Exhibit (k)(2)
BROKER-DEALER AGREEMENT
between
BANKERS TRUST COMPANY
and
[BROKER]
Dated as of ________ __, 2000
Relating to
AUCTION PREFERRED SHARES
of
MFS MUNICIPAL INCOME TRUST
BROKER-DEALER AGREEMENT dated as of ________ __, 2000, between BANKERS
TRUST COMPANY, a New York banking corporation (the "Auction Agent") (not in its
individual capacity, but solely as agent of MFS Municipal Income Trust, a
Massachusetts business trust (the "Trust"), pursuant to authority granted to it
in the Auction Agency Agreement dated as of December 4, 2000, between the Trust
and the Auction Agent (the "Auction Agency Agreement")) and [BROKER] (together
with its successors and assigns, "BD").
The Trust proposes to issue 5,600 preferred shares of beneficial
interest, without par value, liquidation preference $25,000 per share,
designated Auction Preferred Shares (the "APS"), pursuant to the Statement (as
defined below).
The Statement provides that the Applicable Rate on shares of each
series of APS, as the case may be, for each Subsequent Rate Period shall, under
certain conditions, be the rate per annum that a bank or trust company appointed
by the Trust advises results from implementation of the Auction Procedures (as
defined below) for such series. The Board of Trustees of the Trust has adopted a
resolution appointing Bankers Trust Company as Auction Agent for purposes of the
Auction Procedures for each series of APS, and pursuant to Section 2.5 of the
Auction Agency Agreement, the Trust has requested and directed the Auction Agent
to execute and deliver this Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Auction Agent and BD agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1. Terms Defined by Reference to the Statement.
Capitalized terms not defined herein shall have the respective meanings
specified in the Statement of the Trust.
1.2. Terms Defined Herein. As used herein and in the Settlement
Procedures (as defined below), the following terms shall have the following
meanings, unless the context otherwise requires:
(a) "Auction" shall have the meaning specified in Section 3.1 hereof.
(b) "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Statement.
(c) "Authorized Officer" shall mean each Managing Director, Vice
President, Assistant Vice President and Associate of the Auction Agent and every
other officer or employee of the Auction Agent designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.
(d) "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of this Agreement in a communication to the
Auction Agent.
(e) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.
(f) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit A.
(g) "Statement" shall mean the Statement dated December 4, 2000,
creating and establishing the powers, preferences and rights of the APS, as
amended to the date hereof.
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.
II. NOTIFICATION OF DIVIDEND PERIOD AND ADVANCE NOTICE OF ALLOCATION OF
TAXABLE INCOME.
2.1. The provisions contained in Part I, Section 4 of the Statement
concerning the notification of a Special Rate Period will be followed by the
Auction Agent and BD, and the provisions contained therein are incorporated
herein by reference in their entirety and shall be deemed to be a part of this
Agreement to the same extent as if such provisions were set forth fully herein.
2.2. Except as otherwise provided in Part I, Section 3 and/or Part II,
Section 5 of the Statement, whenever the Trust intends to include any net
capital gain or other income taxable for Federal income tax purposes in any
dividend on shares of APS, the Trust shall, in the case of a Minimum Rate Period
or Special Rate Period of 28 Rate Period Days or fewer, and may, in the case of
any other Special Rate Period, notify the Auction Agent of the amount to be so
included as provided in Part II, Section 5 of the Statement. Whenever the
Auction Agent receives such notice from the Trust, it will notify each
Broker-Dealer in turn, who, on or prior to such Auction Date, in accordance with
its Broker-Dealer Agreement, will notify its Beneficial Owners and Potential
Beneficial Owners believed to be interested in submitting an Order in the
Auction to be held on such Auction Date. The Trust may also include such net
capital gain or other income taxable for federal income tax purposes in a
dividend on shares of Municipal Preferred without giving advance notice if the
dividend is increased by a Gross-up Payment. Whenever the Trust includes any
Gross-up Payment as provided in Part I, Section 3 of the Statement, the Trust
will notify the Auction Agent of such additional amounts to be so included in
such dividend as provided in Part II, Section 5 of the Statement. Whenever the
Auction Agent receives such notice from the Trust, in turn it will notify the
Securities Depository and each Broker-Dealer, who, on or prior to the applicable
Dividend Payment Date, in accordance with its Broker-Dealer Agreement, will
notify its Beneficial Owners.
