_________________________________________________________________
AUCTION AGENCY AGREEMENT
between
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
and
The Bank of New York
Dated as of [ ], 2002
Relating to
National Municipal Income Preferred Shares,
Series M, Series T, Series W and Series TH
of
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
____________________________________________________________
TABLE OF CONTENTS
PAGE
1. Definitions and Rules of Construction...................1
1.1 Terms Defined by Reference to
Preferred Shares Provisions..................1
1.2 Terms Defined Herein.........................1
1.3 Rules of Construction........................2
2. The Auction.............................................3
2.1 Purpose; Incorporation by Reference of
Auction Procedures and Settlement
Procedures...................................3
2.2 Preparation of Each Auction;
Maintenance of Registry of Beneficial
Owners.......................................3
2.3 Information Concerning Rates.................6
2.4 Auction Schedule.............................10
2.5 Designation of Special Rate Period...........11
2.6 Allocation of Taxable Income.................12
2.7 Failure to Deposit...........................13
2.8 Broker-Dealers...............................15
2.9 Ownership of Preferred Shares................16
2.10 Access to and Maintenance of Auction
Records......................................16
3. The Auction Agent as Dividend and Redemption Pric
e Disbursing Agent..........................................17
4. The Auction Agent as Transfer Agent and Registrar.......17
4.1 Issue of Share Certificates..................17
4.2 Registration of Transfer of Shares...........17
4.3 Removal of Legend on Restricted Shares.......18
4.4 Lost Share Certificates......................18
4.5 Disposition of Cancelled
Certificates;1 Record Retention..............18
4.6 Share Transfer Books.........................18
4.7 Return of Funds..............................19
5. Representations and Warranties of the Fund
6. The Auction Agent.......................................20
6.1 Duties and Responsibilities..................20
6.2 Rights of the Auction Agent..................21
6.3 Auction Agent's Disclaimer...................22
6.4 Compensation, Expenses and
Indemnification..............................22
7. Miscellaneous...........................................22
7.1 Term of Agreement............................22
2
7.2 Communications...............................23
7.3 Entire Agreement.............................24
7.4 Benefits.....................................24
7.5 Amendment; Waiver............................24
7.6 Successors and Assigns.......................25
7.7 Assignment...................................25
7.8 Severability.................................25
7.9 Execution in Counterparts....................25
7.10 Governing Law................................25
3
AUCTION AGENCY AGREEMENT dated as of [ ], 2002 between
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC., a Maryland
Corporation (the "Fund"), and The Bank of New York, a New York
banking corporation (the "Auction Agent").
WHEREAS, the Fund proposes to issue four series of
preferred stock, par value $.001 per share, liquidation
preference $25,000 per share, designated National Municipal
Income Preferred Shares, Series M ("Preferred Shares Series M"),
National Municipal Income Preferred Shares, Series T ("Preferred
Shares Series T"), National Municipal Income Preferred Shares,
Series W ("Preferred Shares Series W"), National Municipal Income
Preferred Shares, Series TH ("Preferred Shares Series TH")
(together the Preferred Shares Series M, Preferred Shares Series
T, Preferred Shares Series W and Preferred Shares Series TH are
the "Preferred Shares") pursuant to the Articles Supplementary
(as hereinafter defined) and desires that the Auction Agent
perform certain duties in connection with the Preferred Shares
upon the terms and subject to the conditions of this Agreement,
and hereby appoints the Auction Agent to act in the capacities
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the Fund and the Auction Agent
agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Articles
Supplementary. Capitalized terms not defined herein shall have
the respective meanings specified in the Articles Supplementary.
1.2 Terms Defined Herein. As used herein and in the
Settlement Procedures, the following terms shall have the
following meanings, unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean the
member of, or participant in, the Securities Depository that will
act on behalf of a Bidder.
(b) "Articles Supplementary" shall mean the
Articles Supplementary establishing and fixing the rights and
preferences of the Preferred Shares and attached hereto as
Exhibit C.
(c) "Auction" shall have the meaning specified in
Section 2.1 hereof.
(d) "Auction Procedures" shall mean the auction
procedures constituting Part II of the Articles Supplementary.
4
(e) "Authorized Officer" shall mean each Vice
President, Assistant Vice President, and Assistant Treasurer of
the Auction Agent assigned to the Dealing and Trading Group of
its Corporate Trust Department and every other officer or
employee of the Auction Agent designated as an "Authorized
Officer" for purposes hereof in a written communication to the
Fund.
(f) "Broker-Dealer Agreement" shall mean each
agreement among the Fund, the Auction Agent and a Broker-Dealer
substantially in the form attached hereto as Exhibit A.
(g) "Fund Officer" shall mean the Chairman of the
Board of Directors of the Fund, the President, each Vice
President (whether or not designated by a number or word or words
added before or after the title "Vice President"), the Secretary,
the Treasurer, each Assistant Vice President, each Assistant
Secretary and each Assistant Treasurer of the Fund and every
other officer or employee of the Fund designated as a "Fund
Officer" for purposes hereof in a notice to the Auction Agent.
(h) "Settlement Procedures" shall mean the
Settlement Procedures attached hereto as Exhibit B.
(i) "Underwriting Agreement" shall mean the
Underwriting Agreement, dated [ ], 2002, among the Fund,
Alliance Capital Management L.P., Xxxxxxx Xxxxx Xxxxxx Inc.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and UBS
Warburg LLC.
1.3 Rules of Construction. Unless the context or use
indicates another or different meaning or intent, the following
rules shall apply to the construction of this Agreement:
(a) Words importing the singular number shall
include the plural number and vice versa.
(b) The captions and headings herein are solely
for convenience of reference and shall not constitute a part of
this Agreement nor shall they affect its meaning, construction or
effect.
(c) The words "hereof", "herein", "hereto" and
other words of similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of
day shall be to New York City time.
5
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction
Procedures and Settlement Procedures. (a) The Articles
Supplementary provide that the Applicable Rate for each
Subsequent Rate Period with respect to any series of Preferred
Shares shall, except under certain conditions, be the rate per
annum that a bank or trust company appointed by the Fund advises
results from implementation of the Auction Procedures for such
series. Each periodic implementation of the Auction Procedures
is hereinafter referred to as an "Auction." The Board of
Directors has adopted a resolution appointing The Bank of New
York as Auction Agent for purposes of the Auction Procedures for
each series of the Preferred Shares. The Bank of New York accepts
such appointment and agrees to follow the procedures set forth in
this Section 2 and the Auction Procedures for the purpose of
determining the Applicable Rate for each series of Preferred
Shares for each Subsequent Rate Period thereof for which the
Applicable Rate is to be determined by an Auction.
(b) All of the provisions contained in the Auction
Procedures and the Settlement Procedures are incorporated herein
by reference in their entirety and shall be deemed to be a part
hereof to the same extent as if such provisions were fully set
forth herein.
