended from time to time, in connection with Moody's ratings
of Energy Notes.
"1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
"1940 Act Energy Notes Asset Coverage" means asset coverage,
as determined in accordance with Section 18(h) of the 1940 Act, of at
least 300% with respect to all outstanding senior securities
representing indebtedness of the Issuer, including all Outstanding
Energy Notes (or such other asset coverage as may in the future be
specified in or under the 1940 Act as the minimum asset coverage for
senior securities representing indebtedness of a closed-end investment
company as a condition of declaring dividends on its common shares),
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determined on the basis of values calculated as of a time within 48
hours next preceding the time of such determination.
"Notes" means Securities of the Issuer ranking on a parity
with the Energy Notes that may be issued from time to time pursuant to
the Indenture.
"Notice of Redemption" means any notice with respect to the
redemption of Energy Notes of a series pursuant to Section 2.03.
"Order" shall have the meaning specified in Appendix A hereto.
"Other Rating Agency" means each rating agency, if any, other
than Moody's or Fitch then providing a rating for the Energy Notes
pursuant to the request of the Issuer.
"Other Rating Agency Discount Factor" means the discount
factors set forth in the Other Rating Agency Guidelines of each Other
Rating Agency for use in calculating the Discounted Value of the
Issuer's assets in connection with the Other Rating Agency's rating of
Energy Notes.
"Other Rating Agency Eligible Assets" means assets of the
Issuer set forth in the Other Rating Agency Guidelines of each Other
Rating Agency as eligible for inclusion in calculating the Discounted
Value of the Issuer's assets in connection with the Other Rating
Agency's rating of Energy Notes.
"Other Rating Agency Guidelines" mean the guidelines provided
by each Other Rating Agency, as may be amended from time to time, in
connection with the Other Rating Agency's rating of Energy Notes.
"Outstanding" or "outstanding" means, as of any date, Energy
Notes theretofore issued by the Issuer except, without duplication, (i)
any Energy Notes theretofore canceled, redeemed or repurchased by the
Issuer, or delivered to the Trustee for cancellation or with respect to
which the Issuer has given notice of redemption and irrevocably
deposited with the Paying Agent sufficient funds to redeem such Energy
Notes and (ii) any Energy Notes represented by any certificate in lieu
of which a new certificate has been executed and delivered by the
Issuer. Notwithstanding the foregoing, (A) in connection with any
Auction, any series of Energy Notes as to which the Issuer or any
person known to the Auction Agent to be an Affiliate of the Issuer
shall be the Existing Holder thereof shall be disregarded and deemed
not to be Outstanding; and (B) for purposes of determining the Energy
Notes Basic Maintenance Amount, Energy Notes held by the Issuer shall
be disregarded and not deemed Outstanding but Energy Notes held by any
Affiliate of the Issuer shall be deemed Outstanding.
"Paying Agent" means Deutsche Bank Trust Company Americas
unless and until another entity appointed by a resolution of the Board
of Trustees enters into an agreement with the Issuer to serve as paying
agent, which paying agent may be the same as the Trustee and Auction
Agent.
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"Person" or "person" means and includes an individual, a
partnership, a trust, a company, an unincorporated association, a joint
venture or other entity or a government or any agency or political
subdivision thereof.
"Potential Beneficial Owner," with respect to a series of
Energy Notes, shall mean a customer of a Broker-Dealer that is not a
Beneficial Owner of Energy Notes of such series but that wishes to
purchase Energy Notes of such series, or that is a Beneficial Owner of
Energy Notes of such series that wishes to purchase additional Energy
Notes of such series.
"Rate Period" means, with respect to a series of Energy Notes,
the period commencing on the Date of Original Issue thereof and ending
on the date specified for such series on the Date of Original Issue
thereof and thereafter, as to such series, the period commencing on the
day following each Rate Period for such series and ending on the day
established for such series by the Issuer.
"Rating Agency" means each of Fitch (if Fitch is then rating
Energy Notes), Moody's (if Xxxxx'x is then rating Energy Notes) and any
Other Rating Agency.
"Rating Agency Guidelines" mean Fitch Guidelines (if Fitch is
then rating Energy Notes), Moody's Guidelines (if Xxxxx'x is then
rating Energy Notes) and any Other Rating Agency Guidelines.
"Redemption Default" has the meaning set forth in Section 2.02
hereof.
"Redemption Price" has the meaning set forth in Section 2.02
hereof.
"Reference Rate" means, with respect to the determination of
the Maximum Rate and Default Rate, (1) the applicable AA Composite
Commercial Paper Rate (for a Rate Period of fewer than 184 days) or the
applicable Treasury Index Rate (for a Rate Period of 184 days or more)
or (2) the applicable London-Interbank Offered Rate ("LIBOR").
"S&P" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., or its successors.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Depository" means The Depository Trust Company and
its successors and assigns or any successor securities depository
selected by the Issuer that agrees to follow the procedures required to
be followed by such securities depository in connection with the Energy
Notes.
"Sell Order" shall have the meaning specified in Appendix A
hereto.
"Special Rate Period" means a Rate Period that is not a
Standard Rate Period.
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"Specific Redemption Provisions" means, with respect to any
Special Rate Period of more than one year, either, or any combination
of (i) a period (a "Non-Call Period") determined by the Board of
Trustees after consultation with the Broker-Dealers, during which the
Energy Notes subject to such Special Rate Period are not subject to
redemption at the option of the Issuer pursuant to Section 2.03(a)(i)
and (ii) a period (a "Premium Call Period"), consisting of a number of
whole years as determined by the Board of Trustees after consultation
with the Broker-Dealers, during each year of which the Energy Notes
subject to such Special Rate Period shall be redeemable at the Issuer's
option pursuant to Section 2.03(a)(i) and/or in connection with any
mandatory redemption pursuant to Section 2.03(a)(i) at a price equal to
the principal amount plus accumulated but unpaid interest plus a
premium expressed as a percentage or percentages of $25,000 or
expressed as a formula using specified variables as determined by the
Board of Trustees after consultation with the Broker-Dealers.
"Standard Rate Period" means a Rate Period of 28 days.
"Stated Maturity" with respect to Energy Notes Series A shall
mean ______________, 20__.
"Submission Deadline" means 1:00 P.M., Eastern Standard time,
on any Auction Date or such other time on any Auction Date by which
Broker-Dealers are required to submit Orders to the Auction Agent as
specified by the Auction Agent from time to time.
"Submitted Bid" shall have the meaning specified in Appendix A
hereto.
"Submitted Hold Order" shall have the meaning specified in
Appendix A hereto.
"Submitted Order" shall have the meaning specified in Appendix
A hereto.
"Submitted Sell Order" shall have the meaning specified in
Appendix A hereto.
"Sufficient Clearing Bids" shall have the meaning specified in
Appendix A hereto.
"Treasury Index Rate" means the average yield to maturity for
actively traded marketable U.S. Treasury fixed interest rate securities
having the same number of 30-day periods to maturity as the length of
the applicable Rate Period, determined, to the extent necessary, by
linear interpolation based upon the yield for such securities having
the next shorter and next longer number of 30-day periods to maturity
treating all Rate Periods with a length greater than the longest
maturity for such securities as having a length equal to such longest
maturity, in all cases based upon data set forth in the most recent
weekly statistical release published by the Board of Governors of the
Federal Reserve System (currently in H.15(519)); provided, however, if
the most recent such statistical release shall not have been published
during the 15 days preceding the date of computation, the foregoing
computations shall be based upon the average of comparable data as
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quoted to the Issuer by at least three recognized dealers in U.S.
Government securities selected by the Issuer.
"Valuation Date" means every Friday, or, if such day is not a
Business Day, the next preceding Business Day; provided, however, that
the first Valuation Date may occur on any other date established by the
Trust; provided, further, however, that such first Valuation Date shall
be not more than one week from the date on which Energy Notes initially
are issued.
"Winning Bid Rate" has the meaning set forth in Section 3
hereto.
Section 1.02. Interpretation. References to sections, subsections,
clauses, sub-clauses, paragraphs and subparagraphs are to such sections,
subsections, clauses, sub-clauses, paragraphs and subparagraphs contained in
this supplemental indenture, as the case may be, unless specifically identified
otherwise.
Words importing the masculine gender include the feminine gender. Words
importing persons include firms, associations and corporations. Words importing
the singular number include the plural number and vice versa. Additional terms
are defined in the body of this Supplemental Indenture and the Appendices
hereto.
In the event that any term or provision contained herein with respect
to the Energy Notes shall conflict with or be inconsistent with any term or
provision contained in the Indenture, the terms and provisions of this
Supplemental Indenture shall govern.
ARTICLE II
NOTE DETAILS, FORM OF NOTES, REDEMPTION OF NOTES AND USE OF PROCEEDS OF NOTES
Section 2.01. General Terms.
(a) Designation:
(i) Series A: A series of Notes having an aggregate principal
amount of $______________, is designated "Series A Energy Notes"
("Energy Notes Series A"). The principal amount of the Energy Notes
Series A shall be due and payable at the Stated Maturity. The initial
Rate Period for Energy Notes series A shall be the period from and
including the Date of Original Issue thereof to but excluding
__________, 2005. The Energy Notes Series A shall have an Applicable
Rate for the initial Rate Period equal to ___% per annum and an initial
Interest Payment Date of ____________, 200_. Thereafter, the Applicable
Rate shall be determined in accordance with the Auction Procedures set
forth in Appendix A hereto, until the Stated Maturity. The Energy Notes
Series A shall have such other terms and conditions as are set forth
herein. The Energy Notes Series A shall constitute a separate series of
Notes of the Issuer.
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(b) Subject to the provisions hereof, the Board of Trustees of the
Issuer may, in the future, authorize an increase in the aggregate principal
amount of an Outstanding series of Energy Notes or the issuance of additional
series of Energy Notes, with the same terms and conditions of the respective
series herein described, except that the Applicable Rate for its initial Rate
Period, its initial Interest Payment Date and any other changes in the terms
herein set forth shall be as set forth in a supplemental indenture.
(c) The Energy Notes shall be in substantially the form set forth in
Appendix B hereto, with such appropriate insertions, notations, legends and
other variations as are required or permitted by the Indenture or any
supplemental indenture. The Energy Notes and the rights and duties of the
Issuer, the Trustee, any Paying Agent, the Holders thereof (and of the
Securities of any other series), shall be subject to and governed by the
Indenture (including as it has been amended and supplemented by this
Supplemental Indenture and as it may be hereinafter amended or supplemented by
any supplemental indenture thereto pursuant to the applicable provisions
thereof) insofar as the Indenture shall be applicable.
(d) Except as otherwise provided in this Section, the Energy Notes in
the form of one global note for each Stated Maturity date shall be registered in
the name of the Securities Depository or its nominee and ownership thereof shall
be maintained in book-entry form by the Securities Depository for the account of
the Agent Members. Initially, each Energy Note shall be registered in the name
of Cede & Co., as the nominee of The Depository Trust Company. Except as
otherwise provided in the Indenture, the Energy Notes may be transferred, in
whole but not in part, only to the Securities Depository or a nominee of the
Securities Depository or to a successor Securities Depository selected or
approved by the Issuer or to a nominee of such successor Securities Depository.
Each global note shall bear a legend substantially to the following effect:
"Except as otherwise provided in the Indenture, this global note may be
transferred, in whole but not in part, only to another nominee of the Securities
Depository (as defined in the Indenture) or to a successor Securities Depository
or to a nominee of a successor Securities Depository."
Section 2.02. Interest. (a) The Holders of any series of Energy Notes
shall be entitled to receive interest payments on their Energy Notes at the
Applicable Rate, determined as set forth in paragraph (c) of this Section 2.02,
and no more, payable on the respective dates determined as set forth in
paragraph (b) of this Section 2.02. Interest on the Outstanding Energy Notes of
any series issued on the Date of Original Issue shall accumulate from the Date
of Original Issue.
(b)(i) Interest shall be payable, subject to subparagraph (b)(ii) of this
Section 2.02, on each series of Energy Notes, with respect to any Rate Period on
the first Business Day following the last day of such Rate Period; provided,
however, if the Rate Period is greater than 30 days then on a monthly basis on
the first Business Day of each month within such Rate Period and on the Business
Day following the last day of such Rate Period.