III. THE AUCTION.
3.1. Purpose; Incorporation by Reference of Auction Procedures and
Settlement.
(a) The provisions of the Auction Procedures will be followed by the
Auction Agent for the purpose of determining the Applicable Rate for any
subsequent Rate Period of any series of APS 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 of this Agreement to the same extent as if such
provisions were set forth fully herein.
(c) BD agrees to act as, and assumes the obligations of and limitations
and restrictions placed upon, a Broker-Dealer under this Agreement. BD
understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Part I, Section 1 of the Statement
may execute a Broker-Dealer Agreement and participate as Broker-Dealers in
Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Trust, by notice to BD and all other Broker-Dealers,
may prohibit all Broker-Dealers from submitting Bids in Auctions for their own
accounts, provided that Broker-Dealers may continue to submit Hold Orders and
Sell Orders.
3.2. Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the APS, the
Auction Agent shall advise BD by telephone of the Reference Rate and the Maximum
Rate in effect on such Auction Date.
(b) The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
shares of APS. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of shares of APS and information related thereto only to its
officers, employees, agents or representatives who need to know such information
for the purposes of acting in accordance with this Agreement, and the Auction
Agent shall prevent the transmission of such information to others and shall
cause its officers, employees, agents and representatives to abide by the
foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.
3.3. Auction Schedule; Method of Submission of Orders.
(a) The Trust and the Auction Agent shall conduct Auctions for APS in
accordance with the schedule set forth below. Such schedule may be changed at
any time by the Auction Agent with the consent of the Trust, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice of any such
change to BD. Such notice shall be received prior to the first Auction Date on
which any such change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Trust and Broker-Dealers
of the Reference Rate and the Maximum Rate as set
forth in Section 3.2(a) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Part II,
Section 2(a) of the Statement. Submission Deadline
is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant to
Part II, Section 3(a) of the Statement.
By approximately 3:00 P.M. Auction Agent advises the Trust of the results of
the Auction as provided in Part II, Section 3(b)
of the Statement.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part and
shares of APS are allocated as provided in Part
II, Section 4 of the Statement.
Auction Agent gives notice of the Auction results
as set forth in Section 3.4(a) hereof.
(b) BD agrees to maintain a list of Potential Beneficial Owners and to
contact the Potential Beneficial Owners on such list on or prior to each Auction
Date for the purposes set forth in Part II of the Statement.
(c) BD shall submit Orders to the Auction Agent in writing or via the
internet in substantially the form attached hereto as Exhibit B. BD shall submit
separate Orders to the Auction Agent for each Potential Beneficial Owner or
Beneficial Owner on whose behalf BD is submitting an Order and shall not net or
aggregate the Orders of Potential Beneficial Owners or Beneficial Owners on
whose behalf BD is submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit C, of transfers of shares
of APS, made through BD by an Existing Holder to 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 shares of APS to be transferred
to or by any Person that purchased or sold shares of APS through BD pursuant to
an Auction. The Auction Agent is not required to accept any notice delivered
pursuant to the terms of the foregoing sentence with respect to an Auction
unless it is received by the Auction Agent by 3:00 P.M. on the Business Day next
preceding the applicable Auction Date.
3.4. Notice of Auction Results.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone as set forth in paragraph (a) of the Settlement Procedures. On the
Business Day next succeeding such Auction Date, the Auction Agent shall notify
BD in writing of the disposition of all Orders submitted by BD in the Auction
held on such Auction Date.