2.2 Preparation of Each Auction; Maintenance of
Registry of Beneficial Owners. (a) Not later than seven days
prior to the first Auction Date for the first series of Preferred
Shares, the Fund shall provide the Auction Agent with a list of
the Broker-Dealers. Not later than seven days prior to any
Auction Date for any series of Preferred Shares for which any
change in such list of Broker-Dealers is to be effective, the
Fund will notify the Auction Agent in writing of such change and,
if any such change involves the addition of a Broker-Dealer to
such list, shall cause to be delivered to the Auction Agent for
execution by the Auction Agent a Broker-Dealer Agreement signed
by such Broker-Dealer; provided, however, that if the Fund
proposes to designate any Special Rate Period of any series of
Preferred Shares pursuant to Section 4 of Part I of the Articles
Supplementary, not later than 11:00 A.M. on the Business Day next
preceding the Auction next preceding the first day of such
Special Rate Period or by such later time or date, or both, as
may be agreed to by the Auction Agent, the Fund shall provide the
Auction Agent with a list of the Broker-Dealers for such series
and a manually signed copy of each Broker-Dealer Agreement or a
new Schedule A to the Broker-Dealer Agreement (which Schedule A
shall replace and supersede any previous Schedule A to such
Broker-Dealer Agreement) with each Broker-Dealer for such series.
The Auction Agent and the Fund shall have entered into a Broker-
6
Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.
(b) In the event that any Auction Date for any
series of Preferred Shares shall be changed after the Auction
Agent shall have given the notice referred to in clause (vi) of
paragraph (a) of the Settlement Procedures, or after the notice
referred to in Section 2.5(a) hereof, if applicable, the Auction
Agent, by such means as the Auction Agent deems practicable,
shall give notice of such change to the Broker-Dealers for such
series not later than the earlier of 9:15 A.M. on the new Auction
Date or 9:15 A.M. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a
registry of the beneficial owners of the shares of each series of
Preferred Shares who shall constitute Existing Holders of shares
of such series for purposes of Auctions and shall indicate
thereon the identity of the respective Broker-Dealer of each
Existing Holder, if any, on whose behalf such Broker-Dealer
submitted the most recent Order in any Auction which resulted in
such Existing Holder continuing to hold or purchasing shares of
such series of Preferred Shares. The Auction Agent shall keep
such registry current and accurate based upon information
provided to it by Broker-Dealers. The Fund shall provide or
cause to be provided to the Auction Agent at or prior to the Date
of Original Issue of each series of Preferred Shares a list of
the initial Existing Holders of the shares of each such series,
the number of shares purchased by each such Existing Holder and
the respective Broker-Dealer of each such Existing Holder or the
affiliate thereof through which each such Existing Holder
purchased such shares. The Auction Agent may rely upon, as
conclusive evidence of the identities of the Existing Holders of
shares of any series of Preferred Shares, (A) such list, (B) the
results of Auctions and (C) notices from any Broker-Dealer as
described in the first sentence of Section 2.2(c)(iii) hereof and
(D) the results of any procedures approved by the Fund that have
been devised for the purpose of determining the identities of
Existing Holders in situations where shares of Preferred Shares
may have been transferred without compliance with any restriction
on the transfer thereof set forth in the Auction Procedures.
(ii) In the event of any partial redemption of any
series of Preferred Shares, the Auction Agent may, but shall not
be obligated to, at least two Business Days prior to the next
Auction for such series, request each Broker-Dealer to provide
the Auction Agent with a list of Persons who such Broker-Dealer
believes should remain Existing Holders after such redemption
based upon inquiries of those Persons such Broker-Dealer believes
are Beneficial Owners as a result of the most recent Auction and
with respect to each such Person, the number of shares of such
series such Broker-Dealer believes are owned by such Person after
7
such redemption. In the absence of receiving any such
information from any Broker-Dealer, the Auction Agent may
continue to treat the Persons listed in its registry of Existing
Holders as the Beneficial Owner of the number of shares of such
series shown in such registry.
(iii) The Auction Agent shall be required to
register a transfer of Preferred Shares of any series from an
Existing Holder of such Preferred Shares only if such transfer is
to another Existing Holder, or other Person if permitted by the
Fund, and only if such transfer is (A) made pursuant to an
Auction, (B) the Auction Agent has been notified in writing (I)
in a notice substantially in the form of [Exhibit D] to the
Broker-Dealer Agreements by the Broker-Dealer of such transfer or
(II) in a notice substantially in the form of [Exhibit E] to the
Broker-Dealer Agreements by the Broker-Dealer of any Existing
Holder, or other Person if permitted by the Fund, that purchased
or sold such shares of Preferred Shares in an Auction of the
failure of such shares of Preferred Shares to be transferred as a
result of such Auction or (C) pursuant to procedures approved by
the Fund that have been devised for the purpose of determining
the identities of Existing Holders in situations where shares of
Preferred Shares may have been transferred without compliance
with any restriction of the transfer thereof set forth in the
Auction Procedures. The Auction Agent is not required to accept
any such notice for an Auction unless it is received by the
Auction Agent by 3:00 P.M. on the Business Day preceding such
Auction.
(d) The Auction Agent may, but shall not be
obligated to, request the Broker-Dealers, as set forth in the
Broker-Dealer Agreements, to provide the Auction Agent with a
list of Persons who such Broker-Dealer believes should be
Existing Holders based upon inquiries of those Persons such
Broker-Dealer believes are Beneficial Owners as a result of the
most recent Auction and with respect to each such Person, the
number of shares of such series of Preferred Shares such Broker-
Dealer believes to be owned by such Person. The Auction Agent
shall keep confidential such registry of Existing Holders and
shall not disclose the identities of the Existing Holders of such
shares of Preferred Shares to any Person other than the Fund and
the Broker-Dealers that provided such information; provided,
however, that the Auction Agent reserves the right and is
authorized to disclose any such information if (a) it is ordered
to do so by a court of competent jurisdiction or a regulatory
body, judicial or quasi-judicial agency or authority having the
authority to compel such disclosure, (b) it is advised by its
counsel that its failure to do so would be unlawful or (c)
failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received
indemnity or security satisfactory to it.
8
2.3 Information Concerning Rates. (a) The Applicable
Rate on the date of this Agreement for Preferred Shares Series M
is [___]%, for Preferred Shares Series T is [___]%, for Preferred
Shares W is [___]%, and for Preferred Shares Series TH is [___]%.
If there is any change in the credit rating of Preferred Shares
by either of the rating agencies (or substitute or successor
rating agencies) referred to in the definition of "Rate Multiple"
resulting in any change in the Rate Multiple for Preferred Shares
after the date of this Agreement, the Fund shall notify the
Auction Agent in writing of such change in the Rate Multiple
prior to 12:00 Noon on the Business Day prior to the next Auction
Date for any series of Preferred Shares succeeding such change.
If the Fund designates all or a portion of any dividend on shares
of any series of Preferred Shares to consist of net capital gains
or other income taxable for federal income tax purposes, it will
indicate, in its notice in the form of Exhibit J hereto to the
Auction Agent pursuant to Section 2.6 hereof, the Rate Multiple
for such series to be in effect for the Auction Date on which the
dividend rate for such dividend is to be fixed. In determining
the Maximum Rate for any series of Preferred Shares on any
Auction Date as set forth in Section 2.3(b)(i) hereof, the
Auction Agent shall be entitled to conclusively rely on the last
Rate Multiple for Preferred Shares of which it has most recently
received notice from the Fund (or, in the absence of such notice,
the percentage set forth in the first sentence of this paragraph
(a)), except that if the Fund shall have notified the Auction
Agent of a Rate Multiple to be in effect for an Auction Date in
accordance with the preceding sentence, the Rate Multiple in
effect for the next succeeding Auction Date of any series of
Preferred Shares shall be, unless the Fund notifies the Auction
Agent of a change in the Rate Multiple for such succeeding
Auction Date pursuant to this Section 2.3(a), the Rate Multiple
that was in effect on the first preceding Auction Date for
Preferred Shares with respect to which the dividend, the rate for
which was fixed on such Auction Date, did not include any net
capital gains or other income taxable for federal income tax
purposes.
(b) (i) On each Auction Date for any series of
Preferred Shares, the Auction Agent shall determine the Maximum
Rate for such series. The Maximum Rate for any series of
Preferred Shares on any Auction Date shall be:
(A) In the case of any Auction Date which is
not the Auction date immediately prior to the first day
of any proposed Special Rate Period designated by the
Fund pursuant to Section 4 of Part I of the Articles
Supplementary, the product of (1) the Reference Rate on
such Auction Date for the next Rate Period of such
series and (2) the Rate Multiple on such Auction Date,
unless such series has or had a Special Rate Period
9
(other than a Special Rate Period of 28 Rate Period Days
or fewer) and an Auction at which Sufficient Clearing
Bids existed has not yet occurred for a Minimum Rate
Period of such series after such Special Rate Period, in
which case the higher of:
(1) the dividend rate on shares of such
series for the then-ending Rate Period; and
(2) the product of (x) the higher of (I)
the Reference Rate on such Auction Date for a Rate
Period equal in length to the then-ending Rate
Period of such series, if such then ending Rate
Period was 364 Rate Period Days or fewer, or the
Treasury Note Rate on such Auction Date for a Rate
Period equal in length to the then-ending Rate
Period of such series, if such then ending Rate
Period was more than 364 Rate Period Days, and (II)
the Reference Rate on such Auction Date for a Rate
Period equal in length to such Special Rate Period
of such series, if such Special Rate Period was 364
Rate Period Days or fewer, or the Treasury Note
Rate on such Auction Date for a Rate Period equal
in length to such Special Rate Period, if such
Special Rate Period was more than 364 Rate Period
Days and (y) the Rate Multiple on such Auction
Date; or
(B) In the case of any Auction Date which is
the Auction Date immediately prior to the first day of
any proposed Special Rate Period designated pursuant to
Section 4 of Part I of the Articles Supplementary, the
product of (1) the highest of (x) the Reference Rate on
such Auction Date for a Rate-Period equal in length to
the then-ending Rate Period of such series, if such
then-ending Rate Period was 364 Rate Period Days or
fewer, or the Treasury Note Rate on such Auction Date
for a Rate Period equal in length to the then-ending
Rate Period of such Rate Period, if such then-ending
Rate Period was more than 364 Rate Period Days, (y) the
Reference Rate on such Auction Date for the Special Rate
Period for which the Auction is being held if such
Special Rate Period is 364 Rate Period Days or fewer or
the Treasury Note Rate on such Auction Date for the
Special Rate Period for which the Auction is being held
if such Special Rate Period is more than 364 Rate Period
Days, and (z) the Reference Rate on such Auction Date
for Minimum Dividend Periods and (2) the Rate Multiple
on such Auction Date.
10
Not later than 9:30 A.M. on each Auction Date, the Auction Agent
shall notify the Fund and the Broker-Dealers of the Maximum Rate
so determined and the "AA" Composite Commercial Paper Rate(s),
the Taxable Equivalent of the Short-Term Municipal Bond Rate(s),
Treasury Note Rate(s) and Treasury Xxxx Rate(s), as the case may
be, used to make such determination.
(ii) From and after a Failure to Deposit
by the Fund during any Rate Period of any series of
Preferred Shares, until such failure is cured and a
late charge (as defined in paragraph (a) of Section
2.7), is paid, in accordance with subparagraph
(e)(i) of Section 2 of Part I of the Articles
Supplementary, on the first day of each Rate Period
of such series the Auction Agent shall determine
the Treasury Note Rate for such Rate Period of more
than 364 Rate Period Days and the Reference Rate
for Rate Periods of 364 Rate Period Days or fewer.
Not later than 9:30 A.M. on each such first day,
the Auction Agent shall notify the Fund of the
applicable Reference Rate and Treasury Note Rate.
(iii) If any "AA" Composite Commercial
Paper Rate, Taxable Equivalent of the Short-Term
Municipal Bond Rate, Treasury Note Rate or Treasury
Xxxx Rate, as the case may be, is not quoted on an
interest or bond equivalent basis, as the case may
be, the Auction Agent shall convert the quoted rate
to the interest or bond equivalent thereof as set
forth in the definition of such rate in the
Articles Supplementary if the rate obtained by the
Auction Agent is quoted on a discount basis, or if
such rate is quoted on a basis other than an
interest or bond equivalent or discount basis the
Auction Agent shall convert the quoted rate to an
interest or bond equivalent rate after consultation
with the Fund as to the method of such conversion.
(iv) If any "AA" Composite Commercial
Paper Rate is to be based on rates supplied by
Commercial Paper Dealers and one or more of the
Commercial Paper Dealers shall not provide a
quotation for the determination of such "AA"
Composite Commercial Paper Rate, the Auction Agent
shall immediately notify the Fund so that the Fund
can determine whether to select a Substitute
Commercial Paper Dealer or Substitute Commercial
Paper Dealers to provide the quotation or
quotations not being supplied by any Commercial
Paper Dealer or Commercial Paper Dealers. The Fund
11
shall promptly advise the Auction Agent of any such
selection.
(v) If any Treasury Note Rate or
Treasury Xxxx Rate is to be based on rates supplied
by U.S. Government Securities Dealers and one or
more of the U.S. Government Securities Dealers
shall not provide a quotation for the determination
of such Treasury Rate, the Auction Agent shall
immediately notify the Fund so that the Fund can
determine whether to select a Substitute U.S.
Government Securities Dealer or Substitute U.S.
Government Securities Dealers to provide the
quotation or quotations not being supplied by any
U.S. Government Securities Dealer or U.S.
Government Securities Dealers. The Fund shall
promptly advise the Auction Agent of any such
selection.
(c) The maximum marginal tax rate referred to in
the definition of "Rate Multiple" in the Articles Supplementary
is referred to in this Agreement as the "Highest Marginal Rate."
The Highest Marginal Rate on the date of this Agreement is 38.6%.
If there is any change in the Highest Marginal Rate, the Fund
shall notify the Auction Agent in writing of such change prior to
12:00 Noon on the Business Day prior to the next Auction Date for
Preferred Shares succeeding such change. In determining the
Maximum Rate for any series of Preferred Shares on any Auction
Date, the Auction Agent shall be entitled to rely on the Highest
Marginal Rate of which it has most recently received notice from
the Fund (or, in the absence of such notice, the percentage set
forth in the first sentence of this paragraph (c)).
2.4 Auction Schedule. The Auction Agent shall conduct
Auctions in accordance with the schedule set forth below. Such
schedule may be changed by the Auction Agent with the consent of
the Fund, which consent shall not be unreasonably withheld. The
Auction Agent shall give written notice of any such change to
each Broker-Dealer. Such notice shall be given prior to the
close of business on the Business Day next preceding the first
Auction Date on which any such change shall be effective.
Time Event
By 9:30 A.M. Auction Agent advises the Fund
and Broker-Dealers of the
applicable Maximum Rate and the
Reference Rate(s) and Treasury
Note Rate(s), as the case may
be, used in determining such
12
Maximum Rate as set forth in
Section 2.3(b)(i) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles
information communicated to it
by Broker-Dealers as provided
in [Section 3(a)] of the
Auction Procedures. Submission
Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes
determinations pursuant to
[Section 4(a)] of the Auction
Procedures.
By approximately 3:30 P.M. Auction Agent advises Fund of
results of Auction as provided
in [Section 4(b)] of the
Auction Procedures. Submitted
Bids and Submitted Sell Orders
are accepted and rejected and
shares of Preferred Shares
allocated as provided in
[Section 5] of the Auction
Procedures. Auction Agent
gives notice of Auction results
as set forth in [paragraph (a)]
of the Settlement Procedures.
The Auction Agent shall follow the notification procedures set
forth in [paragraph (a)] of the Settlement Procedures.
2.5 Designation of Special Rate Period. (a) The
Articles Supplementary provide that, subject to the Fund's option
to designate a Special Rate Period as referred to in paragraph
(b) of this Section 2.5, (i) each Rate Period of any series of
Preferred Shares will be a Minimum Rate Period (a duration of
seven days, subject to certain exceptions) and (ii) each Rate
Period following a Rate Period of any series of Preferred Shares
that is other than a Minimum Rate Period will be a Minimum Rate
Period. Not less than 10 nor more than 20 days prior to the last
day of any such Rate Period that is not a Minimum Rate Period,
(i) the Fund shall deliver to the Auction Agent a notice of the
Auction Date of the next succeeding Auction for such series in
the form of Exhibit D hereto and (ii) the Auction Agent shall
deliver such notice by first-class mail, postage prepaid, to each
Existing Holder of shares of such series at the address set forth
for such Existing Holder in the records of the Auction Agent and
to the Broker-Dealers for such series as promptly as practicable
after its receipt of such notice from the Fund.
13
(b) Pursuant to the Articles Supplementary, the
Fund may, at its option, designate a Special Rate Period for any
series of Preferred Shares in the manner described in Section 4
of Part I of the Articles Supplementary.
(i) If the Board of Directors proposes to
designate any succeeding Subsequent Rate Period of any
series of Preferred Shares as a Special Rate Period, (A)
the Fund shall deliver to the Auction Agent a notice of
such proposed Special Rate Period in the form of Exhibit
E hereto not less than 20 nor more than 30 days prior to
the first day of such proposed Special Rate Period and
(B) the Auction Agent on behalf of the Fund shall
deliver such notice by first-class mail, postage
prepaid, to each Existing Holder of shares of such
series of Preferred Shares at the address set forth for
such Existing Holder in the records of the Auction Agent
and to the Broker-Dealers for such series as promptly as
practicable after its receipt of such notice from the
Fund.
(ii) If the Board of Directors determines to
designate such succeeding Subsequent Rate Period as a
Special Rate Period, (A) the Fund shall deliver to the
Auction Agent a notice of such determination in the form
of Exhibit F hereto not later than 11:00 A.M. on the
second Business Day next preceding the first day of such
proposed Special Rate Period and (B) the Auction Agent
shall deliver such notice to the Broker-Dealers for such
series not later than 3:30 P.M. on such second Business
Day.
(iii) If the Fund shall deliver to the
Auction Agent a notice not later than 11:00 A.M. on the
second Business Day next preceding the first day of such
proposed Special Rate Period stating that the Fund has
determined not to exercise its option to designate such
succeeding Subsequent Rate Period as a Special Rate
Period, in the form of Exhibit E hereto, or shall fail
to timely deliver either such notice or a notice in the
form of Exhibit F hereto, the Auction Agent shall
deliver a notice in the form of Exhibit G hereto to the
Broker-Dealers for such series not later than 3:30 P.M.
on such second Business Day (or, if the Auction Agent
has agreed to a later time or date, as promptly as
practicable thereafter).
Such change in the length of a Rate Period shall not occur if (1)
an Auction for shares of such series shall not be held on such
Auction Date for any reason or (2) an Auction for shares of such
14
series shall be held on such Auction Date but Sufficient clearing
Bids for shares of such series shall not exist in such Auction.
2.6 Allocation of Taxable Income. The Fund shall, in
the case of a Minimum Rate Period of 28 Rate Period Days or
fewer, and may, in the case of any other Special Rate Period,
designate all or a portion of any dividend on shares of any
series of Preferred Shares to consist of net capital gains or
other income taxable for federal income tax purposes by
delivering to the Auction Agent a notice in the form of Exhibit J
hereto of such designation not later than the Dividend Payment
Date for such series next preceding the Auction Date on which the
dividend rate for such dividend is to be fixed. The Auction
Agent will deliver such notice to the Broker-Dealers for such
series on the Business Day following its receipt of such notice
from the Fund. Within two Business Days after any Auction Date
involving the allocation of income taxable for federal income tax
purposes, the Auction Agent shall notify each Broker-dealer for
the related series as to the dollar amount per share of such
taxable income and income exempt from federal income taxation
included in the related dividend to the extent that such
information is provided to the Auction Agent in advance.
2.7 Failure to Deposit. (a) If:
(i) any Failure to Deposit shall have
occurred with respect to shares of any series of
Preferred Shares during any Rate Period thereof (other
than any Special Rate Period of more than 364 Rate
Period Days or any Rate Period succeeding any Special
Rate Period of more than 364 Rate Period Days during
which a Failure to Deposit occurred that has not been
cured); but prior to 12:00 Noon, New York City time, on
the third Business Day next succeeding the date on which
such Failure to Deposit occurred, such Failure to
Deposit shall have been cured in accordance with Section
2.7(c) and the Fund shall have paid to the Auction Agent
a late charge (a "Late Charge") equal to the sum of (1)
if such Failure to Deposit consisted of the failure
timely to pay to the Auction Agent the full amount of
dividends with respect to any Dividend Period on such
shares, an amount computed by multiplying (x) 200% of
the Reference Rate for the Rate Period during which such
Failure to Deposit occurs on the Dividend Payment Date
for such Dividend Period by (y) a fraction, the
numerator of which shall be the number of days for which
such Failure to Deposit has not been cured in accordance
with Section 2.7(c) hereof (including the day such
Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of
which shall be 360, and applying the rate obtained
15
against the aggregate liquidation preference of the
outstanding shares of such series of Preferred Shares
and (2) if such Failure to Deposit consisted of the
failure timely to pay to the Auction Agent the
Redemption Price of the shares of such series of
Preferred Shares, if any, for which Notice of Redemption
has been given by the Fund, an amount computed by
multiplying (x) 200% of the Reference Rate for the Rate
Period during which such Failure to Deposit occurs on
the redemption date by (y) a fraction, the numerator of
which shall be the number of days for which such Failure
to Deposit is not cured in accordance with Section
2.7(c) hereof (including the day such Failure to Deposit
occurs and excluding the day such Failure to Deposit is
cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate
liquidation preference of the outstanding shares of such
series of Preferred Shares to be redeemed,
then the Auction Agent shall deliver a notice in the form of
Exhibit H hereto by first-class mail, postage prepaid, to the
Broker-Dealers for such series not later than one Business Day
after its receipt of the payment from the Fund curing such
Failure to Deposit and such Late Charge.
(b) If:
(i) any Failure to Deposit shall have
occurred with respect to shares of any series of
Preferred Shares during a Rate Period thereof (other
than any Special Rate Period of more than 364 Rate
Period Days or any Rate Period succeeding any Special
Rate Period of more than 364 Rate Period Days during
which a Failure to Deposit occurred that has not been
cured), and, prior to 12:00 Noon, New York City time, on
the third Business Day next succeeding the date on which
such Failure to Deposit occurred, such Failure to
Deposit shall not have been cured in accordance with
Section 2.7(c) hereof or the Fund shall not have paid to
the Auction Agent the applicable Late Charge; or
(ii) any Failure to Deposit shall have
occurred with respect to shares of any series of
Preferred Shares during a Special Rate Period thereof of
more than 364 Rate Period Days, or during any Rate
Period thereof succeeding any Special Rate Period of
more than 364 Rate Period Days during which a Failure to
Deposit occurred that has not been cured, and, prior to
12:00 noon, New York City time, on the fourth Business
Day preceding the Auction Date for the Rate Period
subsequent to such Rate Period, such Failure to Deposit
16
shall not have been cured in accordance with Section
2.7(c) hereof or the Fund shall not have paid the
applicable Late Charge to the Auction Agent in
accordance with Section 2(e)(i)(D) of the Articles
Supplementary (such Late Charge, for purposes of this
clause (b)(iii) of this Section 2.7, to be calculated by
using, as the Reference Rate, the Reference Rate
applicable to a Rate Period (x) consisting of more than
182 Rate Period Days and (y) commencing on the date on
which the Rate Period during which Failure to Deposit
occurs commenced,
then the Auction Agent shall deliver a notice in the form of
Exhibit I hereto to the Broker-Dealers for such series not later
than one Business Day after the receipt of the payment from the
Fund curing such Failure to Deposit and such Late Charge.
(c) A Failure to Deposit with respect to shares of
Preferred Shares shall have been cured (if such Failure
to Deposit is not solely due to the willful failure to
the Fund to make the required payment to the Auction
Agent) with respect to any Rate Period if, within the
respective time periods described immediately above, the
Fund shall have paid to the Auction Agent (i) all
accumulated and unpaid dividends on the shares of
Preferred Shares and (ii) without duplication, the
Redemption Price for the shares of Preferred Shares, if
any, for which Notice of Redemption has been mailed;
provided, however, that the foregoing clause (ii) shall
not apply to the Fund's failure to pay the Redemption
Price in respect of shares of Preferred Shares when the
related Redemption Notice provides that redemption of
such shares is subject to one or more conditions
precedent and each such condition precedent shall not
have been satisfied at the time or times and in the
manner specified in such Notice of Redemption.
2.8 Broker-Dealers. (a) Not later than 12:00 Noon on
each Auction Date for any series of Preferred Shares, the Fund
shall pay to the Auction Agent an amount in cash equal to the
aggregate fees payable to the Broker-Dealers for such series
pursuant to [Section 2.8] of the Broker-Dealer Agreements for
such series. The Auction Agent shall apply such moneys as set
forth in [Section 2.8] of each such Broker-dealer Agreement.
(b) The Fund shall obtain the consent of the
Auction Agent prior to selecting any Person to act as a Broker-
Dealer, which consent shall not be unreasonably withheld.
(c) The Auction Agent shall terminate any Broker-
Dealer Agreement as set forth therein if so directed by the Fund,
17
provided that at least one Broker-Dealer Agreement would be in
effect for each series of Preferred Shares after such
termination.
(d) Subject to the Auction Agent's having
consented to the selection of the relevant Broker-Dealer pursuant
to Section 2.8(b) hereof, the Auction Agent shall from time to
time enter into such Broker-Dealer Agreements with one or more
Broker-Dealers as the Fund shall request, and shall enter into
such schedules to any such Broker-Dealer Agreements as the Fund
shall request, which schedules, among other things, shall set
forth the series of Preferred Shares to which such Broker-Dealer
Agreement relates.
2.9 Ownership of Shares of Preferred Shares. The Fund
shall notify the Auction Agent if the Fund or any affiliate of
the Fund acquires any shares of Preferred Shares of any series.
Neither the Fund nor any affiliate of the Fund shall submit any
Order in any Auction for Preferred Shares, except as set forth in
the next sentence. Any Broker-Dealer that is an affiliate of the
Fund may submit Orders in Auctions, but only if such Orders are
not for its own account. For purposes of this Section 2.9, a
Broker-Dealer shall not be deemed to be an affiliate of the Fund
solely because one or more of the directors or executive officers
of such Broker-Dealer or of any Person controlled by, in control
of or under common control with such Broker-Dealer is also a
director of the Fund. The Auction Agent shall have no duty or
liability with respect to enforcement of this Section 2.9.
2.10 Access to and Maintenance of Auction Records. The
Auction Agent shall at no cost to the Auction Agent, upon the
receipt of prior written notice from the Fund, afford to the Fund
access at reasonable times during normal business hours to all
books, records, documents and other information concerning the
conduct and results of Auctions. The Auction Agent shall have no
responsibility for, and shall incur no liability in connection
with the compliance with this Section 2.10. The Auction Agent
shall maintain records relating to any Auction for a period of
six years after such Auction, and such records shall, in
reasonable detail, accurately and fairly reflect the actions
taken by the Auction Agent hereunder.
3. The Auction Agent as Dividend and
Redemption Price Disbursing Agent.
The Auction Agent, as dividend and redemption price
disbursing agent, shall pay to the Holders of Preferred Shares of
any series (i) on each Dividend Payment Date for such series,
dividends on the shares of such series, (ii) on any date fixed
for redemption of Preferred Shares of any series, the Redemption
Price of any shares of such series called for redemption and
18
(iii) any Late Charge related to any payment of dividends or
Redemption Price, in each case after receipt of the necessary
funds from the Fund with which to pay such dividends, Redemption
Price or Late Charge. The amount of dividends for any Rate
Period for any series of Preferred Shares to be paid by the
Auction Agent to the Holders of such shares of such series will
be determined by the Fund as set forth in Section 2 of Part I of
the Articles Supplementary with respect to such series. The
Redemption Price of any shares to be paid by the Auction Agent to
the Holders will be determined by the Fund as set forth in
Section 11 of Part I of the Articles Supplementary with respect
to such series. The Fund shall notify the Auction Agent in
writing of a decision to redeem shares of any series of Preferred
Shares at least five days prior to the date a notice of
redemption is required to be mailed to the Holders of the shares
to be redeemed by paragraph (a) of Section 11 of Part I of the
Articles Supplementary. Such notice by the Fund to the Auction
Agent shall contain the information required by paragraph (c) of
Section 11 of Part I of the Articles Supplementary to be stated
in the notice of redemption required to be mailed by the Fund to
such Holders.
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Share Certificates. Upon the Date of
Original Issue of each series of Preferred Shares, one or more
certificates representing all of the shares of each such series
issued on such date shall be issued by the Fund and, at the
request of the Fund, registered in the name of Cede & Co. and
countersigned by the Auction Agent.
4.2 Registration of Transfer of Shares. Shares of each
series of Preferred Shares shall be registered solely in the name
of the Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares. All
requests for removal of legends on shares of any series of
Preferred Shares indicating restrictions on transfer shall be
accompanied by an opinion of counsel stating that such legends
may be removed and such shares freely transferred, such opinion
to be delivered under cover of a letter from a Fund Officer
authorizing the Auction Agent to remove the legend on the basis
of said opinion.
4.4 Lost Share Certificates. The Auction Agent shall
issue and register replacement certificates for certificates
represented to have been lost, stolen or destroyed upon the
fulfillment of such requirements as shall be deemed appropriate
by the Fund and the Auction Agent, subject at all times to
provisions of law, the By-Laws of the Fund governing such matters
and resolutions adopted by the Fund with respect to lost
securities. The Auction Agent may issue new certificates in
19
exchange for and upon the cancellation of mutilated certificates.
Any request by the Fund to the Auction Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall
be deemed to be a representation and warranty by the Fund to the
Auction Agent that such issuance will comply with such provisions
of law and the By-Laws and resolutions of the Fund.
4.5 Disposition of Cancelled Certificates; Record
Retention. The Auction Agent shall retain all share certificates
which have been cancelled in transfer or exchange and all
accompanying documentation in accordance with applicable rules
and regulations of the Securities and Exchange Commission for two
calendar years. The Fund also shall undertake to furnish to the
Securities and Exchange Commission and to the Board of Governors
of the Federal Reserve System, upon demand, at either the
principal office or at any regional office, complete, correct and
current hard copies of any and all such records. Thereafter such
records shall not be destroyed by the Fund without the
concurrence of the Auction Agent.
4.6 Share Transfer Books. For so long as the Auction
Agent, The Bank of New York, is acting as the transfer agent for
any series of Preferred Shares pursuant to this Agreement, it
shall maintain a share transfer book containing a list of the
Holders of the shares of each series of Preferred Shares. In
case of any request or demand for the inspection of the share
transfer books of the Fund or any other books in the possession
of the Auction Agent, the Auction Agent will notify the Fund and
secure instructions as to permitting or refusing such inspection.
The Auction Agent reserves the right, however, to exhibit the
share transfer books or other books to any Person provided,
however, that the Auction Agent reserves the right and is
authorized to disclose any such information if (a) it is ordered
to do so by a court of competent jurisdiction or a regulatory
body, judicial or quasi-judicial agency or authority having the
authority to compel such disclosure, (b) it is advised by its
counsel that its failure to do so would be unlawful or (c)
failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received
indemnity or security satisfactory to it.
4.7 Return of Funds. Any funds deposited with the
Auction Agent hereunder by the Fund for any reason, including but
not limited to redemption of shares of Preferred Shares of any
series, that remain unpaid after ninety days shall be repaid to
the Fund upon the written request of the Fund.
20
5. Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent
that:
(a) the Fund is a duly incorporated and existing
corporation and is in good standing as a corporation under the
laws of the State of Maryland and has all necessary power and
authority to execute and deliver this Agreement and to authorize,
create and issue the shares of each series of Preferred Shares,
and the Preferred Shares of each series when issued will be duly
authorized, validly issued, fully paid and nonassessable;
(b) this Agreement has been duly and validly
authorized, executed and delivered by the Fund and, assuming due
authorization, execution and delivery by the Auction Agent,
constitutes the legal, valid and binding obligation of the Fund;
(c) the form of the certificate evidencing the
shares of Preferred Shares complies with all applicable laws of
The State of Maryland;
(d) the shares of Preferred Shares of each series,
when issued, will have been duly registered under the Securities
Act of 1933, as amended, and no further action by or before any
governmental body or authority of the United States or of any
state thereof is required in connection with the execution and
delivery of the Agreement or will have been required in
connection with the issuance of the shares of Preferred Shares of
each series;
(e) the execution and delivery of the Agreement
and the issuance and delivery of the shares of Preferred Shares
of each series do not and will not conflict with, violate or
result in a breach of, the terms, conditions or provisions of, or
constitute a default under, the Articles of Incorporation (as
amended by one or more Articles Supplementary or Articles of
Amendment)or the Bylaws of the Fund, any law or regulation, any
order or decree of any court or public authority having
jurisdiction, or any mortgage, indenture, contract, agreement or
undertaking to which the Fund is a party or by which it is bound
the effect of which conflict, violation, default or breach would
be material to the Fund or the Fund and its subsidiaries taken as
a whole; and
(f) No taxes are payable upon or in respect of the
execution of this Agreement or the issuance of the shares of each
series of Preferred Shares.
21
6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent
for the Fund hereunder and owes no duties, fiduciary or
otherwise, to any other Person, by reason of this Agreement.
(b) The Auction Agent undertakes to perform such
duties and only such duties as are specifically set forth in this
Agreement and the Broker-Dealer Agreements, and no implied
covenants or obligations shall be read into this Agreement
against the Auction Agent.
(c) In the absence of willful misconduct or gross
negligence on its part, the Auction Agent shall not be liable for
any action taken, suffered, or omitted or for any error of
judgment made by it in the performance of its duties under this
Agreement. The Auction Agent shall not be liable for any error
of judgment made in good faith unless the Auction Agent shall
have been grossly negligent in ascertaining the pertinent facts.
(d) The Auction Agent shall not be responsible or
liable for any failure or delay in the performance of its
obligations under this agreement arising out of or causes,
directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage;
epidemics; riots; interruptions, loss or malfunctions of
utilities; computer (hardware or software) or communications
services; acts of civil or military authority or governmental
actions; it being understood that the Auction Agent shall use
reasonable efforts which are consistent with accepted practices
in the banking industry to resume performance as soon as
practicable under the circumstances.
6.2 Rights of the Auction Agent. (a)The Auction Agent
may conclusively rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby
and upon any written instruction, notice, request, direction,
consent, report, certificate, share certificate or other
instrument, paper or document believed in good faith by it to be
genuine. The Auction Agent shall not be liable for acting upon
any telephone communication authorized hereby which the Auction
Agent believes in good faith to have been given by the Fund or by
any Broker-Dealer. The Auction Agent may record telephone
communications with the Fund or with any Broker-Dealer or both.
(b) The Auction Agent may consult with counsel
reasonably acceptable to the Fund and the advice of such counsel
shall be full and complete authorization and protection in
22
respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to
advance, expend or risk its own funds or otherwise incur or
become exposed to financial liability in the performance of its
duties hereunder.
(d) The Auction Agent may perform its duties and
exercise its rights hereunder either directly or by or through
agents or attorneys and shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed by it with due care hereunder except as set forth above
in Section 6.1(c).
(e) In no event shall the Auction Agent be
responsible or liable for special, indirect or consequential loss
or damage of any kind whatsoever (including, but not limited to,
loss of profit), even if the Auction Agent has been advised of
the likelihood of such loss or damage and regardless of the form
of action.
6.3 Auction Agent's Disclaimer. The Auction Agent
makes no representation as to the validity or adequacy of this
Agreement, the Broker-Dealer Agreements or the shares of any
series of Preferred Shares except that the Auction Agent hereby
represents that the Agreement has been duly authorized, executed
and delivered by the Auction Agent and constitutes a legal and
binding obligation of the Auction Agent.
6.4 Compensation, Expenses and Indemnification.
(a) The Fund shall pay the Auction Agent in the amount and
manner agreed to in writing by the Fund and the Auction Agent for
all services rendered by it under this Agreement and the Broker-
Dealer Agreements.
(b) The Fund shall reimburse the Auction Agent
upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Auction Agent in accordance with
any provision of this Agreement and the Broker-Dealer Agreements
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any expense or
disbursement attributable to its gross negligence or willful
misconduct.
(c) The Fund shall indemnify the Auction Agent,
its Directors, Employees, Representations, and Agents for and
hold it harmless against, any loss, liability or expense incurred
without gross negligence or bad faith on its part, arising out of
or in connection with its agency under this Agreement and the
Broker-Dealer Agreements, including the costs and expenses of
23
defending itself against any claim or liability in connection
with its exercise or performance of its duties hereunder and
thereunder.
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless
it shall be terminated as provided in this Section 7.1. The Fund
may terminate this Agreement any time by so notifying the Auction
Agent, provided that the Fund has entered into an agreement in
substantially the form of this Agreement with a successor auction
agent. The Auction Agent may terminate this Agreement upon
written notice to the Fund on the date specified in such notice,
which date shall be no earlier than 45 days after the date of
delivery of such notice. Further, if the Auction Agent has not
received amounts due to it under the terms of this Agreement, the
Auction Agent may terminate this Agreement 30 days after
delivering notice to the Fund of failure to receive such amounts.
(b) Except as otherwise provided in this paragraph
(b), the respective rights and duties of the Fund and the Auction
Agent under this Agreement shall cease upon termination of this
Agreement. The Fund's obligations under Section 6.4 hereof and
its representations and warranties contained in Section 5 hereof
and the Auction Agent's obligations and liabilities under Section
4.5 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall, at the
Fund's request, promptly deliver to the Fund copies of all books
and records maintained by it in connection with its duties
hereunder.
7.2 Communications. Except for (a) communications
authorized to be by telephone pursuant to this Agreement or the
Auction Procedures and (b) communications in connection with
Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar
writing) given to such person at its address or telecopy number
set forth below:
24
If to the Company, Alliance National Municipal
addressed: Income Fund, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
Telephone No.: (000) 000-0000
With a copy sent to:
Alliance Global Investor
Services, Inc.
000 Xxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer of Alliance
National Municipal Income Fund, Inc.
Telephone No.: (000) 000-0000
If to the Auction Agent, The Bank of New York
addressed: 0 Xxxx Xxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and
Trading Group - Auction Desk
Telecopier No.: (000) 000-0000/8238
or 8239
Telephone No.: (000) 000-0000
or to such other address as the party to whom the communication
is addressed shall have previously communicated to the other
party in writing. Communications shall be given on behalf of the
Fund by a Fund Officer and on behalf of the Auction Agent by
telephone (confirmed by telecopy or in writing) by an Authorized
Officer. Communications shall be effective when received at the
proper address.
7.3 Entire Agreement. This Agreement contains the
entire agreement among the parties relating to the subject matter
hereof, and there are no other representations, endorsements,
promises, agreements or understandings, oral, written or
inferred, between the parties relating to the subject matter
hereof, except for agreements relating to the compensation of the
Auction Agent.
7.4 Benefits. Nothing herein, express or implied,
shall give to any Person, other than the Fund, the Auction Agent
25
and their respective successors and assigns, any benefit of any
legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or
construed to be modified, amended, rescinded, cancelled or
waived, in whole or in part, except by a written instrument
signed by a duly authorized representative of the party to be
charged.
(b) Failure of either party hereto to exercise any
right or remedy hereunder in the event of a breach hereof by the
other party shall not constitute a waiver of any such rights or
remedies with respect to any subsequent breach.
7.6 Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the
respective successors and assigns of each of the Fund and the
Auction Agent.
7.7 Assignment. Neither this Agreement nor any part
hereof may be assigned by either party hereto without the express
prior written consent of the other party.
7.8 Severability. If any clause, provision or section
hereof shall be ruled invalid or unenforceable by any court of
competent jurisdiction, the invalidity or unenforceability of
such clause, provision or section shall not affect any of the
remaining clauses, provisions or sections hereof.
7.9 Execution in Counterparts. This Agreement may be
executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.
7.10 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New
York. The parties agree that all actions and proceedings arising
out of this Auction Agency Agreement or any of the transactions
contemplated hereby shall be brought in the County of New York
and, in connection with any such action or proceeding, submit to
the jurisdiction of, and venue in, such County. Each of the
parties hereto also irrevocably waives all right to trial by jury
in any action, proceeding or counterclaim arising out of this
Agreement or the transactions contemplated hereby.
26
IN WITNESS WHEREOF, the parties hereto have caused this
Auction Agency Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the date first
above written.
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
By:
Name:
Title:
THE BANK OF NEW YORK
By:
Name:
Title:
27
EXHIBITS
EXHIBIT A Form of Broker-Dealer Agreement
EXHIBIT B Settlement Procedures
EXHIBIT C Articles Supplementary
EXHIBIT D Form of Notice of Auction Date
EXHIBIT E Form of Notice of Proposed Change of Length of
Rate Period
EXHIBIT F Form of Notice of Change of Length of Rate
Period
EXHIBIT G Form of Notice of Determination Not to Change
Length of Rate Period
EXHIBIT H Form of Notice of Cure of Failure to Deposit
EXHIBIT I Form of Notice of Subsequent Cure of Failure
to Deposit
EXHIBIT J Form of Notice of Capital Gains and Taxable
Ordinary Income Dividend
28
Exhibit A
FORM OF
BROKER-DEALER AGREEMENT
A-1
Exhibit B
SETTLEMENT PROCEDURES
B-1
Exhibit C
ARTICLES SUPPLEMENTARY
C-1
Exhibit D
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF AUCTION DATE FOR
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that the Auction Date of the next
Auction for the Preferred Shares Series ___ of Alliance National
Municipal Income Fund, Inc. (the "Fund") is scheduled to be
_____________ __ and the next Dividend Payment Date for the
Fund's Preferred Shares Series ___ will be _________.
[A Failure to Deposit in respect of the Preferred Shares
Series ___ currently exists. If such Failure to Deposit is not
cured or the applicable Late Charge is not paid prior to 12:00
Noon, New York City time, on the fourth Business Day preceding
the next scheduled Auction Date of the Preferred Shares Series
___ as defined, the next Auction will not be held. Notice of the
next Auction for the Preferred Shares Series ___ will be
delivered when such Failure to Deposit is cured and the
applicable Late Charge is paid.(1)]
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
_________________________
(1) Include this language if a Failure to Deposit exists.
D-1
Exhibit E
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF PROPOSED CHANGE OF
LENGTH OF RATE PERIOD OF
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that Alliance National Municipal
Income Fund, Inc. (the "Fund") may exercise its option to
designate the Rate Period of its Preferred Shares Series ____
commencing [the first day of the Special Rate Period] as a
Special Rate Period.
By 11:00 A.M. on the second Business Day preceding the
first day of such proposed Special Rate Period, the Fund will
notify The Bank of New York of either (a) its determination to
exercise such option, designating the length of such Special Rate
Period for such series or (b) its determination not to exercise
such option.
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
E-1
Exhibit F
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF CHANGE OF LENGTH OF RATE PERIOD OF
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that Alliance National Municipal
Income Fund, Inc. (the "Fund") has determined to designate the
Rate Period of its Preferred Shares Series ___ commencing on [the
first day of the Special Rate Period] as a Special Rate Period.
The Special Rate Period will be ___ [Rate Period Days].
The Auction Date for the Special Rate Period is [the
Business Day next preceding the first day of such Special Rate
Period].
As a result of the Special Rate Period designation, the
amount of dividends payable on Preferred Shares Series ___ during
the Special Rate Period will be based on a 360-day year.
The Special Rate Period shall not commence if (a) an
Auction for shares of Preferred Shares shall not be held on such
Auction Date for any reason or (b) an Auction for shares of
Preferred Shares shall not be held on such Auction Date by
Sufficient Clearing Bids for such shares shall not exist in such
Auction.
The scheduled Dividend Payment Dates for such series of
Preferred Shares during such Special Rate Period will be
_______________________.
[Specific Redemption Provisions, if applicable.]
Attached hereto is a Preferred Shares Basic Maintenance
Report showing that, as of the third Business Day next preceding
such proposed Special Rate Period, Moody's Eligible Assets (if
Xxxxx'x is rating such shares of Preferred Shares) and S&P
Eligible Assets (if S&P is rating such shares of Preferred
Shares) each have an aggregate Discounted Value at least equal to
the Preferred Shares Basic Maintenance Amount as of such Business
Day (assuming for purposes of the foregoing calculation that (i)
the Maximum Rate is the Maximum Rate on such Business Day as if
such Business Day were the Auction Date for the proposed Special
Rate Period, and (ii) the Moody's Discount Factors applicable to
Moody's Eligible Assets are determined by reference to the first
F-1
Moody's Exposure Period longer than the Moody's Exposure Period
then applicable to the Fund.)
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
F-2
Exhibit G
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF DETERMINATION NOT TO CHANGE
LENGTH OF RATE PERIOD OF
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that Alliance National Municipal
Income Fund, Inc. (the "Fund") has determined not to exercise its
option to designate a Special Rate Period of its Preferred Shares
Series ___ and the next succeeding Rate Period of such series
will be a Minimum Rate Period of ___ Rate Period Days.
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
G-1
Exhibit H
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF CURE OF
FAILURE TO DEPOSIT ON
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that Alliance National Municipal
Income Fund, Inc. (the "Fund") has cured its Failure to Deposit
and paid the applicable Late Charge with respect to its Preferred
Shares Series ___. The dividend rate on the shares of Preferred
Shares Series ___ for the current Dividend Period is
____________% per annum, the Dividend Payment Date for the
current Dividend Period is scheduled to be __________ and the
next Auction Date is scheduled to be __________.
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
H-1
Exhibit I
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF CURE OF
FAILURE TO DEPOSIT ON
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that Alliance National Municipal
Income Fund, Inc. (the "Fund") has cured its Failure to Deposit
and paid the applicable Late Charge with respect to its Preferred
Shares Series ___. The next Auction Date for the Preferred
Shares Series ___ is scheduled to be on _______________.
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
I-1
Exhibit J
ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
NOTICE OF
[CAPITAL GAINS] [AND] [TAXABLE ORDINARY INCOME](1)
DIVIDEND FOR
NATIONAL MUNICIPAL INCOME PREFERRED SHARES
("PREFERRED SHARES")
NOTICE IS HEREBY GIVEN that the amount of the dividend
payable on __________ for the Preferred Shares Series ___ of
Alliance National Municipal Income Fund, Inc. (the "Fund") will
be determined by the Auction to be held on ____________________.
Up to [$ A ](2) [$ B ](3) per share of the dividend payable
on such date as determined by such Auction will consist of
[capital gains](2) [ordinary income taxable for federal income
tax purposes](3). If the dividend amount payable on such date as
determined by such Auction is less than [$ A ](2) [$ B ](3)
per share, the entire amount of the dividend will consist of
[capital gains](2) [ordinary income taxable for federal income
tax purposes](3). [To the extent such dividend amount exceeds
[$ A ] per share, any excess up to [$ B ] per share will
consist of ordinary income taxable for federal income tax
purposes.](4) Accordingly, the aforementioned composition of the
dividend payable on ____________________ should be considered in
determining Orders to be submitted with respect to the Auction to
be held on _________________. The Rate Multiple in effect for
such Auction will be ___%.
ALLIANCE NATIONAL MUNICIPAL
INCOME FUND, INC.
Dated:_______________
___________________
(1) Include language with respect to capital gains,
taxable ordinary income or both, depending on the character of
the designation to be made with respect to the dividend(s).
J-1
(2) Include bracketed material if a portion of the
dividend will be designated capital gains.
(3) Include bracketed material if a portion of the
dividend will be designated ordinary income taxable for federal
income tax purposes and no portion of the dividend will be
designated capital gains.
(4) Include bracketed material if a portion of the
dividend will be designated capital gains and a portion will be
designated ordinary income taxable for federal income tax
purposes.
A = the maximum amount of capital gains allocated to such
series of Preferred Shares to be included in such dividend,
divided by the number of shares of Preferred Shares.
B = the maximum amount of ordinary income taxable for federal
income tax purposes allocated to such series of Preferred
Shares to be included in such dividend, divided by the
number of shares in such series.
J-2
00250209.AY5
