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Exhibit (k)(5)
Colonial Management Associates, Inc.
December , 1999
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Colonial Broker-Dealer
Agreement-Basic Terms for Acting as a Broker-Dealer dated December 14, 1999,
receipt of which is hereby acknowledged by you (the "Basic Terms"). For purposes
of this letter ("Acceptance Letter"), (a) "Trust" shall mean any closed-end
investment company registered under the Investment Company Act of 1940, as
amended, for which Colonial Management Associates, Inc. acts as investment
adviser and which is listed on Exhibit A; and (b) the Basic Terms are
incorporated herein by reference, you shall be considered BD for all purposes
thereof, Bankers Trust Company shall be considered the Auction Agent for all
purposes thereof, and each Trust listed on Exhibit A hereto shall be considered
a Trust for all purposes thereof.
We hereby request that you act as a Broker-Dealer for the
Municipal Auction Rate Cumulative Preferred Shares ("Municipal Preferred") of
each series of each Trust that executes a letter, substantially in the form
attached hereto as Exhibit B, appointing you as a Broker-Dealer ("Request
Letter"). You hereby (a) accept such appointment as a Broker-Dealer for each
series of Municipal Preferred of each Trust identified in a Request Letter and
(b) agree to act as BD in accordance with the Basic Terms; provided, however,
that:
(1) for purposes of the Basic Terms, your address, telecopy
number and telephone number for communications pursuant to the Basic Terms shall
be as follows:
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.:
Telephone No.:
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and the address, telecopy number and telephone number of the Auction Agent for
communications pursuant to the Basic Terms shall be as follows:
Bankers Trust Company
Corporate Trust and Agency Group
Four Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Auction Rate/Remarketed Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
You hereby acknowledge that, notwithstanding any provision of
the Basic Terms to the contrary, the Trust may (a) upon five business days'
notice to the Auction Agent and you, amend, alter or repeal any of the
provisions contained in the Basic Terms, it being understood and agreed that you
shall be deemed to have accepted any such amendment, alteration or repeal if,
after the expiration of such five business day period, you submit an Order to
the Auction Agent in respect of the shares of Municipal Preferred of the Trust
or Trusts to which such amendment, alteration or repeal relates, and (b) subject
to Section 4.1 of the Basic Terms, upon two business days' notice to the Auction
Agent and you, exclude you from participating as a Broker-Dealer in any
particular Auction for any particular series of Municipal Preferred.
This Acceptance Letter shall be deemed to form part of the
Basic Terms.
Capitalized terms not defined in this Acceptance Letter shall
have the meanings ascribed to them in the Basic Terms, as the case may be.
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If the foregoing terms are acceptable to you, please so
indicate in the space provided below. This Acceptance Letter may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: __________________________
Name:
Title:
Accepted by and Agreed to as of the date first written above:
XXXXXXX XXXXX XXXXXX INC.
By: _______________________
Name:
Title:
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EXHIBIT A TO ACCEPTANCE LETTER
Colonial California Insured Municipal Fund
Colonial Insured Municipal Fund
Colonial New York Insured Municipal Fund
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EXHIBIT B TO ACCEPTANCE LETTER
[Form of Request Letter]
[Name(s) of Trust(s)]
________ __, 1999
Ladies and Gentlemen:
Reference is made to (a) the Colonial Broker-Dealer Agreement
-- Basic Terms for Acting as a Broker-Dealer dated ___ __, 1999, receipt of
which is hereby acknowledged by you (the "Broker-Dealer Basic Terms") and (b)
the Colonial Auction Agency Agreement -- Basic Terms for Acting as Auction Agent
dated ______, 1999, receipt of which is hereby acknowledged by you (the "Auction
Agency Basic Terms"). For purposes of this letter ("Request Letter"), (a)
"Trust" shall mean each undersigned closed-end investment company registered
under the Investment Company Act of 1940, as amended, for which Colonial
Management Associates, Inc. acts as investment adviser; (b) the Broker-Dealer
Basic Terms are incorporated herein by reference, each Broker-Dealer listed on
Exhibit A hereto shall be considered BD for all purposes thereof, [insert
Auction Agent] shall be considered the Auction Agent for all purposes thereof,
and each Trust shall be considered a Trust for all purposes thereof; and (c) the
Auction Agency Basic Terms are incorporated herein by reference, [insert Auction
Agent] shall be considered the Auction Agent for all purposes thereof, and each
Trust shall be considered a Trust for all purposes thereof.
Each Trust hereby appoints the Broker-Dealers listed on
Exhibit A hereto as Broker-Dealers for each series of Municipal Auction Rate
Cumulative Preferred Shares "Municipal Preferred") of such Trust. Each such
Broker-Dealer will act as BD in respect of each such series in accordance with
the Broker-Dealer Basic Terms; provided, however, that for purposes of the
Broker-Dealer Basic Terms, [insert Auction Agent]'s address, telecopy number and
telephone number for communications pursuant to the Broker-Dealer Basic Terms
shall be as follows:
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Bankers Trust Company agrees to act as Auction Agent with
respect to shares of each series of Municipal Preferred of each Trust in
accordance with the Auction Agency Basic Terms.
This Request Letter shall be deemed to form part of the
Auction Agency Basic Terms.
Capitalized terms not defined in this Request Letter shall
have the meanings ascribed to them in the Broker-Dealer Basic Terms or Auction
Agency Basic Terms, as the case may be.
If the foregoing terms are acceptable to you, please so
indicate in the space provided below. This Request Letter may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
[NAME(S) OF TRUST(S)]
By:
-----------------------------------
Name:
Title:
Accepted and Agreed to as of
the date first written above:
COLONIAL MANAGEMENT [NAME OF AUCTION AGENT]
ASSOCIATES, INC.