(b) BD shall notify each Beneficial Owner, Potential Beneficial Owner,
Existing Holder or Potential Holder on whose behalf 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.
If any Beneficial Owner or Existing Holder selling shares of APS in an
Auction fails to deliver such shares, the BD or any Person that was to have
purchased shares of APS in such Auction may deliver to such Person a number of
whole shares of APS that is less than the number of shares that otherwise was to
be purchased by such Person. In such event, the number of shares of APS to be so
delivered shall be determined by such BD. Delivery of such lesser number of
shares shall constitute good delivery. Upon the occurrence of any such failure
to deliver shares, such BD shall deliver to the Auction Agent the notice
required by Section 3.3(d)(ii) hereof. Notwithstanding the foregoing terms of
this Section 3.4(b), any delivery or non-delivery of shares of APS which
represents any departure from the results of an Auction, as determined by the
Auction Agent, shall be of no effect unless and until the Auction Agent shall
have been notified of such delivery or nondelivery in accordance with the terms
of Section 3.3(d) hereof. The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 3.4(b).
3.5. Service Charge to Be Paid to BD.
On the Business Day next succeeding each Auction Date for any series of
APS, the Auction Agent shall pay to BD from moneys received from the Trust an
amount equal to: (a) (i) in the case of any Auction Date immediately preceding a
Rate Period 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 Part II, Section 2 of the Statement) submitted
to the Auction Agent by BD plus (iii) the number of shares of APS deemed to be
subject to Hold Orders of Existing Holders pursuant to Part II, Section 2(c) of
the Statement 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
Beneficial Owner who acquired shares of APS through BD transfers those shares to
another Person other than pursuant to an Auction, then the Broker-Dealer for the
shares so transferred shall continue to be BD, provided, however, that if the
transfer was effected by, or if the transferee is, a Broker-Dealer other than
BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.
IV. THE AUCTION AGENT.
4.1. Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust hereunder
and owes no fiduciary duties to any other Person by reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered or omitted by it, or
for any error of judgment made by it in the performance of its duties under this
Agreement.
4.2. Rights of the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any communication authorized by this Agreement
and any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
by it to be genuine. The Auction Agent shall not be liable for acting upon any
telephone communication authorized by this Agreement which the Auction Agent
believes in good faith to have been given by the Trust or by BD. The Auction
Agent may record telephone communications with BD.
(b) The Auction Agent may consult with counsel of its own 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) 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.
4.3. Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the validity or adequacy of this Agreement or the APS
except that Auction Agent hereby represents that this Agreement has been duly
authorized, created and delivered by the Auction Agent and constitutes a legal
and binding obligation of the Auction Agent.
V. MISCELLANEOUS.
5.1. Termination. Any party may terminate this Agreement at any time
upon five days' prior written notice to the other party; provided, however, that
if BD is Xxxxxxx Xxxxx Xxxxxx Inc., neither BD nor the Auction Agent may
terminate this Agreement without first obtaining the prior written consent of
the Trust to such termination, which consent shall not be withheld unreasonably.
5.2. Participant in Securities Depository; Payment of Dividends in
Same-Day Funds.
(a) BD is, and shall remain for the term of this Agreement, a member
of, or a 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 APS available in
same-day funds on each Dividend Payment Date to customers that use BD (or its
affiliate) as Agent Member.
5.3. Agent Member. At the date hereof, BD is a participant of the
Securities Depository.
5.4. Communications. Except for (i) communications authorized to be
made by telephone pursuant to this Agreement or the Auction Procedures and (ii)
communications in connection with the 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, internet or similar
writing) and shall be given to such party at its address or telecopier number
set forth below:
If to BD, ________
addressed to: ________
________
________
Attention: ________
Telecopier No.: ________
Telephone No.: ________
E-Mail: _______________
If to the Auction Bankers Trust Company
Agent, addressed to: Corporate Trust and Agency Group
Four Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Auction Rate Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
E-Mail: xxxxxxxx.xxxxxxxxxxx@xx.xxx
or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
5.5. Entire Agreement. This Agreement contains the entire agreement
between the parties relating to the subject matter hereof, and there are no
other representations, endorsements, promises, agreements or understandings,
oral, written or inferred, between the parties relating to the subject matter
hereof.