(ii) If a day for payment of interest resulting from the application of
subparagraph (b)(i) above is not a Business Day, (A) then the Interest Payment
Date shall be the first Business Day following such day for payment of interest
in the case of a series of Energy Notes designated as "Series A" or (B) then the
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Interest Payment Date shall be the first Business Day that falls prior to such
day for payment of interest in the case of a series of Energy Notes designated
as "Series A".
(iii) The Issuer shall pay to the Paying Agent not later than 3:00 p.m.,
New York City time, on the Business Day next preceding each Interest Payment
Date for each series of Energy Notes, an aggregate amount of funds available on
the next Business Day in the City of New York, New York, equal to the interest
to be paid to all Holders of such Energy Notes on such Interest Payment Date.
The Issuer shall not be required to establish any reserves for the payment of
interest.
(iv) All moneys paid to the Paying Agent for the payment of interest
shall be held in trust for the payment of such interest by the Paying Agent for
the benefit of the Holders specified in subparagraph (b)(v) of this Section
2.02. Any moneys paid to the Paying Agent in accordance with the foregoing but
not applied by the Paying Agent to the payment of interest, including interest
earned on such moneys, will, to the extent permitted by law, be repaid to the
Issuer at the end of 90 days from the date on which such moneys were to have
been so applied.
(v) Each interest payment on a series of Energy Notes shall be paid on
the Interest Payment Date therefor to the Holders of that series as their names
appear on the security ledger or security records of the Issuer on the Business
Day next preceding such Interest Payment Date. Interest in arrears for any past
Rate Period may be declared and paid at any time, without reference to any
regular Interest Payment Date, to the Holders as their names appear on the books
or records of the Issuer on such date, not exceeding 15 days preceding the
payment date thereof, as may be fixed by the Board of Trustees. No interest will
be payable in respect of any Interest Payment or payments which may be in
arrears.
(c)(i) The interest rate on Outstanding Energy Notes of each series during
the period from and after the Date of Original Issue to and including the last
day of the initial Rate Period therefor shall be equal to the rate per annum set
forth under Section 2.01(a) above. For each subsequent Rate Period with respect
to the Energy Notes Outstanding thereafter, the interest rate shall be equal to
the rate per annum that results from an Auction; provided, however, that if an
Auction for any subsequent Rate Period of a series of Energy Notes is not held
for any reason or if Sufficient Clearing Bids have not been made in an Auction
(other than as a result of all series of Energy Notes being the subject of
Submitted Hold Orders), then the interest rate on a series of Energy Notes for
any such Rate Period shall be the Maximum Rate (except (i) during a Default
Period when the interest rate shall be the Default Rate, as set forth in Section
2.02(c)(ii) below) or (ii) after a Default Period and prior to the beginning of
the next Rate Period when the interest rate shall be the Maximum Rate at the
close of business on the last day of such Default Period). The All Hold Rate
will apply automatically following an Auction in which all of the Outstanding
series of Energy Notes are subject (or are deemed to be subject) to Hold Orders.
The rate per annum at which interest is payable on a series of Energy Notes as
determined pursuant to this Section 2(c)(i) shall be the "Applicable Rate."
(ii) Subject to the cure provisions below, a "Default Period" with
respect to a particular series will commence on any date the Issuer fails to
deposit irrevocably in trust in same-day funds, with the Paying Agent by 12:00
noon, New York City time, (A) the full amount of any interest on that series
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payable on the Interest Payment Date (an "Interest Default") or (B) the full
amount of any redemption price (the "Redemption Price") payable on the date
fixed for redemption (the "Redemption Date") (a "Redemption Default") and
together with an Interest Default, hereinafter referred to as "Default").
Subject to the cure provisions of Section 2(c)(iii) below, a Default Period with
respect to an Interest Default or a Redemption Default shall end on the Business
Day on which, by 12:00 noon, New York City time, all unpaid interest and any
unpaid Redemption Price shall have been deposited irrevocably in trust in
same-day funds with the Paying Agent. In the case of an Interest Default, the
Applicable Rate for each Rate Period commencing during a Default Period will be
equal to the Default Rate, and each subsequent Rate Period commencing after the
beginning of a Default Period shall be a Standard Rate Period; provided,
however, that the commencement of a Default Period will not by itself cause the
commencement of a new Rate Period. No Auction shall be held during a Default
Period with respect to an Interest Default applicable to that series of Energy
Notes.
(iii) No Default Period with respect to an Interest Default or Redemption
Default shall be deemed to commence if the amount of any interest or any
Redemption Price due (if such default is not solely due to the willful failure
of the Issuer) is deposited irrevocably in trust, in same-day funds with the
Paying Agent by 12:00 noon, New York City time within three Business Days after
the applicable Interest Payment Date or Redemption Date, together with an amount
equal to the Default Rate applied to the amount of such non-payment based on the
actual number of days comprising such period divided by 365 for each series. The
Default Rate shall be equal to the Reference Rate multiplied by three.
(iv) The amount of interest payable on each Interest Payment Date of each
Rate Period of less than one year (or in respect of interest on another date in
connection with a redemption during such Rate Period) shall be computed by
multiplying the Applicable Rate (or the Default Rate) for such Rate Period (or a
portion thereof) by a fraction, the numerator of which will be the number of
days in such Rate Period (or portion thereof) that such Energy Notes were
outstanding and for which the Applicable Rate or the Default Rate was applicable
and the denominator of which will be 365, multiplying the amount so obtained by
$25,000, and rounding the amount so obtained to the nearest cent. During any
Rate Period of one (1) year or more, the amount of interest per Energy Note
payable on any Interest Payment Date (or in respect of interest on another date
in connection with a redemption during such Rate Period) shall be computed as
described in the preceding sentence, except that it will be determined on the
basis of a year consisting of twelve 30-day months.
(d) Any Interest Payment made on any series of Energy Notes shall first
be credited against the earliest accumulated but unpaid interest due with
respect to such series.
Section 2.03. Redemption. (a) (i) After the initial Rate Period, subject
to the provisions of this Section 2.03 and to the extent permitted under the
1940 Act [and Massachusetts law], the Issuer may, at its option, redeem in whole
or in part out of funds legally available therefor a series of Energy Notes
herein designated as (A) having a Rate Period of one year or less, on the
Business Day after the last day of such Rate Period by delivering a notice of
redemption not less than 15 days and not more than 40 days prior to the date
fixed for such redemption, at a redemption price equal to the aggregate
principal amount, plus an amount equal to accumulated but unpaid interest
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thereon (whether or not earned) to the date fixed for redemption ("Redemption
Price"), or (B) having a Rate Period of more than one year, on any Business Day
prior to the end of the relevant Rate Period by delivering a notice of
redemption not less than 15 days and not more than 40 days prior to the date
fixed for such redemption, at the Redemption Price, plus a redemption premium,
if any, determined by the Board of Trustees after consultation with the
Broker-Dealers and set forth in any applicable Specific Redemption Provisions at
the time of the designation of such Rate Period as set forth in Section 2.04
hereof; provided, however, that during a Rate Period of more than one year no
series of Energy Notes will be subject to optional redemption except in
accordance with any Specific Redemption Provisions approved by the Board of
Trustees after consultation with the Broker-Dealers at the time of the
designation of such Rate Period. Notwithstanding the foregoing, the Issuer shall
not give a notice of or effect any redemption pursuant to this Section
2.03(a)(i) unless, on the date on which the Issuer intends to give such notice
and on the date of redemption (a) the Issuer has available certain Deposit
Securities with maturity or tender dates not later than the day preceding the
applicable redemption date and having a value not less than the amount
(including any applicable premium) due to Holders of a series of Energy Notes by
reason of the redemption of such Energy Notes on such date fixed for the
redemption and (b) the Issuer would have Eligible Assets with an aggregate
Discounted Value at least equal the Energy Notes Basic Maintenance Amount
immediately subsequent to such redemption, if such redemption were to occur on
such date, it being understood that the provisions of paragraph (d) of this
Section 2.03 shall be applicable in such circumstances in the event the Issuer
makes the deposit and takes the other action required thereby.
(ii) If the Issuer fails to maintain, as of any Valuation Date, Eligible
Assets with an aggregate Discounted Value at least equal to the Energy Notes
Basic Maintenance Amount or, as of the last Business Day of any month, the 1940
Act Energy Notes Asset Coverage, and such failure is not cured within ten
Business Days following such Valuation Date in the case of a failure to maintain
the Energy Notes Basic Maintenance Amount or on the last Business Day of the
following month in the case of a failure to maintain the 1940 Act Energy Notes
Asset Coverage as of such last Business Day (each an "Asset Coverage Cure
Date"), the Energy Notes will be subject to mandatory redemption out of funds
legally available therefor. The principal amount of Energy Notes to be redeemed
in such circumstances will be equal to the lesser of (A) the minimum principal
amount of Energy Notes the redemption of which, if deemed to have occurred
immediately prior to the opening of business on the relevant Asset Coverage Cure
Date, would result in the Issuer having Eligible Assets with an aggregate
Discounted Value at least equal to the Energy Notes Basic Maintenance Amount, or
sufficient to satisfy 1940 Act Energy Notes Asset Coverage, as the case may be,
in either case as of the relevant Asset Coverage Cure Date (provided that, if
there is no such minimum principal amount of Energy Notes the redemption of
which would have such 12 result, all Energy Notes then Outstanding will be
redeemed), and (B) the maximum principal amount of Energy Notes that can be
redeemed out of funds expected to be available therefor on the Mandatory
Redemption Date at the Mandatory Redemption Price set forth in subparagraph
(a)(iii) of this Section 2.03.
(iii) In determining the Energy Notes required to be redeemed in
accordance with the foregoing Section 2.03(a)(ii), the Issuer shall allocate the
principal amount of Energy Notes required to be redeemed to satisfy the Energy
Notes Basic Maintenance Amount or the 1940 Act Energy Notes Asset Coverage, as
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the case may be, pro rata among the Holders of Energy Notes in proportion to the
principal amount of Energy Notes they hold and other Notes subject to mandatory
redemption provisions similar to those contained in this Section 2.03, subject
to the further provisions of this subparagraph (iii). The Issuer shall effect
any required mandatory redemption pursuant to subparagraph (a)(ii) of this
Section 2.03 no later than 40 days after the Asset Coverage Cure Date (the
"Mandatory Redemption Date"), except that if the Issuer does not have funds
legally available for the redemption of, or is not otherwise legally permitted
to redeem, the principal amount of Energy Notes which would be required to be
redeemed by the Issuer under clause (A) of subparagraph (a)(ii) of this Section
2.03 if sufficient funds were available, together with other Notes which are
subject to mandatory redemption under provisions similar to those contained in
this Section 2.03, or the Issuer otherwise is unable to effect such redemption
on or prior to such Mandatory Redemption Date, the Issuer shall redeem those
Energy Notes, and other Notes which it was unable to redeem, on the earliest
practicable date on which the Issuer will have such funds available, upon notice
pursuant to Section 2.03(b) to record owners of the Energy Notes to be redeemed
and the Paying Agent. The Issuer will deposit with the Paying Agent funds
sufficient to redeem the specified principal amount of Energy Notes with respect
to a redemption required under subparagraph (a)(ii) of this Section 2.03, by
1:00 p.m., New York City time, of the Business Day immediately preceding the
Mandatory Redemption Date. If fewer than all of the Outstanding Energy Notes are
to be redeemed pursuant to this Section 2.03(a)(iii), the principal amount of
Energy Notes to be redeemed shall be redeemed pro rata from the Holders of such
Energy Notes in proportion to the principal amount of such Energy Note held by
such Holders, by lot or by such other method as the Issuer shall deem fair and
equitable, subject, however, to the terms of any applicable Specific Redemption
Provisions. "Mandatory Redemption Price" means the Redemption Price plus (in the
case of a Rate Period of one year or more only) a redemption premium, if any,
determined by the Board of Trustees after consultation with the Broker-Dealers
and set forth in any applicable Specific Redemption Provisions.
(b) In the event of a redemption pursuant to Section 2.03(a), the
Issuer will file a notice of its intention to redeem with the Securities and
Exchange Commission so as to provide at least the minimum notice required under
Rule 23c-2 under the 1940 Act or any successor provision. In addition, the
Issuer shall deliver a notice of redemption to the Auction Agent (the "Notice of
Redemption") containing the information set forth below (i) in the case of an
optional redemption pursuant to subparagraph (a)(i) above, one Business Day
prior to the giving of notice to the Holders and (ii) in the case of a mandatory
redemption pursuant to subparagraph (a)(ii) above, on or prior to the 30th day
preceding the Mandatory Redemption Date. The Trustee will use its reasonable
efforts to provide notice to each Holder of Energy Notes called for redemption
by electronic or other reasonable means not later than the close of business on
the Business Day immediately following the day on which the Trustee determines
the Energy Notes to be redeemed (or, during a Default Period with respect to
such Energy Notes, not later than the close of business on the Business Day
immediately following the day on which the Trustee receives Notice of Redemption
from the Issuer). The Trustee shall confirm such notice in writing not later
than the close of business on the third Business Day preceding the date fixed
for redemption by providing the Notice of Redemption to each Holder of Energy
Notes called for redemption, the Paying Agent (if different from the Trustee)
and the Securities Depository. Notice of Redemption will be addressed to the
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registered owners of each series of Energy Notes at their addresses appearing on
the books or records of the Issuer. Such Notice of Redemption will set forth (i)
the date fixed for redemption, (ii) the principal amount and identity of Energy
Notes to be redeemed, (iii) the redemption price (specifying the amount of
accumulated interest to be included therein), (iv) that interest on the Energy
Notes to be redeemed will cease to accumulate on such date fixed for redemption,
and (v) the provision under which redemption shall be made. No defect in the
Notice of Redemption or in the transmittal or mailing thereof will affect the
validity of the redemption proceedings, except as required by applicable law. If
fewer than all Energy Notes held by any Holder are to be redeemed, the Notice of
Redemption mailed to such Holder shall also specify the principal amount of
Energy Notes to be redeemed from such Holder.
(c) Notwithstanding the provisions of paragraph (a) of this Section
2.03, no Energy Notes may be redeemed unless all interest on the Outstanding
Energy Notes and all Notes of the Issuer ranking on a parity with the Energy
Notes, have been or are being contemporaneously paid or set aside for payment;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of all Outstanding Energy Notes pursuant to the successful
completion of an otherwise lawful purchase or exchange offer made on the same
terms to, and accepted by, Holders of all Outstanding Energy Notes.
(d) Upon the deposit of funds sufficient to redeem any Energy Notes with
the Paying Agent and the giving of the Notice of Redemption to the Trustee under
paragraph (b) of this Section 2.03, interest on such Energy Notes shall cease to
accumulate and such Energy Notes shall no longer be deemed to be Outstanding for
any purpose (including, without limitation, for purposes of calculating whether
the Issuer has maintained the requisite Energy Notes Basic Maintenance Amount or
the 1940 Act Energy Notes Asset Coverage), and all rights of the holder of the
Energy Notes so called for redemption shall cease and terminate, except the
right of such holder to receive the redemption price specified herein, but
without any interest or other additional amount. Such redemption price shall be
paid by the Paying Agent to the nominee of the Securities Depository. The Issuer
shall be entitled to receive from the Paying Agent, promptly after the date
fixed for redemption, any cash deposited with the Paying Agent in excess of (i)
the aggregate redemption price of the Energy Notes called for redemption on such
date and (ii) such other amounts, if any, to which Holders of the Energy Notes
called for redemption may be entitled. Any funds so deposited that are unclaimed
at the end of two years from such redemption date shall, to the extent permitted
by law, be paid to the Issuer, after which time the Holders of Energy Notes so
called for redemption may look only to the Issuer for payment of the redemption
price and all other amounts, if any, to which they may be entitled. The Issuer
shall be entitled to receive, from time to time after the date fixed for
redemption, any interest earned on the funds so deposited.
(e) To the extent that any redemption for which Notice of Redemption
has been given is not made by reason of the absence of legally available funds
therefor, or is otherwise prohibited, such redemption shall be made as soon as
practicable to the extent such funds become legally available or such redemption
is no longer otherwise prohibited. Failure to redeem any series of Energy Notes
shall be deemed to exist at any time after the date specified for redemption in
a Notice of Redemption when the Issuer shall have failed, for any reason
whatsoever, to deposit in trust with the Paying Agent the redemption price with
respect to any Energy Notes for which such Notice of Redemption has been given.
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Notwithstanding the fact that the Issuer may not have redeemed any Energy Notes
for which a Notice of Redemption has been given, interest may be paid on a
series of Energy Notes and shall include those Energy Notes for which Notice of
Redemption has been given but for which deposit of funds has not been made.
(f) All moneys paid to the Paying Agent for payment of the redemption
price of any Energy Notes called for redemption shall be held in trust by the
Paying Agent for the benefit of holders of Energy Notes to be redeemed.
(g) So long as any Energy Notes are held of record by the nominee of
the Securities Depository, the redemption price for such Energy Notes will be
paid on the date fixed for redemption to the nominee of the Securities
Depository for distribution to Agent Members for distribution to the persons for
whom they are acting as agent.
(h) Except for the provisions described above, nothing contained herein
limits any right of the Issuer to purchase or otherwise acquire any Energy Notes
outside of an Auction at any price, whether higher or lower than the price that
would be paid in connection with an optional or mandatory redemption, so long
as, at the time of any such purchase, there is no arrearage in the payment of
interest on, or the mandatory or optional redemption price with respect to, any
series of Energy Notes for which Notice of Redemption has been given and the
Issuer is in compliance with the 1940 Act Energy Notes Asset Coverage and has
Eligible Assets with an aggregate Discounted Value at least equal to the Energy
Notes Basic Maintenance Amount after giving effect to such purchase or
acquisition on the date thereof. If fewer than all the Outstanding Energy Notes
of any series are redeemed or otherwise acquired by the Issuer, the Issuer shall
give notice of such transaction to the Trustee, in accordance with the
procedures agreed upon by the Board of Trustees.
(i) Notwithstanding anything herein to the contrary, including, without
limitation, Sections 2.02(e) and 2.07 hereof, the Board of Trustees may
authorize, create or issue any class or series of Notes, including other series
of Energy Notes, ranking prior to or on a parity with the Energy Notes to the
extent permitted by the 1940 Act, as amended, if, upon issuance, either (A) the
net proceeds from the sale of such Notes (or such portion thereof needed to
redeem or repurchase the Outstanding Energy Notes) are deposited with the
Trustee in accordance with Section 2.03(d), Notice of Redemption as contemplated
by Section 2.03(b) has been delivered prior thereto or is sent promptly
thereafter, and such proceeds are used to redeem all Outstanding Energy Notes or
(B) the Issuer would meet the 1940 Act Energy Notes Asset Coverage, the Energy
Notes Basic Maintenance Amount and the requirements of Section 2.08 hereof.
Section 2.04. Designation of Rate Period. (a) The initial Rate Period
for each series of Energy Notes is as set forth under "Designation" above. The
Issuer will designate the duration of subsequent Rate Periods of each series of
Energy Notes; provided, however, that no such designation is necessary for a
Standard Rate Period and, provided further, that any designation of a Special
Rate Period shall be effective only if (i) notice thereof shall have been given
as provided herein, (ii) any failure to pay in a timely manner to the Trustee
the full amount of any interest on, or the redemption price of, Energy Notes
shall have been cured as provided above, (iii) Sufficient Clearing Bids shall
have existed in an Auction held on the Auction Date immediately preceding the
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first day of such proposed Special Rate Period, (iv) if the Issuer shall have
mailed a Notice of Redemption with respect to any Energy Notes, the redemption
price with respect to such Energy Notes shall have been deposited with the
Paying Agent, and (v) in the case of the designation of a Special Rate Period,
the Issuer has confirmed that as of the Auction Date next preceding the first
day of such Special Rate Period, it has Eligible Assets with an aggregate
Discounted Value at least equal to the Energy Notes Basic Maintenance Amount,
and the Issuer has consulted with the Broker-Dealers and has provided notice of
such designation and otherwise complied with the Rating Agency Guidelines.
(b) If the Issuer proposes to designate any Special Rate Period, not
fewer than 28 (or two Business Days in the event the duration of the Rate Period
prior to such Special Rate Period is fewer than eight days) nor more than 30
Business Days prior to the first day of such Special Rate Period, notice shall
be (i) made by press release and (ii) communicated by the Issuer by telephonic
or other means to the Trustee and confirmed in writing promptly thereafter. Each
such notice shall state (A) that the Issuer proposes to exercise its option to
designate a succeeding Special Rate Period, specifying the first and last days
thereof and (B) that the Issuer will by 3:00 p.m., New York City time, on the
Second Business Day next preceding the first day of such Special Rate Period,
notify the Trustee, who will promptly notify the Broker-Dealers, of either (x)
its determination, subject to certain conditions, to proceed with such Special
Rate Period, subject to the terms of any Specific Redemption Provisions, or (y)
its determination not to proceed with such Special Rate Period, in which latter
event the succeeding Rate Period shall be a Standard Rate Period.
No later than 3:00 p.m., New York City time, on the second Business Day
next preceding the first day of any proposed Special Rate Period, the Issuer
shall deliver to the Trustee, who will promptly deliver to the Broker-Dealers
and Existing Holders, either:
(i) a notice stating (A) that the Issuer has determined to
designate the next succeeding Rate Period as a Special Rate Period,
specifying the first and last days thereof and (B) the terms of any
Specific Redemption Provisions; or
(ii) a notice stating that the Issuer has determined not to
exercise its option to designate a Special Rate Period.
If the Issuer fails to deliver either such notice with respect to any
designation of any proposed Special Rate Period to the Auction Agent or is
unable to make the confirmation provided in clause (v) of Paragraph (a) of this
Section 2.04 by 3:00 p.m., New York City time, on the second Business Day next
preceding the first day of such proposed Special Rate Period, the Issuer shall
be deemed to have delivered a notice to the Auction Agent with respect to such
Rate Period to the effect set forth in clause (ii) above, thereby resulting in a
Standard Rate Period.
Section 2.05. Restrictions on Transfer. Energy Notes may be transferred
only (a) pursuant to an order placed in an Auction, (b) to or through a
Broker-Dealer or (c) to the Issuer or any Affiliate. Notwithstanding the
foregoing, a transfer other than pursuant to an Auction will not be effective
unless the selling Existing Holder or the Agent Member of such Existing Holder,
in the case of an Existing Holder whose Energy Notes are listed in its own name
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on the books of the Auction Agent, or the Broker-Dealer or Agent Member of such
Broker-Dealer, in the case of a transfer between persons holding Energy Notes
through different Broker-Dealers, advises the Auction Agent of such transfer.
The certificates representing the Energy Notes issued to the Securities
Depository will bear legends with respect to the restrictions described above
and stop-transfer instructions will be issued to the Transfer Agent and/or
Registrar.
Section 2.06. 1940 Act Energy Notes Asset Coverage. The Issuer shall
maintain, as of the last Business Day of each month in which any Energy Notes
are Outstanding, asset coverage with respect to the Energy Notes which is equal
to or greater than the 1940 Act Energy Notes Asset Coverage; provided, however,
that Section 2.03(a)(ii) shall be the sole remedy in the event the Issuer fails
to do so.
Section 2.07. Energy Notes Basic Maintenance Amount. So long as the
Energy Notes are Outstanding and any Rating Agency is then rating the Energy
Notes, the Issuer shall maintain, as of each Valuation Date, Eligible Assets
having an aggregate Discounted Value equal to or greater than the Energy Notes
Basic Maintenance Amount; provided, however, that Section 2.03(a)(ii) shall be
the sole remedy in the event the Issuer fails to do so.
Section 2.08. Certain Other Restrictions. (a) For so long as any Energy
Notes are Outstanding and any Rating Agency is then rating the Energy Notes, the
Issuer will not engage in certain proscribed transactions set forth in the
Rating Agency Guidelines, unless it has received written confirmation from each
such Rating Agency that proscribes the applicable transaction in its Rating
Agency Guidelines that any such action would not impair the rating then assigned
by such Rating Agency to a series of Energy Notes.
(b) For so long as any Energy Notes are Outstanding, the Fund will not
declare, pay or set apart for payment any dividend or other distribution (other
than a dividend or distribution paid in shares of, or options, warrants or
rights to subscribe for or purchase, common shares or other shares of beneficial
interest of the Issuer) upon any class of shares of beneficial interest of the
Issuer, unless, in every such case, immediately after such transaction, the 1940
Act Energy Notes Asset Coverage would be achieved after deducting the amount of
such dividend, distribution, or purchase price, as the case may be; provided,
however, that dividends may be declared upon any preferred shares of beneficial
interest of the Issuer if the Energy Notes have an asset coverage of at least
200% at the time of declaration thereof, after deducting the amount of such
dividend.
Section 2.09. Compliance Procedures for Asset Maintenance Tests. For so
long as any Energy Notes are Outstanding and any Rating Agency is then rating
such Energy Notes:
(a) As of each Valuation Date, the Issuer shall determine in
accordance with the procedures specified herein (i) the Market Value of
each Eligible Asset owned by the Issuer on that date, (ii) the
Discounted Value of each such Eligible Asset using the Discount
Factors, (iii) whether the Energy Notes Basic Maintenance Amount is met
as of that date, (iv) the value of the total assets of the Issuer, less
all liabilities, and (v) whether the 1940 Act Energy Notes Asset
Coverage is met as of that date.
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(b) Upon any failure to maintain the required Energy Notes
Basic Maintenance Amount or 1940 Act Energy Notes Asset Coverage on any
Valuation Date, the Issuer may use reasonable commercial efforts
(including, without limitation, altering the composition of its
portfolio, purchasing Energy Notes outside of an Auction or in the
event of a failure to file a Rating Agency Certificate (as defined
below) on a timely basis, submitting the requisite Rating Agency
Certificate) to re-attain (or certify in the case of a failure to file
on a timely basis, as the case may be) the required Energy Notes Basic
Maintenance Amount or 1940 Act Energy Notes Asset Coverage on or prior
to the Asset Coverage Cure Date.
(c) Compliance with the Energy Notes Basic Maintenance Amount
and 1940 Act Energy Notes Asset Coverage tests shall be determined with
reference to those Energy Notes which are deemed to be Outstanding
hereunder.
(d) The Issuer shall deliver to each Rating Agency which is
then rating Energy Notes and any other party specified in the Rating
Agency Guidelines all certificates that are set forth in the respective
Rating Agency Guidelines regarding 1940 Act Energy Notes Asset
Coverage, Energy Notes Basic Maintenance Amount and/or related
calculations at such times and containing such information as set forth
in the respective Rating Agency Guidelines (each, a "Rating Agency
Certificate").
(e) In the event that any Rating Agency Certificate is not
delivered within the time periods set forth in the Rating Agency
Guidelines, the Issuer shall be deemed to have failed to maintain the
Energy Notes Basic Maintenance Amount or the 1940 Act Energy Notes
Asset Coverage, as the case may be, on such Valuation Date for purposes
of Section 2.09(b). In the event that any Rating Agency Certificate
with respect to an applicable Asset Coverage Cure Date is not delivered
within the time periods set forth in the Rating Agency Guidelines, the
Issuer shall be deemed to have failed to have Eligible Assets with an
aggregate Discounted Value at least equal to the Energy Notes Basic
Maintenance Amount or to meet the 1940 Energy Notes Asset Coverage, as
the case may be, as of the related Valuation Date, and such failure
shall be deemed not to have been cured as of such Asset Coverage Cure
Date for purposes of the mandatory redemption provisions.
Section 2.10. Delivery of Notes. Upon the execution and delivery of this
Supplemental Indenture, the Issuer shall execute and deliver to the Trustee and
the Trustee shall authenticate the Energy Notes and deliver them to The
Depository Trust Company and as hereinafter in this Section provided.
Prior to the delivery by the Trustee of any of the Energy Notes, there
shall have been filed with or delivered to the Trustee the following:
(a) A resolution duly adopted by the Issuer, certified by the
Secretary or other Authorized Officer thereof, authorizing the
execution and delivery of this Supplemental Indenture and the issuance
of the Energy Notes.
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(b) Duly executed copies of this Supplemental Indenture and a
copy of the Indenture.
(c) Rating letters from each Rating Agency rating the Energy
Notes.
(d) An opinion of Counsel pursuant to Sections 303 and 903 of
the Original Indenture.
Section 2.11. Trustee's Authentication Certificate. The Trustee's
authentication certificate upon the Energy Notes shall be substantially in the
forms provided in Appendix C hereto. No Energy Note shall be secured hereby or
entitled to the benefit hereof, or shall be valid or obligatory for any purpose,
unless a certificate of authentication, substantially in such form, has been
duly executed by the Trustee; and such certificate of the Trustee upon any
Energy Note shall be conclusive evidence and the only competent evidence that
such Bond has been authenticated and delivered hereunder. The Trustee's
certificate of authentication shall be deemed to have been duly executed by it
if manually signed by an authorized officer of the Trustee, but it shall not be
necessary that the same person sign the certificate of authentication on all of
the Energy Notes issued hereunder.
ARTICLE III
GENERAL PROVISIONS
Section 3.01. Date of Execution. This Supplemental Indenture for
convenience and for the purpose of reference is dated as of [________], 2005.
Section 3.02. Laws Governing. It is the intent of the parties hereto
that this Supplemental Indenture shall in all respects be governed by the laws
of New York.
Section 3.03. Severability. If any covenant, agreement, waiver, or part
thereof in this Supplemental Indenture contained be forbidden by any pertinent
law or under any pertinent law be effective to render this Supplemental
Indenture invalid or unenforceable or to impair the lien hereof, then each such
covenant, agreement, waiver, or part thereof shall itself be and is hereby
declared to be wholly ineffective, and this Supplemental Indenture shall be
construed as if the same were not included herein.
Section 3.04. Exhibits. The terms of the Exhibits attached to this
Supplemental Indenture are incorporated herein in all particulars.
ARTICLE IV
APPLICABILITY OF INDENTURE
The provisions of the Indenture are hereby ratified, approved and
confirmed, except as otherwise expressly modified by this Supplemental
Indenture. The representations, warranties and covenants contained in the
-21-
Indenture (except as expressly modified herein) are hereby reaffirmed with the
same force and effect as if fully set forth herein and made again as of the date
hereof.
-22-
IN WITNESS WHEREOF, the Issuer has caused this Supplemental Indenture
to be executed in its corporate name and behalf by the Secretary, and the
Trustee, to evidence its acceptance of the trusts hereby created, has caused
this Supplemental Indenture to be executed in its corporate name and behalf, all
in multiple counterparts, each of which shall be deemed an original, and the
Issuer and the Trustee have caused this Supplemental Indenture to be dated as of
the date herein above first shown, although actually executed on the dates shown
in the acknowledgments hereafter appearing.
ENERGY INCOME AND GROWTH FUND
By: ____________________________________
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Trustee
By: ____________________________________
-23-
APPENDIX A
AUCTION PROCEDURES
1. Orders. (a) Prior to the Submission Deadline on each Auction Date
for a series of Energy Notes:
(i) each Beneficial Owner of Energy Notes of such series may
submit to its Broker-Dealer by telephone or otherwise information as
to:
(A) the principal amount of Outstanding Energy
Notes, if any, of such series held by such Beneficial Owner
which such Beneficial Owner desires to continue to hold
without regard to the Applicable Rate for Energy Notes of such
series for the next succeeding Rate Period of such series;
(B) the principal amount of Outstanding Energy Notes,
if any, of such series held by such Beneficial Owner which
such Beneficial Owner offers to sell if the Applicable Rate
for Energy Notes of such series for the next succeeding Rate
Period of Energy Notes of such series shall be less than the
rate per annum specified by such Beneficial Owner; and/or
(C) the principal amount of Outstanding Energy
Notes, if any, of such series held by such Beneficial Owner
which such Beneficial Owner offers to sell without regard to
the Applicable Rate for Energy Notes of such series for the
next succeeding Rate Period of Energy Notes of such series;
and
(ii) one or more Broker-Dealers, using lists of Potential
Beneficial Owners, shall in good faith for the purpose of conducting a
competitive Auction in a commercially reasonable manner, contact
Potential Beneficial Owners (by telephone or otherwise), including
Persons that are not Beneficial Owners, on such lists to determine the
principal amount of Energy Notes, if any, of such series which each
such Potential Beneficial Owner offers to purchase if the Applicable
Rate for Energy Notes of such series for the next succeeding Rate
Period of Energy Notes of such series shall not be less than the rate
per annum specified by such Potential Beneficial Owner.
For the purposes hereof, the communication by a Beneficial Owner or
Potential Beneficial Owner to a Broker-Dealer, or by a Broker-Dealer to the
Auction Agent, of information referred to in clause (i)(A), (i)(B), (i)(C) or
(ii) of this paragraph (a) is hereinafter referred to as an "Order" and
collectively as "Orders" and each Beneficial Owner and each Potential Beneficial
Owner placing an Order with a Broker-Dealer, and such Broker-Dealer placing an
Order with the Auction Agent, is hereinafter referred to as a "Bidder" and
collectively as "Bidders"; an Order containing the information referred to in
clause (i)(A) of this paragraph (a) is hereinafter referred to as a "Hold Order"
and collectively as "Hold Orders"; an Order containing the information referred
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to in clause (i)(B) or (ii) of this paragraph (a) is hereinafter referred to as
a "Bid" and collectively as "Bids"; and an Order containing the information
referred to in clause (i)(C) of this paragraph (a) is hereinafter referred to as
a "Sell Order" and collectively as "Sell Orders."
(b)(i) A Bid by a Beneficial Owner or an Existing Holder of Energy Notes
of a series subject to an Auction on any Auction Date shall constitute an
irrevocable offer to sell:
(A) the principal amount of Outstanding Energy Notes of such
series specified in such Bid if the Applicable Rate for Energy Notes of
such series determined on such Auction Date shall be less than the rate
specified therein;
(B) such principal amount or a lesser principal amount of
Outstanding Energy Notes of such series to be determined as set forth
in clause (iv) of paragraph (a) of Section 4 of this Appendix A if the
Applicable Rate for Energy Notes of such series determined on such
Auction Date shall be equal to the rate specified therein; or
(C) the principal amount of Outstanding Energy Notes of such
series specified in such Bid if the rate specified therein shall be
higher than the Maximum Rate for Energy Notes of such series, or such
principal amount or a lesser principal amount of Outstanding Energy
Notes of such series to be determined as set forth in clause (iii) of
paragraph (b) of Section 4 of this Appendix A if the rate specified
therein shall be higher than the Maximum Rate for Energy Notes of such
series and Sufficient Clearing Bids for Energy Notes of such series do
not exist.
(ii) A Sell Order by a Beneficial Owner or an Existing Holder of Energy
Notes of a series of Energy Notes subject to an Auction on any Auction Date
shall constitute an irrevocable offer to sell:
(A) the sum principal amount of Outstanding Energy Notes of
such series specified in such Sell Order; or
(B) such principal amount or a lesser principal amount of
Outstanding Energy Notes of such series as set forth in clause (iii) of
paragraph (b) of Section 4 of this Appendix A if Sufficient Clearing
Bids for Energy Notes of such series do not exist;
provided, however, that a Broker-Dealer that is an Existing Holder with respect
to a series of Energy Notes shall not be liable to any Person for failing to
sell such Energy Notes pursuant to a Sell Order described in the proviso to
paragraph (c) of Section 2 of this Appendix A if (1) such Energy Notes were
transferred by the Beneficial Owner thereof without compliance by such
Beneficial Owner or its transferee Broker-Dealer (or other transferee person,
if permitted by the Issuer) with the provisions of Section 2.05 of this
supplemental indenture or (2) such Broker-Dealer has informed the Auction Agent
pursuant to the terms of its Broker-Dealer Agreement that, according to such
Broker-Dealer's records, such Broker-Dealer believes it is not the Existing
Holder of such Energy Notes.
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(iii) A Bid by a Potential Beneficial Holder or a Potential Holder of
Energy Notes of a series subject to an Auction on any Auction Date shall
constitute an irrevocable offer to purchase:
(A) the principal amount of Outstanding Energy Notes of such
series specified in such Bid if the Applicable Rate for Energy Notes of
such series determined on such Auction Date shall be higher than the
rate specified therein; or
(B) such principal amount or a lesser principal amount of
Outstanding Energy Notes of such series as set forth in clause (v) of
paragraph (a) of Section 4 of this Appendix A if the Applicable Rate
for Energy Notes of such series determined on such Auction Date shall
be equal to the rate specified therein.
2. Submission of Orders by Broker-Dealers to Auction Agent. (a) Each
Broker-Dealer shall submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders for Energy Notes of a series
subject to an Auction on such Auction Date obtained by such Broker-Dealer,
designating itself (unless otherwise permitted by the Issuer) as an Existing
Holder in respect of Energy Notes subject to Orders submitted or deemed
submitted to it by Beneficial Owners and as a Potential Holder in respect of
Energy Notes subject to Orders submitted to it by Potential Beneficial Owners,
and shall specify with respect to each such Order:
(i) the name of the Bidder placing such Order (which shall be
the Broker-Dealer unless otherwise permitted by the Issuer);
(ii) the aggregate principal amount of Energy Notes of such
series that are the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder of
Energy Notes of such series:
(A) the principal amount of Energy Notes, if any, of
such series subject to any Hold Order of such Existing Holder;
(B) the principal amount of Energy Notes, if any, of
such series subject to any Bid of such Existing Holder and the
rate specified in such Bid; and
(C) the principal amount of Energy Notes, if any, of
such series subject to any Sell Order of such Existing Holder;
and
(iv) to the extent such Bidder is a Potential Holder of Energy
Notes of such series, the rate and principal amount of Energy Notes of
such series specified in such Potential Holder's Bid.
(b) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round such rate up to
the next highest one thousandth (.001) of 1%.
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(c) If an Order or Orders covering all of the Outstanding Energy Notes
of a series held by any Existing Holder is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order to
have been submitted by or on behalf of such Existing Holder covering the
principal amount of Outstanding Energy Notes of such series held by such
Existing Holder and not subject to Orders submitted to the Auction Agent;
provided, however, that if an Order or Orders covering all of the Outstanding
Energy Notes of such series held by any Existing Holder is not submitted to the
Auction Agent prior to the Submission Deadline for an Auction relating to a
Special Rate Period consisting of more than 28 Rate Period Days, the Auction
Agent shall deem a Sell Order to have been submitted by or on behalf of such
Existing Holder covering the principal amount of outstanding Energy Notes of
such series held by such Existing Holder and not subject to Orders submitted to
the Auction Agent.
(d) If one or more Orders of an Existing Holder is submitted to the
Auction Agent covering in the aggregate more than the principal amount of
Outstanding Energy Notes of a series subject to an Auction held by such Existing
Holder, such Orders shall be considered valid in the following order of
priority:
(i) all Hold Orders for Energy Notes of such series shall be
considered valid, but only up to and including in the aggregate
principal amount of Outstanding Energy Notes of such series held by
such Existing Holder, and if the aggregate principal amount of Energy
Notes of such series subject to such Hold Orders exceeds the aggregate
principal amount of Outstanding Energy Notes of such series held by
such Existing Holder, the principal amount of Energy Notes subject to
each such Hold Order shall be reduced pro rata to cover the principal
amount of Outstanding Energy Notes of such series held by such Existing
Holder;
(ii)(A) any Bid for Energy Notes of such series shall be
considered valid up to and including the excess of the principal amount
of Outstanding Energy Notes of such series subject to any Hold Orders
referred to in clause (i) above;
(B) subject to subclause (A), if more than one Bid of an
Existing Holder for Energy Notes of such series is submitted to the
Auction Agent with the same rate and the aggregate principal amount of
Outstanding Energy Notes of such series subject to such Bids is greater
than such excess, such Bids shall be considered valid up to and
including the amount of such excess, and the principal amount of Energy
Notes of such series subject to each Bid with the same rate shall be
reduced pro rata to cover the principal amount of Energy Notes of such
series equal to such excess;
(C) subject to subclauses (A) and (B), if more than one Bid
of an Existing Holder for Energy Notes of such series is submitted to
the Auction Agent with different rates, such Bids shall be considered
valid in the ascending order of their respective rates up to and
including the amount of such excess; and
(D) in any such event, the amount, if any, of such
Outstanding Energy Notes of such series subject to any portion of Bids
considered not valid in whole or in part under this clause (ii) shall
A-4
be treated as the subject of a Bid for Energy Notes of such series by
or on behalf of a Potential Holder at the rate therein specified; and
(iii) all Sell Orders for Energy Notes of such series shall be
considered valid up to and including the excess of the principal amount
of Outstanding Energy Notes of such series held by such Existing Holder
over the aggregate principal amount of Energy Notes of such series
subject to valid Hold Orders referred to in clause (i) above and valid
Bids referred to in clause (ii) above.
(e) If more than one Bid for one or more Energy Note of a series is
submitted to the Auction Agent by or on behalf of any Potential Holder, each
such Bid submitted shall be a separate Bid with the rate and principal amount
therein specified.
(f) Any Order submitted by a Beneficial Owner or a Potential Beneficial
Owner to its Broker-Dealer, or by a Broker-Dealer to the Auction Agent, prior to
the Submission Deadline on any Auction Date, shall be irrevocable.
3. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. (a) Not earlier than the Submission Deadline on each Auction
Date for a series of Energy Notes, the Auction Agent shall assemble all valid
Orders submitted or deemed submitted to it by the Broker-Dealers in respect of
Energy Notes of such series (each such Order as submitted or deemed submitted by
a Broker-Dealer being hereinafter referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as
a "Submitted Order" and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as "Submitted Orders")
and shall determine for such series:
(i) the excess of the aggregate principal amount of
Outstanding Energy Notes of such series over the principal amount of
Outstanding Energy Notes of such series subject to Submitted Hold
Orders (such excess being hereinafter referred to as the "Available
Energy Notes" of such series);
(ii) from the Submitted Orders for Energy Notes of such series
whether:
(A) the aggregate principal amount of Outstanding
Energy Notes of such series subject to Submitted Bids of
Potential Holders specifying one or more rates between the
Minimum Rate (for Standard Rate Periods or less, only) and the
Maximum Rate (for all Rate Periods) for Energy Notes of such
series;
exceeds or is equal to the sum of:
(B) the aggregate principal amount of Outstanding
Energy Notes of such series subject to Submitted Bids of
Existing Holders specifying one or more rates between the
Minimum Rate (for Standard Rate Periods or less, only) and the
Maximum Rate (for all Rate Periods) for Energy Notes of such
series; and
A-5
(C) the aggregate principal amount of Outstanding
Energy Notes of such series subject to Submitted Sell Orders
(in the event such excess or such equality exists (other than because
all of the Outstanding Energy Notes of such series are subject to
Submitted Hold Orders), such Submitted Bids in subclause (A) above
being hereinafter referred to collectively as "Sufficient Clearing
Bids" for Energy Notes of such series); and
(iii) if Sufficient Clearing Bids for Energy Notes of such
series exist, the lowest rate specified in such Submitted Bids (the
"Winning Bid Rate" for Energy Notes of such series) which if:
(A)(I) each such Submitted Bid of Existing Holders
specifying such lowest rate and (II) all other such Submitted
Bids of Existing Holders specifying lower rates were rejected,
thus entitling such Existing Holders to continue to hold the
Energy Notes of such series that are subject to such Submitted
Bids; and
(B)(I) each such Submitted Bid of Potential Holders
specifying such lowest rate and (II) all other such Submitted
Bids of Potential Holders specifying lower rates were
accepted;
would result in such Existing Holders described in subclause (A) above
continuing to hold an aggregate principal amount of Outstanding Energy
Notes of such series which, when added to the aggregate principal
amount of Outstanding Energy Notes of such series to be purchased by
such Potential Holders described in subclause (B) above, would equal
not less than the Available Energy Notes of such series.
(b) Promptly after the Auction Agent has made the determinations
pursuant to paragraph (a) of this Section 3, the Auction Agent shall advise the
Issuer of the Minimum Rate and Maximum Rate for the series of Energy Notes for
which an Auction is being held on the Auction Date and, based on such
determination, the Applicable Rate for Energy Notes of such series for the next
succeeding Rate Period thereof as follows:
(i) if Sufficient Clearing Bids for Energy Notes of such
series exist, that the Applicable Rate for all s Energy Notes of such
series for the next succeeding Rate Period thereof shall be equal to
the Winning Bid Rate for Energy Notes of such series so determined;
(ii) if Sufficient Clearing Bids for Energy Notes of such
series do not exist (other than because all of the Outstanding Energy
Notes of such series are subject to Submitted Hold Orders), that the
Applicable Rate for all Energy Notes of such series for the next
succeeding Rate Period thereof shall be equal to the Maximum Rate for
Energy Notes of such series; or
A-6
(iii) if all of the Outstanding Energy Notes of such series are
subject to Submitted Hold Orders, that the Applicable Rate for all
Energy Notes of such series for the next succeeding Rate Period thereof
shall be All Hold Rate.
4. Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Energy Notes. Existing Holders shall continue to hold
the Energy Notes that are subject to Submitted Hold Orders, and, based on the
determinations made pursuant to paragraph (a) of Section 3 of this Appendix A,
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected by
the Auction Agent and the Auction Agent shall take such other action as set
forth below:
(a) If Sufficient Clearing Bids for a series of Energy Notes
have been made, all Submitted Sell Orders with respect to Energy Notes
of such series shall be accepted and, subject to the provisions of
paragraphs (d) and (e) of this Section 4, Submitted Bids with respect
to Energy Notes of such series shall be accepted or rejected as follows
in the following order of priority and all other Submitted Bids with
respect to Energy Notes of such series shall be rejected:
(i) Existing Holders' Submitted Bids for Energy
Notes of such series specifying any rate that is higher than
the Winning Bid Rate for Energy Notes of such series shall be
accepted, thus requiring each such Existing Holder to sell the
Energy Notes subject to such Submitted Bids;
(ii) Existing Holders' Submitted Bids for Energy
Notes of such series specifying any rate that is lower than
the Winning Bid Rate for Energy Notes of such series shall be
rejected, thus entitling each such Existing Holder to continue
to hold the Energy Notes subject to such Submitted Bids;
(iii) Potential Holders' Submitted Bids for Energy
Notes of such series specifying any rate that is lower than
the Winning Bid Rate for Energy Notes of such series shall be
accepted;
(iv) each Existing Holder's Submitted Bid for Energy
Notes of such series specifying a rate that is equal to the
Winning Bid Rate for Energy Notes of such series shall be
rejected, thus entitling such Existing Holder to continue to
hold the Energy Notes subject to such Submitted Bid, unless
the aggregate principal amount of Outstanding Energy Notes
subject to all such Submitted Bids shall be greater than the
principal amount of Energy Notes ("remaining Energy Notes") in
the excess of the Available Energy Notes of such series over
the principal amount of Energy Notes subject to Submitted Bids
described in clauses (ii) and (iii) of this paragraph (a), in
which event such Submitted Bid of such Existing Holder shall
be rejected in part, and such Existing Holder shall be
entitled to continue to hold Energy Notes subject to such
Submitted Bid, but only in an amount equal to the principal
amount of Energy Notes of such series obtained by multiplying
the remaining principal amount by a fraction, the numerator of
which shall be the principal amount of Outstanding Energy
Notes held by such Existing Holder subject to such Submitted
A-7
Bid and the denominator of which shall be the aggregate
principal amount of Outstanding Energy Notes subject to such
Submitted Bids made by all such Existing Holders that
specified a rate equal to the Winning Bid Rate for Energy
Notes of such series; and
(v) each Potential Holder's Submitted Bid for
aggregate principal amount of such series specifying a rate
that is equal to the Winning Bid Rate for aggregate principal
amount of such series shall be accepted but only in an amount
equal to the principal amount of Energy Notes of such series
obtained by multiplying the principal amount of Energy Notes
in the excess of the Available Energy Notes of such series
over the principal amount of Energy Notes subject to Submitted
Bids described in clauses (ii) through (iv) of this paragraph
(a) by a fraction, the numerator of which shall be the
principal amount of Outstanding Energy Notes subject to such
Submitted Bid and the denominator of which shall be the
aggregate principal amount of Outstanding Energy Notes subject
to such Submitted Bids made by all such Potential Holders that
specified a rate equal to the Winning Bid Rate for Energy
Notes of such series.
(b) If Sufficient Clearing Bids for a series of Energy Notes
have not been made (other than because all of the Outstanding Energy
Notes of such series are subject to Submitted Hold Orders), subject to
the provisions of paragraph (d) of this Section 4, Submitted Orders for
Energy Notes of such series shall be accepted or rejected as follows in
the following order of priority and all other Submitted Bids for Energy
Notes of such series shall be rejected:
(i) Existing Holders' Submitted Bids for Energy Notes
of such series specifying any rate that is equal to or lower
than the Maximum Rate for Energy Notes of such series shall be
rejected, thus entitling such Existing Holders to continue to
hold the Energy Notes subject to such Submitted Bids;
(ii) Potential Holders' Submitted Bids for Energy
Notes of such series specifying any rate that is equal to or
lower than the Maximum Rate for Energy Notes of such series
shall be accepted; and
(iii) Each Existing Holder's Submitted Bid for Energy
Notes of such series specifying any rate that is higher than
the Maximum Rate for Energy Notes of such series and the
Submitted Sell Orders for Energy Notes of such series of each
Existing Holder shall be accepted, thus entitling each
Existing Holder that submitted or on whose behalf was
submitted any such Submitted Bid or Submitted Sell Order to
sell the Energy Notes of such series subject to such Submitted
Bid or Submitted Sell Order, but in both cases only in an
amount equal to the principal amount of Energy Notes of such
series obtained by multiplying the principal amount of Energy
Notes of such series subject to Submitted Bids described in
clause (ii) of this paragraph (b) by a fraction, the numerator
of which shall be the principal amount of Outstanding Energy
Notes of such series held by such Existing Holder subject to
such Submitted Bid or Submitted Sell Order and the denominator
A-8
of which shall be the aggregate principal amount of
Outstanding Energy Notes of such series subject to all such
Submitted Bids and Submitted Sell Orders.
(c) If all of the Outstanding Energy Notes of a series are
subject to Submitted Hold Orders, all Submitted Bids for Energy Notes
of such series shall be rejected.
(d) If, as a result of the procedures described in clause
(iv) or (v) of paragraph (a) or clause (iii) of paragraph (b) of this
Section 4, any Existing Holder would be entitled or required to sell,
or any Potential Holder would be entitled or required to purchase, less
than an Authorized Denomination of Energy Notes on any Auction Date,
the Auction Agent shall, in such manner as it shall determine in its
sole discretion, round up or down the principal amount of Energy Notes
of such series to be purchased or sold by any Existing Holder or
Potential Holder on such Auction Date as a result of such procedures so
that the principal amount of Energy Notes so purchased or sold by each
Existing Holder or Potential Holder on such Auction Date shall be equal
to an Authorized Denomination.
(e) If, as a result of the procedures described in clause (v)
of paragraph (a) of this Section 4, any Potential Holder would be
entitled or required to purchase less than an Authorized Denomination
of Energy Notes on any Auction Date, the Auction Agent shall, in such
manner as it shall determine in its sole discretion, allocate Energy
Notes of such series or purchase among Potential Holders so that only
Energy Notes of such series in Authorized Denominations are purchased
on such Auction Date as a result of such procedures by any Potential
Holder, even if such allocation results in one or more Potential
Holders not purchasing Energy Notes of such series on such Auction
Date.
(f) Based on the results of each Auction for a series of
Energy Notes, the Auction Agent shall determine the aggregate principal
amount of Energy Notes of such series to be purchased and the aggregate
principal amount of Energy Notes of such series to be sold by Potential
Holders and Existing Holders and, with respect to each Potential Holder
and Existing Holder, to the extent that such aggregate principal amount
of Energy Notes and such aggregate principal amount of Energy Notes to
be sold differ, determine to which other Potential Holder(s) or
Existing Holder(s) they shall deliver, or from which other Potential
Holder(s) or Existing Holder(s) they shall receive, as the case may be,
Energy Notes of such series. Notwithstanding any provision of the
Auction Procedures or the Settlement Procedures to the contrary, in the
event an Existing Holder or Beneficial Owner of Energy Notes of a
series with respect to whom a Broker-Dealer submitted a Bid to the
Auction Agent for such Energy Notes that was accepted in whole or in
part, or submitted or is deemed to have submitted a Sell Order for such
Energy Notes that was accepted in whole or in part, fails to instruct
its Agent Member to deliver such Energy Notes against payment therefor,
partial deliveries of Energy Notes that have been made in respect of
Potential Holders' or Potential Beneficial Owners' Submitted Bids for
Energy Notes of such series that have been accepted in whole or in part
shall constitute good delivery to such Potential Holders and Potential
Beneficial Owners.
A-9
(g) Neither the Issuer nor the Auction Agent nor any
affiliate of either shall have any responsibility or liability with
respect to the failure of an Existing Holder, a Potential Holder, a
Beneficial Owner, a Potential Beneficial Owner or its respective Agent
Member to deliver Energy Notes of any series or to pay for Energy Notes
of any series sold or purchased pursuant to the Auction Procedures or
otherwise.
A-10
APPENDIX B
FORM OF NOTES
FORM OF FACE OF NOTE
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Energy Income and Growth Fund, a Massachusetts business trust, promises
to pay to _____________, or registered assigns, the principal sum of
_______Dollars ($______) on __, 20__.
Additional provisions of the Series A Energy Notes are set forth on
the other side hereof.
Dated: ENERGY INCOME AND GROWTH FUND
By____________________________________
President
______________________________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
Dated: DEUTSCHE BANK TRUST COMPANY AMERICAS
By: ___________________________________
Authorized Signatory
B-1
FORM OF REVERSE SIDE OF NOTE
ENERGY INCOME AND GROWTH FUND
$_______ SERIES A ENERGY NOTES, DUE 20___
1. Interest. Energy Income and Growth Fund, a Massachusetts business
trust (such fund, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Fund"), promises to pay interest on the
principal amount of the Series A Auction Rate Fund Notes (the "Energy Notes") at
the Applicable Rate until maturity.
2. General. Each series of Energy Notes will bear interest at the
Applicable Rate determined as set forth below, payable on the respective dates
set forth below. Interest on the Energy Notes shall be payable when due (as
described below). If the Fund does not pay interest when due, it will trigger an
event of default under the Indenture (subject to the cure provisions), and the
Fund will be restricted from declaring dividends and making other distributions
with respect to its common shares and any preferred shares.
On the Business Day next preceding each Interest Payment Date, the Fund
is required to deposit with the Paying Agent sufficient funds for the payment of
interest. The Fund does not intend to establish any reserves for the payment of
interest.
All moneys paid to the Paying Agent for the payment of interest shall
be held in trust for the payment of such interest to the Holders. Interest will
be paid by the Paying Agent to the Holders as their names appear on the
securities ledger or securities records of the Fund, which Holder is expected to
be the nominee of the Securities Depository. The Securities Depository will
credit the accounts of the Agent Members of the beneficial owners in accordance
with the Securities Depository's normal procedures. The Securities Depository's
current procedures provide for it to distribute interest in same-day funds to
Agent Members who are in turn expected to distribute such interest to the
persons for whom they are acting as agents. The Agent Member of a beneficial
owner will be responsible for holding or disbursing such payments on the
applicable Interest Payment Date to such beneficial owner in accordance with the
instructions of such beneficial owner.
Interest in arrears for any past Rate Period may be subject to a
Default Rate of interest (described below) and may be paid at any time, without
reference to any regular Interest Payment Date, to the Holders as their names
appear on the securities ledger or securities records of the Fund on such date,
not exceeding 15 days preceding the payment date thereof, as may be fixed by the
Board of Trustees. Any interest payment shall first be credited against the
earliest accrued interest. No interest will be payable in respect of any payment
or payments which may be in arrears.
The amount of interest payable on each Interest Payment Date of each
Rate Period of less than one year (or in respect of interest on another date in
connection with a redemption during such Rate Period) shall be computed by
multiplying the Applicable Rate (or the Default Rate) for such Rate Period (or a
portion thereof) by a fraction, the numerator of which will be the number of
B-2
days in such Rate Period (or portion thereof) that such Energy Notes were
outstanding and for which the Applicable Rate or the Default Rate was applicable
and the denominator of which will be 365, multiplying the amount so obtained by
$25,000, and rounding the amount so obtained to the nearest cent. During any
Rate Period of one year or more, the amount of interest of an Energy Note
payable on any Interest Payment Date (or in respect of interest on another date
in connection with a redemption during such Rate Period) shall be computed as
described in the preceding sentence, except that it will be determined on the
basis of a year consisting of 12 30-day months.
Determination of Interest Rate. The interest rate for the initial Rate
Period (i.e., the period from and including the Original Issue Date to and
including the initial Auction Date) and the initial Auction Date are set forth
on the cover page of the Prospectus. After the initial Rate Period, subject to
certain exceptions, the Energy Notes will bear interest at the Applicable Rate
that the Auction Agent advises the Fund has resulted from an Auction.
The initial Rate Period for the Energy Notes shall be ___ days. Rate
Periods after the initial Rate Period shall either be Standard Rate Periods or,
subject to certain conditions and with notice to Holders, Special Rate Periods.
A Special Rate Period will not be effective unless, among other things,
Sufficient Clearing Bids exist at the Auction in respect of such Special Rate
Period (that is, in general, the aggregate amount of Energy Notes subject to Buy
Orders by Potential Holders is at least equal to the aggregate amount of Energy
Notes subject to Sell Orders by Existing Holders).
Interest will accrue at the Applicable Rate from the Original Issue
Date and shall be payable on each Interest Payment Date thereafter. For Rate
Periods of less than 30 days, Interest Payment Dates shall occur on the first
Business Day following such Rate Period and, if greater than 30 days, then on a
monthly basis on the first Business Day of each month within such Rate Period,
not including the initial Rate Period, and on the Business Day following the
last day of such Rate Period. Interest will be paid through the Securities
Depository on each Interest Payment Date.
Except during a Default Period as described below, the Applicable Rate
resulting from an Auction will not be greater than the Maximum Rate, which is
equal to the Applicable Percentage of the Reference Rate, subject to upward but
not downward adjustment in the discretion of the Board of Trustees after
consultation with the Broker-Dealers. The Applicable Percentage will be
determined based on the lower of the credit ratings assigned on that date to the
Energy Notes by Xxxxx'x and Fitch, as follows:
XXXXX'X FITCH APPLICABLE
CREDIT RATING CREDIT RATING PERCENTAGE
------------- ------------- ----------
Aa3 or above AA- or above 200%
A3 to A1 A- to A+ 250%
Baa3 to Baa1 BBB- to BBB+ 275%
Below Baa3 Below BBB- 300%
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The Reference Rate is the greater of (1) the applicable AA Composite
Commercial Paper Rate (for a Rate Period of fewer than 184 days) or the
applicable Treasury Index Rate (for a Rate Period of 184 days or more), or (2)
the applicable LIBOR. For Standard Rate Periods or less only, the Applicable
Rate resulting from an Auction will not be less than the Minimum Rate, which is
70% of the applicable AA Composite Commercial Paper Rate. No Minimum Rate is
specified for Auctions in respect to Rate Periods of more than the Standard Rate
Period.
The Maximum Rate for the Energy Notes will apply automatically
following an Auction for the notes in which Sufficient Clearing Bids have not
been made (other than because all Energy Notes were subject to Submitted Hold
Orders). If an Auction for any subsequent Rate Period is not held for any
reason, including because there is no Auction Agent or Broker-Dealer, then the
Interest Rate on the Energy Notes for any such Rate Period shall be the Maximum
Rate (except for circumstances in which the Interest Rate is the Default Rate,
as described below).
The All Hold Rate will apply automatically following an Auction in
which all of the outstanding Energy Notes are subject to (or are deemed to be
subject to) Submitted Hold Orders. The All Hold Rate is 80% of the applicable AA
Composite Commercial Paper Rate.
Prior to each Auction, Broker-Dealers will notify Holders and the
Trustee of the term of the next succeeding Rate Period as soon as practicable
after the Broker-Dealers have been so advised by the Company. After each
Auction, on the Auction Date, Broker-Dealers will notify Holders of the
Applicable Rate for the next succeeding Rate Period and of the Auction Date of
the next succeeding Auction.
Notification of Rate Period. The Fund will designate the duration of
subsequent Rate Periods of each series of Energy Notes; provided, however, that
no such designation is necessary for a Standard Rate Period and, provided
further, that any designation of a Special Rate Period shall be effective only
if (i) notice thereof shall have been given as provided herein, (ii) any failure
to pay in a timely manner to the Trustee the full amount of any interest on, or
the redemption price of, Energy Notes shall have been cured as provided above,
(iii) Sufficient Clearing Bids shall have existed in an Auction held on the
Auction Date immediately preceding the first day of such proposed Special Rate
Period, (iv) if the Fund shall have mailed a Notice of Redemption with respect
to any Energy Notes, the redemption price with respect to such Energy Notes
shall have been deposited with the Paying Agent, and (v) in the case of the
designation of a Special Rate Period, the Fund has confirmed that as of the
Auction Date next preceding the first day of such Special Rate Period, it has
Eligible Assets with an aggregate Discounted Value at least equal to the Energy
Notes Basic Maintenance Amount, and the Fund has consulted with the
Broker-Dealers and has provided notice of such designation and otherwise
complied with the Rating Agency Guidelines.
If the Fund proposes to designate any Special Rate Period, not fewer
than seven (or two Business Days in the event the duration of the Rate Period
prior to such Special Rate Period is fewer than eight days) nor more than 30
Business Days prior to the first day of such Special Rate Period, notice shall
be (i) made by press release and (ii) communicated by the Fund by telephonic or
other means to the Trustee and Auction Agent and confirmed in writing promptly
thereafter. Each such notice shall state (A) that the Fund proposes to exercise
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its option to designate a succeeding Special Rate Period, specifying the first
and last days thereof and (B) that the Fund will by 3:00 p.m., New York City
time, on the second Business Day next preceding the first day of such Special
Rate Period, notify the Auction Agent and the Trustee, who will promptly notify
the Broker-Dealers, of either (x) its determination, subject to certain
conditions, to proceed with such Special Rate Period, subject to the terms of
any Specific Redemption Provisions, or (y) its determination not to proceed with
such Special Rate Period, in which latter event the succeeding Rate Period shall
be a Standard Rate Period.
No later than 3:00 p.m., New York City time, on the second Business
Day next preceding the first day of any proposed Special Rate Period, the Fund
shall deliver to the Trustee and Auction Agent, who will promptly deliver to the
Broker-Dealers and Existing Holders, either:
(i) a notice stating (A) that the Fund has determined to
designate the next succeeding Rate Period as a Special Rate Period,
specifying the first and last days thereof and (B) the terms of any
Specific Redemption Provisions; or
(ii) a notice stating that the Fund has determined not to
exercise its option to designate a Special Rate Period.
If the Fund fails to deliver either such notice with respect to any
designation of any proposed Special Rate Period to the Auction Agent or is
unable to make the required confirmation described above by 3:00 p.m., New York
City time, on the second Business Day next preceding the first day of such
proposed Special Rate Period, the Fund shall be deemed to have delivered a
notice to the Auction Agent with respect to such Rate Period to the effect set
forth in clause (ii) above, thereby resulting in a Standard Rate Period.
1. Default Period. Subject to cure provisions, a "Default Period" with
respect to a particular series of Energy Notes will commence on any date the
Fund fails to deposit irrevocably in trust in same-day funds, with the Paying
Agent by 12:00 noon, New York City time, (A) the full amount of any declared
interest on that series payable on the Interest Payment Date (an "Interest
Default") or (B) the full amount of any redemption price (the "Redemption
Price") payable on the date fixed for redemption (the "Redemption Date") (a
"Redemption Default" and together with an Interest Default, hereinafter referred
to as "Default"). Subject to cure provisions, a Default Period with respect to
an Interest Default or a Redemption Default shall end on the Business Day on
which, by 12:00 noon, New York City time, all unpaid interest and any unpaid
Redemption Price shall have been deposited irrevocably in trust in same-day
funds with the Paying Agent. In the case of an Interest Default, the Applicable
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Rate for each Rate Period commencing during a Default Period will be equal to
the Default Rate, and each subsequent Rate Period commencing after the beginning
of a Default Period shall be a Standard Rate Period; provided, however, that the
commencement of a Default Period will not by itself cause the commencement of a
new Rate Period. No Auction shall be held during a Default Period with respect
to an Interest Default applicable to that series of Energy Notes. No Default
Period with respect to an Interest Default or Redemption Default shall be deemed
to commence if the amount of any interest or any Redemption Price due (if such
default is not solely due to the willful failure of the Fund) is deposited
irrevocably in trust, in same-day funds with the Paying Agent by 12:00 noon, New
York City time within three Business Days after the applicable Interest Payment
Date or Redemption Date, together with an amount equal to the Default Rate
applied to the amount of such non-payment based on the actual number of days
comprising such period divided by 365 for each series. The Default Rate shall be
equal to the Reference Rate multiplied by three.
2. Trustee, Paying Agent and Auction Agent. Deutsche Bank Trust
Company Americas, a national banking association duly organized and operating
under the laws of the United States of America (together with its successors,
the "Trustee"), will act as Paying Agent with respect to the Energy Notes unless
and until another entity appointed by a resolution of the Board of Trustees
enters into an agreement with the Fund to serve as paying agent, which paying
agent may be the same as the Trustee or the Auction Agent.
Deutsche Bank Trust Company Americas will also act as Auction Agent
unless and until another commercial bank, trust company, or other financial
institution appointed by a resolution of the Board of Trustees enters into an
agreement with the Fund to follow the Auction Procedures for the purpose of
determining the Applicable Rate.
3. Indenture. The Company issued the Energy Notes under an Indenture
dated as of ______ __, 2005, and a Supplemental Indenture dated ______ __, 2005
(collectively, the "Indenture"), between the Fund and the Trustee. The terms of
the Energy Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. xx.xx.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. The Energy Notes are subject to all such terms, and Holders of
Energy Notes are referred to the Indenture and the Act for a statement of those
terms.
The Energy Notes are obligations of the Fund limited to $________
aggregate principal amount (subject to Section 2.01 of the Indenture). The
Energy Notes are one of the Energy Notes referred to in the Indenture. The
Indenture imposes certain limitations on, among other things, the issuance of
debt and redeemable stock by the Fund, the payment of dividends and other
distributions and acquisitions or retirements of the Fund's capital stock and
transactions with Affiliates.
4. Optional Redemption. To the extent permitted under the 1940 Act,
the Fund at its option may redeem Energy Notes having a Rate Period of one year
or less, in whole or in part, out of funds legally available therefor, on the
Interest Payment Date upon not less than 15 days' and not more than 40 days'
prior notice. The optional redemption price shall be equal to the aggregate
principal amount of the Energy Notes to be redeemed, plus an amount equal to
accrued interest to the date fixed for redemption. Energy Notes having a Rate
Period of more than one year are redeemable at the option of the Fund, in whole
or in part, out of funds legally available therefor, prior to the end of the
relevant Rate Period, subject to any Specific Redemption Provisions, which may
include the payment of redemption premiums to the extent required under any
applicable Specific Redemption Provisions. The Fund shall not effect any
optional redemption unless after giving effect thereto (i) the Fund has
available on such date fixed for the redemption certain Deposit Securities with
maturity or tender dates not later than the day preceding the applicable
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redemption date and having a value not less than the amount (including any
applicable premium) due to Holders of a series of Energy Notes by reason of the
redemption of a series of Energy Notes and (ii) the Fund would have Eligible
Assets with an aggregate Discounted Value at least equal to the Energy Notes
Basic Maintenance Amount immediately subsequent to such redemption.
The Fund also reserves the right to repurchase Energy Notes in market
or other transactions from time to time in accordance with applicable law and at
a price that may be more or less than the principal amount of the Energy Notes,
but is under no obligation to do so.
5. Mandatory Redemption. If the Fund fails to maintain, as of any
Valuation Date, Eligible Assets with an aggregate Discounted Value at least
equal to the Energy Notes Basic Maintenance Amount or, as of the last Business
Day of any month, the 1940 Act Energy Notes Asset Coverage, and such failure is
not cured within 10 Business Days following such Valuation Date in the case of a
failure to maintain the Energy Notes Basic Maintenance Amount or on the last
Business Day of the following month in the case of a failure to maintain the
1940 Act Energy Notes Asset Coverage as of such last Business Day (each an
"Asset Coverage Cure Date"), then the Energy Notes will be subject to mandatory
redemption out of funds legally available therefor.
The principal amount of Energy Notes to be redeemed in such
circumstances will be equal to the lesser of (i) the minimum principal amount of
Energy Notes the redemption of which, if deemed to have occurred immediately
prior to the opening of business on the relevant Asset Coverage Cure Date, would
result in the Fund having Eligible Assets with an aggregated Discounted Value at
least equal to the Energy Notes Basic Maintenance Amount or sufficient to
satisfy the 1940 Act Energy Notes Asset Coverage, as the case may be, in either
case as of the relevant Asset Coverage Cure Date (provided that, if there is no
such minimum principal amount of Energy Notes the redemption of which would have
such result, all Energy Notes then outstanding will be redeemed), and (ii) the
maximum principal amount of Energy Notes that can be redeemed out of funds
expected to be available therefor on the Mandatory Redemption Date (as defined
below) at the Mandatory Redemption Price (as defined below).
The Fund shall allocate the principal amount of Energy Notes required
to be redeemed to satisfy the Energy Notes Basic Maintenance Amount or the 1940
Act Energy Notes Asset Coverage, as the case may be, pro rata among the Holders
of Energy Notes in proportion to the principal amount of Energy Notes they hold,
by lot or by such other method as the Fund shall deem fair and equitable,
subject to mandatory redemption provisions, if any.
The Fund is required to effect such a mandatory redemption not later
than 40 days after the Asset Coverage Cure Date, as the case may be (the
"Mandatory Redemption Date"), except that if the Fund does not have funds
legally available for the redemption of, or is not otherwise legally permitted
to redeem, all of the outstanding Energy Notes of a Series which are subject to
mandatory redemption, or the Fund otherwise is unable to effect such redemption
on or prior to such Mandatory Redemption Date, the Fund will redeem those Energy
Notes on the earliest practicable date on which the Fund will have such funds
available, upon notice to record owners of Energy Notes and the Paying Agent.
The Fund's ability to make a mandatory redemption may be limited by the
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provisions of the 1940 Act or Massachusetts law. The redemption price of the
Energy Notes in the event of any mandatory redemption will be the principal
amount, plus an amount equal to accrued interest to the date fixed for
redemption, plus (in the case of a Rate Period of more than one year) redemption
premium, if any, determined by the Board of Trustees after consultation with the
Broker-Dealers and set forth in any applicable Specific Redemption Provisions
(the "Mandatory Redemption Price").
6. Notice of Redemption. Pursuant to Rule 23c-2 under the 1940 Act,
the Fund will file a notice of its intention to redeem with the SEC so as to
provide at least the minimum notice required by such Rule or any successor
provision (notice currently must be filed with the SEC generally at least 30
days prior to the redemption date). The Fund shall deliver a notice of
redemption to the Trustee containing the information described below one
Business Day prior to the giving of notice to Holders in the case of optional
redemptions as described above and on or prior to the 30th day preceding the
Mandatory Redemption Date in the case of a mandatory redemption as described
above. The Trustee will use its reasonable efforts to provide notice to each
holder of Energy Notes called for redemption by electronic means not later than
the close of business on the Business Day immediately following the Business Day
on which the Trustee determines the principal amount of Energy Notes to be
redeemed (or, during a Default Period with respect to such Energy Notes, not
later than the close of business on the Business Day immediately following the
day on which the Trustee receives notice of redemption from the Fund). Such
notice will be confirmed promptly by the Trustee in writing not later than the
close of business on the third Business Day preceding the redemption date by
providing the notice to each holder of record of Energy Notes called for
redemption, the Paying Agent (if different from the Trustee) and the Securities
Depository ("Notice of Redemption"). The Notice of Redemption will be addressed
to the registered owners of the Energy Notes at their addresses appearing on the
books or share records of the Fund. Such notice will set forth (i) the
redemption date, (ii) the principal amount and identity of Energy Notes to be
redeemed, (iii) the redemption price (specifying the amount of accrued interest
to be included therein), (iv) that interest on the Energy Notes to be redeemed
will cease to accrue on such redemption date, and (v) the provision under which
redemption shall be made. No defect in the Notice of Redemption or in the
transmittal or mailing thereof will affect the validity of the redemption
proceedings, except as required by applicable law.
If less than all of the outstanding Energy Notes of a Series are
redeemed on any date, the amount of Energy Notes per Holder to be redeemed on
such date will be selected by the Fund on a pro rata basis in proportion to the
principal amount of Energy Notes held by such holders, by lot or by such other
method as is determined by the Fund to be fair and equitable, subject to the
terms of any Specific Redemption Provisions. In no event will any redemption of
less than all the outstanding Energy Notes of a series be for less than $25,000
or integral multiples thereof. Energy Notes may be subject to mandatory
redemption as described herein notwithstanding the terms of any Specific
Redemption Provisions. The Trustee will give notice to the Securities
Depository, whose nominee will be the record holder of all of the Energy Notes,
and the Securities Depository will determine the Energy Notes to be redeemed
from the account of the Agent Member of each beneficial owner. Each Agent Member
will determine the principal amounts of Energy Notes to be redeemed from the
account of each beneficial owner for which it acts as agent. An Agent Member may
select for redemption Energy Notes from the accounts of some beneficial owners
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without selecting for redemption any Energy Notes from the accounts of other
beneficial owners. Notwithstanding the foregoing, if neither the Securities
Depository nor its nominee is the record holder of all of the Energy Notes, the
particular principal amount to be redeemed shall be selected by the Fund by lot,
on a pro rata basis between each series or by such other method as the Fund
shall deem fair and equitable, as contemplated above.
If Notice of Redemption has been given, then upon the deposit of funds
with the Paying Agent sufficient to effect such redemption, interest on such
Energy Notes will cease to accrue and such Energy Notes will no longer be deemed
to be outstanding for any purpose and all rights of the owners of the Energy
Notes so called for redemption will cease and terminate, except the right of the
owners of such Energy Notes to receive the redemption price, but without any
interest or additional amount. The Fund shall be entitled to receive from the
Paying Agent, promptly after the date fixed for redemption, any cash deposited
with the Paying Agent in excess of (i) the aggregate redemption price of the
Energy Notes called for redemption on such date and (ii) such other amounts, if
any, to which holders of Energy Notes called for redemption may be entitled. The
Fund will be entitled to receive, from time to time after the date fixed for
redemption, from the Paying Agent the interest, if any, earned on such funds
deposited with the Paying Agent and the owners of Energy Notes so redeemed will
have no claim to any such interest. Any funds so deposited which are unclaimed
two years after such redemption date will be paid, to the extent permitted by
law, by the Paying Agent to the Fund upon its request. After such payment,
Holders of Energy Notes called for redemption may look only to the Fund for
payment.
So long as any Energy Notes are held of record by the nominee of the
Securities Depository, the redemption price for such Energy Notes will be paid
on the redemption date to the nominee of the Securities Depository. The
Securities Depository's normal procedures provide for it to distribute the
amount of the redemption price to Agent Members who, in turn, are expected to
distribute such funds to the persons for whom they are acting as agent.
Notwithstanding the provisions for redemption described above, no
Energy Notes may be redeemed unless all interest in arrears on the outstanding
Energy Notes, and any indebtedness of the Fund ranking on a parity with the
Energy Notes, have been or are being contemporaneously paid or set aside for
payment, except in connection with the liquidation of the Fund in which case all
Energy Notes and all indebtedness ranking on a parity with the Energy Notes must
receive proportionate amounts and that the foregoing shall not prevent the
purchase or acquisition of all the outstanding Energy Notes pursuant to the
successful completion of an otherwise lawful purchase or exchange offer made on
the same terms to, and accepted by, Holders of each Series of all outstanding
Energy Notes.
Except for the provisions described above, nothing contained in the
Indenture limits any legal right of the Fund to purchase or otherwise acquire
any Energy Notes outside of an Auction at any price, whether higher or lower
than the price that would be paid in connection with an optional or mandatory
redemption, so long as, at the time of any such purchase, there is no arrearage
in the payment of interest on or the mandatory or optional redemption price with
respect to, any Energy Notes for which Notice of Redemption has been given and
the Fund is in compliance with the 1940 Act Energy Notes Asset Coverage and has
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Eligible Assets with an aggregate Discounted Value at least equal to the Energy
Notes Basic Maintenance Amount after giving effect to such purchase or
acquisition on the date thereof. If less than all the outstanding Energy Notes
are redeemed or otherwise acquired by the Fund, the Fund shall give notice of
such transaction to the Trustee, in accordance with the procedures agreed upon
by the Board of Trustees.
7. Denominations; Transfer; Exchange. The Energy Notes are in
registered form without coupons in denominations of the Principal Amount of
$25,000 and integral multiples thereof. A Holder may transfer or exchange Energy
Notes in accordance with the Indenture. The Fund, Security Registrar or Trustee
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture.
8. Persons Deemed Owners. The registered Holder of Energy Notes may be
treated as the owner for all purposes.
9. Unclaimed Money. If money for the payment of Principal or interest
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Fund, to the extent permitted by law. After any such payment,
Holders entitled to the money must look only to the Fund and not to the Trustee
for payment.
10. Defeasance. Subject to certain conditions, the Fund at any time may
terminate some or all of its obligations under the Energy Notes and the
Indenture if the Company deposits with the Trustee money, U.S. Government
Obligations, such other obligations or arrangements as may be specified, or a
combination thereof, in each case sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof for the payment of Principal and any premium and interest
on the Energy Notes on the respective Stated Maturities, in accordance with the
terms of the Indenture and such Securities.
11. Amendment, Waiver. Subject to certain exceptions set forth in the
Indenture, (i) the Indenture or the Energy Notes may be amended with the written
consent of the Holders of at least a majority in Principal Amount outstanding of
the Notes and (ii) any default or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in Principal Amount
outstanding of the Energy Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of the Energy Notes, the Fund and
the Trustee may amend the Indenture or the Energy Notes: to evidence the
succession of another Person to the Fund and the assumption by any such
successor of the covenants of the Fund in the Indenture and in the Securities;
to add to the covenants of the Fund for the benefit of the Holders of all or any
series of Securities (and if such covenants are to be for the benefit of less
than all series of Securities, stating that such covenants are expressly being
included solely for the benefit of such series) or to surrender any right or
power conferred upon the Fund by the Indenture; to add any additional Events of
Default for the benefit of the Holders of all or any series of Securities (and
if such additional Events of Default are to be for the benefit of less than all
series of Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of such series); to add to or
change any of the provisions of the Indenture to such extent as shall be
necessary to permit or facilitate the issuance of Securities in bearer form,
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registrable or not registrable as to principal, and with or without interest
coupons, or to permit or facilitate the issuance of Securities in uncertificated
form; to add to, change or eliminate any of the provisions of the Indenture in
respect of one or more series of Securities, provided that any such addition,
change or elimination (A) shall neither (i) apply to any Security of any series
created prior to the execution of such supplemental indenture and entitled to
the benefit of such provision nor (ii) modify the rights of the Holder of any
such Security with respect to such provision or (B) shall become effective only
when there is no such Security Outstanding; or to establish the form or terms of
Securities of any series and to increase the aggregate principal amount of any
Outstanding series of Securities, as permitted by the Indenture; to evidence and
provide for the acceptance of appointment by a successor Trustee with respect to
the Securities of one or more series and to add to or change any of the
provisions of the Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, pursuant to
the requirements of the Indenture; or to cure any ambiguity, to correct or
supplement any provision which may be defective or inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under this Indenture, provided that such action shall not adversely
affect the interests of the Holders of Securities of any series in any material
respect.
12. Events of Default and Acceleration of Maturity; Remedies. Any one
of the following events constitutes an "event of default" under the Indenture:
(i) default in the payment of any interest upon any series of
Energy Notes when it becomes due and payable and the continuance of
such default for 30 days;
(ii) default in the payment of the principal of any series of
Energy Notes at maturity;
(iii) default in the performance, or breach, of any covenant or
warranty of the Fund in the Indenture, and continuance of such default
or breach for a period of 90 days after notice has been given;
(iv) certain voluntary or involuntary proceedings involving
the Fund and relating to bankruptcy, insolvency or other similar laws;
(v) if, on the last business day of each of twenty-four
consecutive calendar months, the Energy Notes have an asset coverage
under the 1940 Act of less than 100%; and
(vi) default in the payment of the Mandatory Redemption Price
payable on the Mandatory Redemption Date, if any.
Upon the occurrence and continuance of an event of default, the holders
of a majority in principal amount of outstanding Energy Notes of a series or the
Trustee may declare the principal amount of Energy Notes of such series
immediately due and payable upon written notice to the Fund. Upon an event of
default relating to bankruptcy, insolvency or other similar laws, acceleration
of maturity occurs automatically. At any time after a declaration of
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acceleration with respect to any series of Energy Notes has been made, and
before a judgment or decree for payment of the money due has been obtained, the
holders of a majority in principal amount of the outstanding Energy Notes of
that series, by written notice to the Fund and the Trustee, may rescind and
annul the declaration of acceleration and its consequences if all events of
default with respect to that series of Energy Notes, other than the non-payment
of the principal of that series of Energy Notes which have become due solely by
such declaration of acceleration, have been cured or waived.
At any time after a declaration of acceleration with respect to Energy
Notes of any series has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee, the holders of a majority in
principal amount of the outstanding Energy Notes of that series, by written
notice to the Fund and the Trustee, may rescind and annul such declaration and
its consequences if certain conditions are met.
13. Trustee Dealings with the Company. Subject to certain limitations
imposed by the Act, the Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Energy Notes and may
otherwise deal with the Fund with the same rights it would have if it were not
Trustee, Paying Agent, Security Registrar or such other agent.
14. No Recourse Against Others. A trustee, officer, employee or
shareholder, as such, of the Fund or the Trustee shall not have any liability
for any obligations of the Fund under the Energy Notes or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting the Energy Notes, each Holder of Energy Notes waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Energy Notes.
15. Authentication. The Trustee's authentication certificate upon the
Energy Notes shall be substantially in the forms provided in the Indenture. No
Energy Notes shall be secured or entitled to the benefit of the Indenture, or
shall be valid or obligatory for any purpose, unless a certificate of
authentication, substantially in such form, has been duly executed by the
Trustee; and such certificate of the Trustee upon any Energy Notes shall be
conclusive evidence and the only competent evidence that such Bond has been
authenticated and delivered. The Trustee's certificate of authentication shall
be deemed to have been duly executed by it if manually signed by an authorized
officer of the Trustee, but it shall not be necessary that the same person sign
the certificate of authentication on all of the Energy Notes issued.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder of Energy Notes or an assignee, such as TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gift to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Fund has caused
CUSIP numbers to be printed on the Energy Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders of Energy
Notes. No representation is made as to the accuracy of such numbers either as
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printed on the Energy Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Fund will furnish to any Holder of Energy Notes, upon written
request and without charge to the Holder of Energy Notes, a copy of the
Indenture which has in it the text of the Energy Notes in larger type. Requests
may be made to: ___________________.
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ASSIGNMENT FORM
To assign these Energy Notes, fill in the form below:
I or we assign and transfer these Energy Notes to (Print or type
assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D.
No.) and irrevocably appoint agent to transfer these Energy Notes on the books
of the Fund. The agent may substitute another to act for him.
Date: ____________________ Your Signature: ______________________
SCHEDULE I
PLEDGED NOTES
ISSUER SERIES CERTIFICATE NO. PRINCIPAL AMOUNT
SCHEDULE II
PERMITTED TRANSACTIONS
APPENDIX C
FORM OF TRUSTEE AUTHENTICATION CERTIFICATE
[TO COME]