By: By:
---------------------------- -----------------------------------
Name: Name:
Title: Title:
cc: Broker-Dealers listed on Exhibit A
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EXHIBIT A TO REQUEST LETTER
[LIST OF BROKER-DEALERS]
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COLONIAL
Broker-Dealer Agreement
Basic Terms for Acting as a Broker-Dealer
July 20, 1999
These basic terms ("Basic Terms") set forth the general terms
and conditions pursuant to which a broker-dealer identified in an Acceptance
Letter (together with its successors and assigns, a "BD") will act as a
broker-dealer for Municipal Auction Rate Cumulative Preferred ("Municipal
Preferred") shares issued by investment companies, now or hereafter organized,
registered under the Investment Company Act of 1940, as amended, as further
identified by the Request Letters (the "Trusts"), for which Colonial Management
Associates, Inc. ("Adviser") is the investment adviser.
Each Trust has issued or may issue shares of Municipal
Preferred, pursuant to its Declaration of Trust and By-Laws. A bank or trust
company specified in the Request Letter will act as the auction agent (the
"Auction Agent") of such Trust pursuant to authority granted it in the Auction
Agency Agreement.
The By-Laws of each Trust shall provide that, for each
Subsequent Rate Period of any series of Municipal Preferred of such Trust then
outstanding, the Applicable Rate for such series for such Subsequent Rate Period
shall, except under certain conditions, be the rate per annum that the Auction
Agent of such Trust advises results from implementation of the Auction
Procedures for such series. The Board of Trustees of each Trust shall adopt a
resolution appointing the Auction Agent as auction agent for purposes of the
Auction Procedures for each series of Municipal Preferred of such Trust.
The Auction Procedures of each Trust will require the
participation of one or more Broker-Dealers for each series of Municipal
Preferred of such Trust. BD will act as a Broker-Dealer for each series of
Municipal Preferred of each Trust identified in a Request Letter.
1. Definitions and Rules of Construction.
1.1. Terms Defined by Reference to By-Laws.
Capitalized terms not defined herein shall have the respective
meanings specified in the By-Laws of the relevant Trust.
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1.2. Terms Defined Herein.
As used herein and in the Settlement Procedures, the following
terms shall have the following meanings, unless the context otherwise requires:
(a) "Acceptance Letter" shall mean the letter from Adviser to
BD pursuant to which the Adviser appoints BD as a Broker Dealer for
each series of Municipal Preferred issued by any Trust that has
executed a Request Letter.
(b) "Agreement", with respect to any Trust, shall mean the
Basic Terms, together with the Acceptance Letter and the Request Letter
relating to one or more series of Municipal Preferred of such Trust and
any other substantially similar agreement among such Trust, the
Adviser, any Auction Agent for such Trust and/or BD.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Agency Agreement", with respect to any Trust,
shall mean the Auction Agency Agreement between such Trust and the
Auction Agent relating to one or more series of Municipal Preferred of
such Trust.
(e) "Auction Procedures", with respect to any Trust, shall
mean the auction procedures constituting Part II of Section 12.1 of the
By-Laws of such Trust as of the date of issuance of the Municipal
Preferred shares of such Trust.
(f) "Authorized Officer" of an Auction Agent shall mean each
Senior Vice President, Vice President, Assistant Vice President,
Assistant Treasurer and Assistant Secretary of such Auction Agent
assigned to its Corporate Trust and Agency Group and every other
officer or employee of such Auction Agent designated as an "Authorized
Officer" for purposes of the Agreement in a communication to BD.
(g) "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of the Agreement in a
communication to any Auction Agent.
(h) "By-Laws", with respect to any Trust, shall mean the
By-Laws, as amended and restated, of such Trust, a copy of which will
be attached to the Request Letter of such Trust.
(i) "Municipal Preferred" shall mean the preferred shares, no
par value, of any Trust designated as its "Municipal Auction Rate
Cumulative Preferred Shares" and bearing such further designation as to
series as the Board of Trustees of such Trust or any committee thereof
shall specify, as set forth in a Request Letter.
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(j) "Request Letter", with respect to any Trust, shall mean
the letter from such Trust to the Adviser and the Auction Agent for
such Trust pursuant to which such Trust appoints BD as a Broker-Dealer
for each series of Municipal Preferred of such Trust.
(k) "Settlement Procedures" shall mean the Settlement
Procedures attached hereto as Exhibit A.
1.3. Rules of Construction.
Unless the context or use indicates another or different
meaning or intent, the following rules shall apply to the construction of each
Agreement:
(a) Words importing the singular number shall include the
plural number and vice versa.
(b) The captions and headings herein are solely for
convenience of reference and shall not constitute a part of such
Agreement nor shall they affect its meaning, construction or effect.
(c) The words "hereof", "herein", "hereto", and other words of
similar import refer to such Agreement as a whole.
(d) All references herein to a particular time of day shall be
to New York City time.
2. The Auction.
2.1. Purpose; Incorporation by Reference of Auction Procedures
and Settlement Procedures.
(a) The provisions of the Auction Procedures of any Trust will
be followed by the Auction Agent of such Trust for the purpose of determining
the Applicable Rate for any Subsequent Rate Period of any series of Municipal
Preferred of such Trust for which the Applicable Rate is to be determined by an
Auction. Each periodic operation of such procedures is hereinafter referred to
as an "Auction."
(b) All of the provisions contained in the Auction Procedures
and the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part hereof to the same extent as if such
provisions were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of, and
limitations and restrictions placed upon, a Broker-Dealer under each Agreement
for each series of Municipal Preferred. BD understands that other Persons
meeting the requirements specified in the definition of "Broker-Dealer"
contained in the Auction Procedures may execute Agreements and participate as
Broker-Dealers in Auctions.
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2.2. Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for any
series of Municipal Preferred, the Auction Agent for such series shall advise
the Broker-Dealers for such series by telephone of the Maximum Rate therefor and
the Reference Rate(s) and Treasury Note Rate(s), as the case may be, used in
determining such Maximum Rate.
(b) In the event that any Auction Date for any series of
Municipal Preferred shall be changed after the Auction Agent for such series has
given the notice referred to in clause (vi) of paragraph (a) of the Settlement
Procedures, or after the notice referred to in Section 2.5(a) hereof, if
applicable, such Auction Agent, by such means as such Auction Agent deems
practicable, shall give notice of such change to BD, if it is a Broker-Dealer
for such series, not later than the earlier of 9:15 A.M. on the new Auction Date
or 9:15 A.M. on the old Auction Date.
(c) For purposes of maintaining its list of Existing Holders,
the Auction Agent for any series of Municipal Preferred from time to time may
request any Broker-Dealer to provide such Auction Agent with a list of Persons
who such Broker-Dealer believes should be Existing Holders based upon inquiries
of those Persons such Broker-Dealer believes are Beneficial Owners as a result
of the most recent Auction and with respect to each such Person, the number of
shares of such series of Municipal Preferred such Broker-Dealer believes are
owned by such Person. BD shall comply with any such request relating to a series
of Municipal Preferred in respect of which BD was named a Broker-Dealer, and the
Auction Agent shall keep confidential any such information so provided by BD and
shall not disclose any information so provided by BD to any Person other than
the Trust and BD.
(d) BD agrees to maintain a list of customers relating to a
series of Municipal Preferred and to use its best efforts, subject to existing
laws and regulations, to contact the customers on such list whom BD believes may
be interested in participating in the Auction on each Auction Date, as a
Potential Holder or a Potential Beneficial Owner, for the purposes set forth in
the Auction Procedures. Nothing herein shall require BD to submit an Order for
any customer in any Auction.
(e) The Auction Agent's registry of Existing Holders of shares
of a series of Municipal Preferred shall be conclusive and binding on BD. BD may
inquire of the Auction Agent between 3:00 P.M. on the Business Day preceding an
Auction for shares of a series of Municipal Preferred and 9:30 A.M. on the
Auction Date for such Auction to ascertain the number of shares of such series
in respect of which the Auction Agent has determined BD to be an Existing
Holder. If BD believes it is the Existing Holder of fewer shares of such series
than specified by the Auction Agent in response to BD's inquiry, BD may so
inform the Auction Agent of that belief. BD shall not, in its capacity as
Existing Holder of shares of such series, submit Orders in such Auction in
respect of shares of such series covering in the aggregate more than the number
of shares of such series specified by the Auction Agent in response to BD's
inquiry.
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2.3. Auction Schedule; Method of Submission of Orders.
(a) Each Trust and the Auction Agent for such Trust shall
conduct Auctions for Municipal Preferred in accordance with the schedule set
forth below. Such schedule with respect to any series of Municipal Preferred of
any Trust may be changed by the Auction Agent for such series with the consent
of such Trust, which consent shall not be unreasonably withheld. Such Auction
Agent shall give written notice of any such change to each Broker-Dealer of such
series. Such notice shall be given prior to the close of business on the
Business Day next preceding the first Auction Date on which such change shall be
effective.
Time Event
By 9:30 A.M. Auction Agent for such series
advises such Trust and the
Broker-Dealers for such series of
the applicable Maximum Rate and the
Reference Rate(s) and Treasury Note
Rate(s), as the case may be, used in
determining such Maximum Rate as set
forth in Section 2.2(a) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers
as provided in Section 2(a) of the
Auction Procedures of such Trust.
Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations
pursuant to Section 3(a) of the
Auction Procedures of such Trust.
By approximately 3:00 P.M. Auction Agent advises Trust of
results of Auction as provided in
Section 3(b) of the Auction
Procedures of such Trust.
Submitted Bids and Submitted Sell
Orders are accepted and rejected and
shares of such series of Municipal
Preferred allocated as provided in
Section 4 of the Auction Procedures
of such Trust.
Auction Agent gives notice of
Auction results as set forth in
Section 2.4(a) hereof.
(b) BD shall submit Orders to the appropriate Auction Agent in
writing substantially in the form attached hereto as Exhibit B. BD shall submit
a separate Order to such Auction Agent for each Potential Holder or Existing
Holder with respect to whom BD is submitting an Order and shall not otherwise
net or aggregate such Orders prior to their submission to such Auction Agent.
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(c) BD shall deliver to the appropriate Auction Agent (i) a
written notice in substantially the form attached hereto as Exhibit C of
transfers of shares of Municipal Preferred to BD from another Person other than
pursuant to an Auction and (ii) a written notice substantially in the form
attached hereto as Exhibit D, of the failure of any shares of Municipal
Preferred to be transferred to or by any Person that purchased or sold shares of
Municipal Preferred through BD pursuant to an Auction. Such Auction Agent is not
required to accept any such notice described in clause (i) for an Auction unless
it is received by the Auction Agent by 3:00 P.M. on the Business Day preceding
such Auction.
(d) BD and other Broker-Dealers may submit Orders in Auctions
for their own accounts (including Orders for their own accounts where the Order
is placed beneficially for a customer) unless the relevant Trust shall have
notified BD and all other Broker-Dealers that they may no longer do so, in which
case Broker-Dealers may continue to submit Hold Orders and Sell Orders for their
own accounts.
(e) BD agrees to handle its customers' orders in accordance
with its duties under applicable securities laws and rules.
(f) To the extent that pursuant to Section 4 of the Auction
Procedures of any Trust, BD continues to hold, sells, or purchases a number of
shares that is fewer than the number of shares in an Order submitted by BD to
the Auction Agent in which BD designated itself as an Existing Holder or
Potential Holder in respect of customer Orders, BD shall make appropriate pro
rata allocations among its customers for which it submitted Orders of similar
tenor. If as a result of such allocations, any Beneficial Owner would be
entitled or required to sell, or any Potential Beneficial Owner would be
entitled or required to purchase, a fraction of a share of Municipal Preferred
on any Auction Date, BD shall, in such manner as it shall determine in its sole
discretion, round up or down the number of shares of Municipal Preferred to be
purchased or sold on such Auction Date by any Beneficial Owner or Potential
Beneficial Owner on whose behalf BD submitted an Order so that the number of
shares so purchased or sold by each such Beneficial Owner or Potential
Beneficial Owner on such Auction Date shall be whole shares of Municipal
Preferred.
2.4. Notices.
(a) On each Auction Date for any series of Municipal
Preferred, the Auction Agent for such series shall notify BD, if BD is a
Broker-Dealer of such series, by telephone of the results of the Auction as set
forth in paragraph (a) of the Settlement Procedures. By approximately 11:30 A.M.
on the Business Day next succeeding such Auction Date, the relevant Auction
Agent shall confirm to BD in writing the disposition of all Orders submitted by
BD in such Auction.
(b) BD shall notify each Existing Holder, Potential Holder,
Beneficial Owner or Potential Beneficial Owner of shares of Municipal Preferred
with respect to whom BD has submitted an Order as set forth in paragraph (b) of
the Settlement Procedures and take such other action as is required of BD
pursuant to the Settlement Procedures.
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2.5. Designation of Special Rate Period.
(a) If any Trust delivers to its Auction Agent a notice of the
Auction Date for any series of Municipal Preferred of such Trust for a Rate
Period thereof that next succeeds a Rate Period that is not a Minimum Rate
Period in the form of Exhibit C to the Auction Agency Agreement, and BD is a
Broker-Dealer of such series, the Auction Agent shall deliver such notice to BD
as promptly as practicable after its receipt of such notice from such Trust.
(b) If the Board of Trustees of any Trust proposes to
designate any succeeding Subsequent Rate Period of any series of Municipal
Preferred of such Trust as a Special Rate Period and such Trust delivers to its
Auction Agent a notice of such proposed Special Rate Period in the form of
Exhibit D to the Auction Agency Agreement, and BD is a Broker-Dealer for such
series, such Auction Agent shall deliver such notice to BD as promptly as
practicable after its receipt of such notice from the Trust.
(c) If the Board of Trustees of any Trust determines to
designate such succeeding Subsequent Rate Period as a Special Rate Period, and
such Trust delivers to its Auction Agent a notice of such Special Rate Period in
the form of Exhibit E to the Auction Agency Agreement not later than 11:00 A.M.
on the second Business Day next preceding the first day of such Rate Period (or
by such later time or date, or both, as may be agreed to by such Auction Agent),
and BD is a Broker-Dealer for such series, such Auction Agent shall deliver such
notice to BD not later than 3:00 P.M. on such second Business Day (or, if such
Auction Agent has agreed to a later time or date, as promptly as practicable
thereafter).
(d) If any Trust shall deliver to its Auction Agent a notice
not later than 11:00 A.M. on the second Business Day next preceding the first
day of any Rate Period (or by such later time or date, or both, as may be agreed
to by such Auction Agent) stating that such Trust has determined not to exercise
its option to designate such succeeding Subsequent Rate Period as a Special Rate
Period, in the form of Exhibit F to the Auction Agency Agreement, or shall fail
to timely deliver either such notice or a notice in the form of Exhibit E to the
Auction Agency Agreement, and BD is a Broker-Dealer for such series, such
Auction Agent shall deliver a notice in the form of Exhibit F to the Auction
Agency Agreement to BD not later than 3:00 P.M. on such second Business Day (or,
if such Auction Agent has agreed to a later time or date, as promptly as
practicable thereafter).
2.6. Allocation of Taxable Income.
If any Trust delivers to its Auction Agent a notice in the
form of Exhibit I to the Auction Agency Agreement designating all or a portion
of any dividend on shares of any series of Municipal Preferred of such Trust to
consist of net capital gains or other income taxable for Federal income tax
purposes, and BD is a Broker-Dealer for such series, such Auction Agent shall
deliver such notice to BD on the Business Day following its receipt of such
notice from such Trust. On or prior to the Auction Date referred to in such
notice, BD will contact each of its customers that is a Beneficial Owner of
shares of such series of Municipal Preferred or a
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Potential Beneficial Owner of shares of such series of Municipal Preferred
interested in submitting an Order in the Auction to be held on such Auction
Date, and BD will notify such Beneficial Owners and Potential Beneficial Owners
of the contents of such notice. BD will be deemed to have notified such
Beneficial Owners and Potential Beneficial Owners if, for each of them, (i) BD
makes a reasonable effort to contact such Beneficial Owner or Potential
Beneficial Owner by telephone, and (ii) upon failing to contact such Beneficial
Owner or Potential Beneficial Owner by telephone BD mails written notification
to such Beneficial Owner or Potential Beneficial Owner at the mailing address
indicated in the account records of BD.
The Auction Agent for any series of Municipal Preferred shall
be required to notify BD if it is a Broker-Dealer for such series within two
Business Days after each Auction of such series that involves an allocation of
income taxable for Federal income tax purposes as to the dollar amount per share
of such taxable income and income exempt from Federal income taxation included
in the related dividend.
2.7. Failure to Deposit.
(a) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of any series of Municipal Preferred of any Trust during any
Rate Period thereof (other than any Special Rate Period of more than
364 Rate Period Days or any Rate Period succeeding any Special Rate
Period of more than 364 Rate Period Days during which a Failure to
Deposit occurred that has not been cured), but, prior to 12:00 Noon,
New York City time, on the third Business Day next succeeding the date
on which such Failure to Deposit occurred, such Failure to Deposit
shall have been cured in accordance with Section 2.7 of the Auction
Agency Agreement and such Trust shall have paid to the Auction Agent
for such series the applicable Late Charge as described in Section 2.7
of the Auction Agency Agreement,
then, if BD is a Broker-Dealer for such series, such Auction Agent shall deliver
a notice in the form of Exhibit G to the Auction Agency Agreement by first-class
mail, postage prepaid, to BD not later than one Business Day after its receipt
of the payment from such Trust curing such Failure to Deposit and such Late
Charge.
(b) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of any series of Municipal Preferred of any Trust during any
Rate Period thereof (other than any Special Rate Period of more than
364 Rate Period Days or any Rate Period succeeding any Special Rate
Period of more than 364 Rate Period Days during which a Failure to
Deposit occurred but has not been cured), and, prior to 12:00 Noon, New
York City time, on the third Business Day next succeeding the date on
which such Failure to Deposit occurred, such Failure to Deposit shall
not have been cured as described in Section 2.7 of the Auction Agency
Agreement or such Trust shall not have paid to the Auction Agent
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for such series the applicable Late Charge described in Section 2.7 of
the Auction Agency Agreement; or
(ii) any Failure to Deposit shall have occurred with respect
to shares of any series of Municipal Preferred of any Trust during a
Special Rate Period thereof of more than 364 Rate Period Days, or
during any Rate Period thereof succeeding any Special Rate Period of
more than 364 Rate Period Days during which a Failure to Deposit
occurred that has not been cured, and, prior to 12:00 noon, New York
City time, on the fourth Business Day preceding the Auction Date for
the Rate Period subsequent to such Rate Period, such Failure to Deposit
shall not have been cured as described in Section 2.7 of the Auction
Agency Agreement or such Trust shall not have paid to the Auction Agent
for such series the applicable Late Charge described in Section 2.7 of
the Auction Agency Agreement;
then such Auction Agent shall deliver a notice in the form of Exhibit H to the
Auction Agency Agreement to the Broker-Dealers for such series not later than
one Business Day after the receipt of the payment from such Trust curing such
Failure to Deposit and such Late Charge.
2.8. Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date for any
series of Municipal Preferred specified in, or on Exhibit A to, the Request
Letter of any Trust, the Auction Agent for such series shall pay to BD from
moneys received from such Trust an amount equal to the product of (a) (i) in the
case of any Auction Date immediately preceding a Rate Period of such series
consisting of 364 Rate Period Days or fewer, 1/4 of 1%, or (ii) in the case of
any Auction Date immediately preceding a Rate Period of such series consisting
of more than 364 Rate Period Days, such percentage as may be agreed upon by such
Trust and BD with respect to such Rate Period, times (b) a fraction, the
numerator of which is the number of Rate Period Days in the Rate Period therefor
beginning on such Business Day and the denominator of which is 365 if such Rate
Period consists of 7 Rate Period Days and 360 for all other Rate Periods, times
(c) $25,000 times (d) the sum of (i) the aggregate number of shares of such
series placed by BD in such Auction that were (A) the subject of Submitted Bids
of Existing Holders submitted by BD and continued to be held as a result of such
submission and (B) the subject of Submitted Bids of Potential Holders submitted
by BD and purchased as a result of such submission plus (ii) the aggregate
number of shares of such series subject to valid Hold Orders (determined in
accordance with paragraph (d) of Section 2 of the Auction Procedures) submitted
to the Auction Agent by BD plus (iii) the number of shares of Municipal
Preferred deemed to be subject to Hold Orders of Existing Holders pursuant to
paragraph (c) of Section 2 of the Auction Procedures of such Trust that were
acquired by BD for its own account or were acquired by BD for its customers who
are Beneficial Owners.
For purposes of subclause (d)(iii) of the foregoing paragraph,
if any Existing Holder or Beneficial Owner who acquired shares of any series of
Municipal Preferred through BD transfers those shares to another Person other
than pursuant to an Auction, then the Broker-Dealer for the shares so
transferred shall continue to be BD; provided, however, that if
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the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.
2.9. Settlement.
(a) If any Existing Holder or Beneficial Owner with respect to
whom BD has submitted a Bid or Sell Order for shares of Municipal Preferred of
any series that was accepted in whole or in part fails to instruct its Agent
Member to deliver the shares of Municipal Preferred subject to such Bid or Sell
Order against payment therefor, BD, if it knows the identity of such Agent
Member, shall instruct such Agent Member to deliver such shares against payment
therefor and, if such Agent Member fails to comply with such instructions, BD
may deliver to the Potential Holder or Potential Beneficial Owner with respect
to whom BD submitted a Bid for shares of Municipal Preferred of such series that
was accepted in whole or in part a number of shares of Municipal Preferred of
such series that is less than the number of shares of Municipal Preferred of
such series specified in such Bid to be purchased by such Potential Holder or
Potential Beneficial Owner.
(b) Neither the Auction Agent nor the Trust shall have any
responsibility or liability with respect to the failure of an Existing Holder,
Beneficial Owner, Potential Holder or Potential Beneficial Owner or its
respective Agent Member to deliver shares of Municipal Preferred of any series
or to pay for shares of Municipal Preferred of any series sold or purchased
pursuant to the Auction Procedures or otherwise.
(c) Notwithstanding any provision of the Auction Procedures or
the Settlement Procedures to the contrary, in the event BD is an Existing Holder
with respect to shares of a series of Municipal Preferred and the Auction
Procedures provide that BD shall be deemed to have submitted a Sell Order in an
Auction with respect to such shares if BD fails to submit an Order in that
Auction with respect to such shares, BD shall have no liability to any Person
for failing to sell such shares pursuant to such a deemed Sell Order if (i) such
shares were transferred by the beneficial owner thereof without notification of
such transfer in compliance with the Auction Procedures or (ii) BD has indicated
to the Auction Agent pursuant to Section 2.2(e) of this Agreement that,
according BD's records, BD is not the Existing Holder of such shares.
(d) Notwithstanding any provision of the Auction Procedures or
the Settlement Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner of shares of a series of Municipal Preferred with respect to
whom a Broker-Dealer submitted a Bid to the Auction Agent for such shares that
was accepted in whole or in part, or submitted or is deemed to have submitted a
Sell Order for such shares that was accepted in whole or in part, fails to
instruct its Agent Member to deliver such shares against payment therefor,
partial deliveries of shares of Municipal Preferred that have been made in
respect of Potential Holders' or Potential Beneficial Owners' Submitted Bids for
shares of such series that have been accepted in whole or in part shall
constitute good delivery to such Potential Holders and Potential Beneficial
Owners.
(e) Notwithstanding the foregoing terms of this Section, any
delivery or non-delivery of shares of Municipal Preferred of any series which
represents any departure from the
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results of an Auction for shares of such series, as determined by the Auction
Agent, shall be of no effect for purposes of the registry of Existing Holders
maintained by the Auction Agent pursuant to the Auction Agency Agreement unless
and until the Auction Agent shall have been notified of such delivery or
non-delivery.
(f) The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 2.9.
3. The Auction Agent.
3.1. Duties and Responsibilities.
(a) Each Auction Agent is acting solely as agent for the
Trusts with whom such Auction Agent has entered into Request Letters and owes no
fiduciary duties to any other Person, other than such Trusts, by reason of the
Agreements to which such Auction Agent is a party.
(b) Each Auction Agent undertakes to perform such duties and
only such duties as are specifically set forth in the Agreements to which it is
a party, and no implied covenants or obligations shall be read into such
Agreements against such Auction Agent.
(c) In the absence of bad faith or negligence on its part,
each Auction Agent shall not be liable for any action taken, suffered, or
omitted or for any error of judgment made by it in the performance of its duties
under the Agreements to which it is a party. Each Auction Agent shall not be
liable for any error of judgment made in good faith unless such Auction Agent
shall have been negligent in ascertaining the pertinent facts.
3.2. Rights of the Auction Agents.
(a) Each Auction Agent may rely and shall be protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
in good faith by it to be genuine. Each Auction Agent shall not be liable for
acting upon any telephone communication authorized by the Agreements to which it
is a party that such Auction Agent believes in good faith to have been given by
the appropriate Trust, by the Adviser or by a Broker-Dealer. Each Auction Agent
may record telephone communications with the Broker-Dealers.
(b) Each Auction Agent may consult with counsel of its choice
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) Each Auction Agent shall not be required to advance,
expend or risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder.
3.3. Auction Agents' Disclaimers.
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Each Auction Agent makes no representation as to the validity
or adequacy of the Agreements to which it is a party, the Auction Agency
Agreements to which it is a party or the shares of Municipal Preferred of any
series.
4. Miscellaneous.
4.1. Termination.
Any party to any Agreement may terminate such Agreement at any
time on five days' notice to the other parties to such Agreement, provided that
the Trust party to such Agreement shall not terminate the Agreement unless at
least one Broker-Dealer Agreement would be in effect for each series of
Municipal Preferred of such Trust after such termination. Each Agreement shall
automatically terminate with respect to any series of Municipal Preferred with
respect to which the relevant Auction Agency Agreement has terminated.
4.2. Participant in Securities Depository; Payment of
Dividends in Same-Day Funds.
(a) BD is, and shall remain for the term of the Agreements, a
member of, or participant in, the Securities Depository (or an affiliate of such
a member or participant).
(b) BD represents that it (or if BD does not act as Agent
Member, one of its affiliates) shall make all dividend payments on the Municipal
Preferred available in same-day funds on each Dividend Payment Date to customers
that use BD or affiliate as Agent Member.
4.3. Communications.
Except for (i) communications authorized to be by telephone by
the Agreement of any Trust or the Auction Procedures of such Trust and (ii)
communications in connection with Auctions (other than those expressly required
to be in writing), all notices, requests and other communications to any party
under such Agreement shall be in writing (including telecopy or similar writing)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to a Trust, [Name of Trust]
addressed: Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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If to the Adviser, Colonial Management Associates, Inc.
addressed: Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to BD, to the address or telecopy number as set forth in the
Acceptance Letter.
If to an Auction Agent, to the address or telecopy number as set forth
in the Request Letter, or such other address or telecopy number as such party
may hereafter specify for such purpose by notice to the other parties. Each such
notice, request or communication shall be effective when delivered at the
address specified herein. Communications shall be given on behalf of BD by a BD
Officer and on behalf of an Auction Agent by an Authorized Officer of such
Auction Agent. BD may record telephone communications with any Auction Agent.
4.4. Entire Agreement.
Each Agreement contains the entire agreement among the parties
thereto relating to the subject matter thereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or implied, among the parties thereto relating to the subject matter
thereof. Each Agreement supersedes any prior agreement to which BD was a party
in respect of any Trust.
4.5. Benefits.
Nothing in any Agreement, express or implied, shall give to
any person, other than the Trust party to such Agreement, the Adviser, the
Auction Agent party to such Agreement and BD and their respective successors and
assigns, any benefit or any legal or equitable right, remedy or claim under such
Agreement.
4.6. Amendment; Waiver.
(a) Each Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.
(b) Failure of any party to any Agreement to exercise any
right or remedy thereunder in the event of a breach thereof by any other party
shall not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
4.7. Successors and Assigns.
Each Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and assigns of the Trust party
to such Agreement, the Adviser, the Auction Agent party to such Agreement and
BD.
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4.8. Severability.
If any clause, provision or section hereof shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
4.9. GOVERNING LAW.
EACH AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
4.10. Declaration of Trust.
The Declaration of each Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts. Each Agreement to which a Trust that
is a Massachusetts business trust is a party has been duly executed on behalf of
such Trust by an officer of such Trust acting in such capacity and not
individually, and the obligations of such Trust set forth in such Agreement are
not binding upon any of such Trust's trustees, officers or shareholders
individually, but are binding only upon the assets and property of such Trust.
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EXHIBIT A
SETTLEMENT PROCEDURES
23
EXHIBIT B
[Name of Trust]
$_______ Municipal Auction Rate Cumulative Preferred
Shares, Series ___
AUCTION DATE:__________
ISSUE:__________________________________ SERIES:_______
THE UNDERSIGNED Broker-Dealer SUBMITS THE FOLLOWING ORDERS ON BEHALF OF THE
BIDDER(S) LISTED BELOW:
ORDERS BY EXISTING HOLDERS- NUMBER OF SHARES OF MUNICIPAL PREFERRED
EXISTING HOLDER HOLD BID/RATE SELL
1.______________________________ ________ _________/________ ________
2.______________________________ ________ _________/________ ________
3.______________________________ ________ _________/________ ________
4.______________________________ ________ _________/________ ________
5.______________________________ ________ _________/________ ________
6.______________________________ ________ _________/________ ________
7.______________________________ ________ _________/________ ________
8.______________________________ ________ _________/________ ________
9.______________________________ ________ _________/________ ________
10._____________________________ ________ _________/________ ________
ORDERS BY POTENTIAL HOLDERS- NUMBER OF SHARES OF MUNICIPAL
PREFERRED
POTENTIAL HOLDER
BID/RATE
1.______________________________ _____________/_______
2.______________________________ _____________/_______
3.______________________________ _____________/_______
4.______________________________ _____________/_______
5.______________________________ _____________/_______
6.______________________________ _____________/_______
7.______________________________ _____________/_______
8.______________________________ _____________/_______
9.______________________________ _____________/_______
10._____________________________ _____________/_______
11._____________________________ _____________/_______
12._____________________________ _____________/_______
13._____________________________ _____________/_______
14._____________________________ _____________/_______
15._____________________________ _____________/_______
NOTES:
1. If one or more Orders covering in the aggregate more than the number of
outstanding shares of Municipal Preferred held by any Existing Holder
are submitted, such Orders shall be considered valid in the order of
priority set forth in the Auction Procedures.
2. A Hold Order or Sell Order may be placed only by an Existing Holder
covering a number of shares of Municipal Preferred not greater than the
number of shares of Municipal Preferred currently held by such Existing
Holder.
3. Potential Holders may make Bids only, each of which must specify a
rate. If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
specified.
4. Bids may contain no more than three figures to the right of the decimal
point (.001 of 1%).
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[AUCTION AGENT] AUCTION BID FORM
Submit to:
NAME OF Broker-Dealer:_______________________________________________
AUTHORIZED
SIGNATURE:_________________________________________________________
TOTAL NUMBER OF ORDERS ON THIS BID FORM: __________
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EXHIBIT C
(To be used only for transfers made to a
Broker-Dealer other than pursuant to an Auction)
[NAME OF TRUST]
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES,
SERIES __
TRANSFER FORM
We are the Broker-Dealer to whom the Existing Holder or Beneficial Owner named
below transferred shares of the above series of Municipal Preferred other than
pursuant to an Auction. We hereby notify you that such Existing Holder or
Beneficial Owner has transferred ______ shares of the above series of Municipal
Preferred to us.
-------------------------------------------
(Name of Existing Holder or
Beneficial Owner )
-------------------------------------------
(Name of Broker-Dealer)
By:
--------------------------------------
Printed Name:
Title:
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EXHIBIT D
(To be used only for failures to deliver shares of
Municipal Preferred sold pursuant to an Auction)
[NAME OF TRUST]
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES,
SERIES __
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for _____ (the "Purchaser"), which purchased
_____ shares of the above series of Municipal Preferred in the Auction
held on _____ from the seller of such shares.
II. We are a Broker-Dealer for _____ (the "Seller"), which sold _____
shares of the above series of Municipal Preferred in the Auction held
on _____ to the purchaser of such shares.
We hereby notify you that (check one)--
_____ the Seller failed to deliver such shares of Municipal
Preferred to the Purchaser
_____ the Purchaser failed to make payment to the Seller upon
delivery of such shares of Municipal Preferred
Name:
---------------------------------
(Name of Broker-Dealer)
By:
---------------------------------
Printed Name:
Title:
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1
EXHIBIT E
[Form of Broker-Dealer Acceptance Letter]
Colonial Management Associates, Inc.
[Date]
[Broker-Dealer]
[Address]
Ladies and Gentlemen:
Reference is made to the Colonial Broker-Dealer
Agreement-Basic Terms for Acting as a Broker-Dealer dated ____________, receipt
of which is hereby acknowledged by you (the "Basic Terms"). For purposes of this
letter ("Acceptance Letter"), (a) "Trust" shall mean any closed-end investment
company registered under the Investment Company Act of 1940, as amended, for
which Colonial Management Associates, Inc. acts as investment adviser and which
is listed on Exhibit A; and (b) the Basic Terms are incorporated herein by
reference, you shall be considered a BD for all purposes thereof, [Insert
Auction Agent] shall be considered the Auction Agent for all purposes thereof,
and each Trust listed on Exhibit A hereto shall be considered a Trust for all
purposes thereof.
We hereby request that you act as a Broker-Dealer for the
Municipal Auction Rate Cumulative Preferred Shares ("Municipal Preferred") of
each series of each Trust that executes a letter, substantially in the form
attached hereto as Exhibit B, appointing you as a Broker-Dealer ("Request
Letter"). You hereby (a) accept such appointment as a Broker-Dealer for each
series of Municipal Preferred of each Trust identified in a Request Letter and
(b) agree to act as BD in accordance with the Basic Terms; provided, however,
that:
(1) for purposes of the Basic Terms, your address, telecopy
number and telephone number for communications pursuant to the Basic Terms shall
be as follows:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
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and the address, telecopy number and telephone number of the Auction Agent for
communications pursuant to the Basic Terms shall be as follows:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
You hereby acknowledge that, notwithstanding any provision of
the Basic Terms to the contrary, the Trust may (a) upon five business days'
notice to the Auction Agent and you, amend, alter or repeal any of the
provisions contained in the Basic Terms, it being understood and agreed that you
shall be deemed to have accepted any such amendment, alteration or repeal if,
after the expiration of such five business day period, you submit an Order to
the Auction Agent in respect of the shares of Municipal Preferred of the Trust
or Trusts to which such amendment, alteration or repeal relates, and (b) upon
two business days' notice to the Auction Agent and you, exclude you from
participating as a Broker-Dealer in any particular Auction for any particular
series of Municipal Preferred.
This Acceptance Letter shall be deemed to form part of the
Basic Terms.
Capitalized terms not defined in this Acceptance Letter shall
have the meanings ascribed to them in the Basic Terms, as the case may be.
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If the foregoing terms are acceptable to you, please so
indicate in the space provided below. This Acceptance Letter may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
COLONIAL MANAGEMENT ASSOCIATES, INC.
By: __________________________
Name: [ ]
Title: [ ]
Accepted by and Agreed to as of the date first written above:
[Broker-Dealer]
By: _______________________
Name:
Title:
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EXHIBIT A TO ACCEPTANCE LETTER
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1
EXHIBIT B TO ACCEPTANCE LETTER
[Form of Request Letter]
[Name(s) of Trust(s)]
[Date]
Ladies and Gentlemen:
Reference is made to (a) the Colonial Broker-Dealer Agreement
-- Basic Terms for Acting as a Broker-Dealer dated ____________, receipt of
which is hereby acknowledged by you (the "Broker-Dealer Basic Terms") and (b)
the Colonial Auction Agency Agreement -- Basic Terms for Acting as Auction Agent
dated ___________, receipt of which is hereby acknowledged by you (the "Auction
Agency Basic Terms"). For purposes of this letter ("Request Letter"), (a)
"Trust" shall mean each undersigned closed-end investment company registered
under the Investment Company Act of 1940, as amended, for which Colonial
Management Associates, Inc. acts as investment adviser; (b) the Broker-Dealer
Basic Terms are incorporated herein by reference, each Broker-Dealer listed on
Exhibit A hereto shall be considered BD for all purposes thereof, [insert
Auction Agent] shall be considered the Auction Agent for all purposes thereof,
and each Trust shall be considered a Trust for all purposes thereof; and (c) the
Auction Agency Basic Terms are incorporated herein by reference, [insert Auction
Agent] shall be considered the Auction Agent for all purposes thereof, and each
Trust shall be considered a Trust for all purposes thereof.
Each Trust hereby appoints the Broker-Dealers listed on
Exhibit A hereto as Broker-Dealers for each series of Municipal Auction Rate
Cumulative Preferred Shares "Municipal Preferred") of such Trust. Each such
Broker-Dealer will act as a BD in respect of each such series in accordance with
the Broker-Dealer Basic Terms; provided, however, that for purposes of the
Broker-Dealer Basic Terms, [insert Auction Agent]'s address, telecopy number and
telephone number for communications pursuant to the Broker-Dealer Basic Terms
shall be as follows:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
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[Insert Auction Agent] agrees to act as Auction Agent with
respect to shares of each series of Municipal Preferred of each Trust in
accordance with the Auction Agency Basic Terms.
This Request Letter shall be deemed to form part of the
Auction Agency Basic Terms.
Capitalized terms not defined in this Request Letter shall
have the meanings ascribed to them in the Broker-Dealer Basic Terms or Auction
Agency Basic Terms, as the case may be.
If the foregoing terms are acceptable to you, please so
indicate in the space provided below. This Request Letter may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
[NAME(S) OF TRUST(S)]
By:
----------------------------------
Name:
Title:
Accepted and Agreed to as of
the date first written above:
COLONIAL MANAGEMENT [NAME OF AUCTION AGENT]
ASSOCIATES, INC.
By: By:
---------------------------- -----------------------------
Name: Name:
Title: Title:
cc: Broker-Dealers listed on Exhibit A
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EXHIBIT A TO REQUEST LETTER
[LIST OF BROKER-DEALERS]