5.6. Benefits. Nothing in this Agreement, express or implied, shall
give to any person, other than the Trust, the Auction Agent and BD and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim under this Agreement.
5.7. Amendment; Waiver.
(a) This 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 either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other party
shall not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
5.8. Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the respective successors and
permitted assigns of each of BD and the Auction Agent. This Agreement may not be
assigned by either party hereto absent the prior written consent of the other
party; provided, however, that this Agreement may be assigned by the Auction
Agent to a successor Auction Agent selected by the Trust without the consent of
BD.
5.9. Severability. If any clause, provision or section of this
Agreement 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 remaining clause, provision or section hereof.
5.10. 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.
5.11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in said state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
BANKERS TRUST COMPANY
By:________________________________
Title:
[NAME OF BROKER]
By:________________________________
Title:
EXHIBIT A
SETTLEMENT PROCEDURES
[Included as Appendix D to the Statement of Additional
Information of the Trust]
EXHIBIT B
BANKERS TRUST COMPANY
AUCTION BID FORM
Submit To: Bankers Trust Company Issue: MFS Municipal
Corporate Trust and Agency Group Income Trust
Four Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Auction Rate Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder:________________________________
BENEFICIAL OWNER
Shares now held___________________________ HOLD_____________________
BID at rate of___________
SELL_____________________
POTENTIAL BENEFICIAL OWNER
# of shares bid ___________
BID at rate of ___________ Notes:
(1) If submitting more than one Bid for one Bidder, use additional Auction Bid
Forms.
(2) If one or more Bids covering in the aggregate more than the number of
outstanding shares held by any Beneficial Owner are submitted, such bid shall be
considered valid in the order of priority set forth in the Auction Procedures on
the above issue.
(3) A Hold or Sell Order may be placed only by a Beneficial Owner covering a
number of shares not greater than the number of shares currently held.
(4) Potential Beneficial Owners may make only Bids, each of which must specify a
rate. If more than one Bid is submitted on behalf of any Potential Beneficial
Owner, each Bid submitted shall be a separate Bid with the rate specified.
(5) Bids may contain no more than three figures to the right of the decimal
point (.001 of 1 %). Fractions will not be accepted.
NAME OF BROKER-DEALER ____________________________________
Authorized Signature ____________________________________
EXHIBIT C
(Note: To be used only for transfers made
other than pursuant to an Auction)
TRANSFER FORM
Re: MFS Municipal Income Trust
Auction Preferred Shares
We are (check one):
[ ] the Existing Holder named below;
[ ] the Broker-Dealer for such Existing Holder; or
[ ] the Agent Member for such Existing Holder.
We hereby notify you that such Beneficial Owner has transferred ___________
APS to________________.
---------------------------------------------
(Name of Existing Holder)
---------------------------------------------
(Name of Broker-Dealer)
---------------------------------------------
(Name of Agent Member)
By: -----------------------------------------
Printed Name:
Title:
EXHIBIT D
(Note: To be used only for failures to deliver
APS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for _________________________ (the
"Purchaser"), which purchased _______ shares of APS of MFS Municipal Income
Trust in the Auction held on ___________________ from the seller of such shares.
II. We are a Broker-Dealer for _________________________ (the
"Seller"), which sold _________ shares of APS of MFS Municipal Income Trust, 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 to the Purchaser
________ the Purchaser failed to make payment to the Seller upon
delivery of such shares
Name:__________________________________________
(Name of Broker-Dealer)
By:____________________________________________
Printed Name:
Title:
