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BROKER-DEALER AGREEMENT
between
BANKERS TRUST COMPANY
and
Dated as of
Relating to
AUCTION PREFERRED SHARES
of
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BROKER-DEALER AGREEMENT dated as of ________ between BANKERS TRUST COMPANY
(the "Auction Agent"), a New York banking corporation (not in its individual
capacity but solely as agent of _________________________ (the "Fund") pursuant
to authority granted it in the Auction Agency Agreement, and BT Securities
Corporation (together with its successors and assigns, "BD").
The Fund has issued shares of Auction Preferred Shares, par value $.01 per
share, liquidation preference $50,000 per share (the "APS") pursuant to its
Declaration of Trust, as amended by the Certificate of Vote (the "Certificate").
The Certificate will provide that, for each Subsequent Dividend Period,
the Applicable Rate for such Subsequent Dividend Period shall, 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. The Board of
Trustees has adopted a resolution appointing Bankers Trust Company as Auction
Agent for purposes of the Auction Procedures for the APS.
The Auction Procedures require the participation of one or more
Broker-Dealers for the APS.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein the Auction Agent and BD agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Statement.
Capitalized terms not defined herein shall have the respective
meanings specified in the Certificate.
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) "Auction" shall have the meaning specified in Section 2.1
hereof.
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(b) "Auction Agency Agreement" shall mean the Auction Agency
Agreement, dated as of June 10, 1992, between the fund and the Auction
Agent relating to the APS.
(c) "Auction Procedures" shall mean the auction procedures
constituting Part II of the Certificate.
(d) "Authorized Officer" shall mean each Senior Vice President, Vice
President, Assistant Vice President, Trust Officer, Assistant Treasurer
and Assistant Secretary of the Auction Agent assigned to its Corporate
Trust and Agency Group 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.
(e) "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.
(f) "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a
Broker-Dealer.
(g) "Certificate" shall mean the Certificate of Vote of Trustees
Establishing Preferred Shares authorizing the issuance of APS filed by the
Fund with the office of the Secretary of The Commonwealth of
Massachusetts.
(h) "Master Purchaser's Letter" shall mean a letter addressed to the
Fund, the Auction Agent, a Broker-Dealer and an Agent Member,
substantially in the form attached hereto as Exhibit A.
(i) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit B.
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.
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(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.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(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 Dividend Period 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 this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in the Auction Procedures may execute
Broker-Dealer Agreements and Master Purchaser's Letters and participate as
Broker-Dealers in Auctions.
2.2 Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the APS, the
Auction Agent shall advise the Broker-Dealers by telephone of the Maximum Rate
therefor and the "AA" Composite Commercial Paper Rate(s) and Treasury Rate(s),
as the case may be, used in determining such Maximum Rate.
(b) In the event that any Auction Date for the APS shall be changed
after the Auction Agent 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, the Auction Agent, by such means as the
Auction Agent deems practicable, shall give notice of such change to BD 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.
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(c) The Auction Agent from time to time may request the
Broker-Dealers to provide the Auction Agent with a list of their respective
customers that such Broker-Dealers believe are Existing Holders of shares of
APS. ED shall comply with any such request, 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 Fund and BD.
(d) BD agrees to maintain a list of Potential Holders and to use its
best efforts to contact the Potential Holders on such list whom BD believes may
be interested in participating in such Auction on each Auction Date for the
purposes set forth in the Auction Procedures.
(e) The Auction Agent is not required to accept the Master
Purchaser's Letter of any Potential Holder who wishes to submit a Bid for the
first time in an Auction or of any Potential Holder or Existing Holder who
wishes to amend its Master Purchaser's Letter unless such letter or amendment is
received by the Auction Agent by 3:00 P.M. on the Business Day preceding such
Auction.
2.3 Auction Schedule: Method of Submission of Orders.
(a) The Fund and the Auction Agent shall conduct Auctions for APS 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 such
change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Fund and the
Broker-Dealers of the applicable Maximum
Rate and the "AA" Composite Commercial Paper
Rate(s) and Treasury 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 3(a) of the Auction
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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 3:00 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 APS
allocated as provided in Section 5 of the
Auction Procedures.
Auction Agent gives notice of Auction
results as set forth in Section 2.4(a)
hereof.
(b) BD agrees not to sell, assign or dispose of any share of APS to
any Person who has not delivered, or on whose behalf a Broker-Dealer has not
delivered, a signed Master Purchaser's Letter to the Auction Agent.
(c) BD shall submit Orders to the Auction Agent in writing
substantially in the form attached hereto as Exhibit C. BD shall submit a
separate Order to the Auction Agent for each Potential Holder or Existing Holder
on whose behalf BD is submitting an Order and shall not net or aggregate the
Orders of different Potential Holders or Existing Holders on whose behalf BD is
submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written notice in
substantially the form attached hereto as Exhibit D or transfers of shares of
APS made through BD by an Existing Holder to another Person other than pursuant
to an Auction and shall deliver or cause to be delivered the related Master
Purchaser's Letter executed by such Person if such Person has not previously so
delivered a Master Purchaser's Letter and (ii) a written notice substantially in
the form attached hereto as Exhibit E, of the failure of any 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 such
notice for an Auction unless it is
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received by the Auction Agent by 3:00 P.M. on the Business Day preceding such
Auction.
(e) BD has delivered to the Auction Agent its executed Master
Purchaser's Letter. BD and other Broker-Dealers which have delivered duly
executed Master Purchaser's Letters may submit Orders in Auctions for their own
accounts unless the Fund 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.
(f) BD agrees to handle its customers' Orders in accordance with its
duties under applicable securities laws and rules.
2.4 Notices of Auction Results.
(a) On each Auction Date for APS, the Auction Agent shall notify BD
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 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 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.
2.5 Designation of Special Dividend Period.
(a) If the Fund delivers to the Auction Agent a notice of the
Auction Date for APS for a Rate Period thereof that next succeeds a Rate Period
that is not a Minimum Dividend Period in the form of Exhibit E to the Auction
Agency Agreement, the Auction Agent shall deliver such notice to BD as promptly
as practicable after its receipt of such notice from the Fund.
(b) If the Board of Trustees proposes to designate any succeeding
Subsequent Dividend Period of the APS as a Special Dividend Period and the Fund
delivers to the Auction Agent a notice of such proposed Special Dividend Period
in the form of Exhibit F to the Auction Agency Agreement, the Auction Agent
shall deliver such notice to BD as promptly as practicable after its receipt of
such notice from the Fund.
(c) If the Board of Trustees determines to designate such succeeding
Subsequent Dividend Period as a Special Dividend
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Period, and the Fund delivers to the Auction Agent a notice of such Special
Dividend Period in the form of Exhibit G 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, the Auction Agent shall deliver such notice to BD not later
than 3:00 P.M. on such second Business Day.
(d) 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
any Rate Period stating that the Fund has determined not to exercise its option
to designate such succeeding Subsequent Dividend Period as a Special Dividend
Period, in the form of Exhibit H to the Auction Agency Agreement, or shall fail
to timely deliver either such notice or a notice in the form of Exhibit G to the
Auction Agency Agreement, the Auction Agent shall deliver a notice in the form
of Exhibit H to the Auction Agency Agreement to BD not later than 3:00 P.M. on
such second Business Day.
2.6 Allocation of Taxable Income.
If the Fund delivers to the Auction Agent a notice in the form of
Exhibit K to the Auction Agency Agreement designating all or a portion of any
dividend on the APS to consist of net capital gains or other income taxable for
Federal income tax purposes, the Auction Agent shall deliver such notice to BD
on the Business Day following its receipt of such notice from the Fund. On or
prior to the Auction Date referred to in such notice, BD will contact each of
its customers that BD believes to be an Existing Holder of shares of APS or a
Potential Holder interested in submitting an Order with respect to the Auction
to be held on such Auction Date, and BD will notify such customer of the
contents of such notice. BD will be deemed to have notified such Existing
Holders and Potential Holders if, for each such Holder, (i) it makes a
reasonable effort to contact such Holder by telephone, and (ii) upon failing to
contact such Holder by telephone it mails written notification to such Holder at
the mailing address indicated in such Holder's most recently submitted Master
Purchaser's Letter or at such other address as is indicated in the account
records of BD.
The Auction Agent shall be required to notify BD within two Business
Days after each Auction 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:
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(i) any Failure to Deposit shall have occurred with respect to
shares of APS during any Rate Period thereof (other than any Special
Dividend Period consisting of four or more Dividend Periods or any
Rate Period succeeding any Special Dividend Period consisting of
four or more Dividend Periods during which a Failure to Deposit
occurred that has not been cured); and (ii) prior to 12:00 Noon on
the third Business Day next succeeding the date on which such
Failure to Deposit occurred, such Failure to Deposit shall have been
cured as described in Section 2.7(a) of the Auction Agency Agreement
and the Fund shall have paid to the Auction Agent a late charge as
described in such Section 2.7(a);
then, the Auction Agent shall deliver a notice in the form of Exhibit I 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 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 APS during a Rate Period thereof (other than any Special
Dividend Period consisting of four or more Dividend Periods or any
Rate Period succeeding any Special Dividend Period consisting of
four or more Dividend Periods during which a Failure to Deposit
occurred that has not been cured), and, prior to 12:00 Noon 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(a) of the Auction Agency Agreement and
the Fund shall not have paid to the Auction Agent the late charge
described in such Section 2.7(a), but such Failure to Deposit shall
subsequently be so cured; or
(ii) any Failure to Deposit shall have occurred with respect
to shares of APS during a Special Dividend Period consisting of four
or more Dividend Periods, or during any Rate Period succeeding any
Special Dividend Period consisting of four or more Dividend Periods
during which a Failure to Deposit occurred, and such Failure to
Deposit shall subsequently have been cured within the meaning of
Section 2.7(a) of the Auction Agency Agreement,
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then the Auction Agent shall deliver a notice in the form of Exhibit J to the
Auction Agency Agreement to the Broker-Dealers not later than one Business Day
after the receipt of the payment from the Fund curing such Failure to Deposit.
2.8 Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date, the Auction
Agent shall pay to BD from moneys received from the Fund an amount equal to the
product of (a) (i) in the case of any Auction Date immediately preceding a Rate
Period consisting of less than one year, 1/4 of 1%, or (ii) in the case of any
Auction Date immediately preceding a Rate Period consisting of one year or more,
a percentage agreed upon in writing by the Fund and the Broker-Dealers times (b)
a fraction, the numerator of which is the number of days in the Rate Period
therefor beginning on such Business Day and the denominator of which is 365 if
such Rate Period is less than one year and 360 for all other Rate Periods, times
(c) $50,000 times (d) the sum of (1) the aggregate number of shares 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 subject
to valid Hold Orders (determined in accordance with paragraph (d) of Section 3
of the Auction Procedures) submitted to the Auction Agent by BD plus (iii) the
number of shares of APS deemed to be subject to Hold Orders by Existing Holders
pursuant to paragraph (c) of Section 3 of the Auction Procedures that were
acquired by such Existing Holders through BD.
For purposes of subclause (d) (iii) of the foregoing paragraph, if
any Existing Holder 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.
2.9 Settlement.
(a) If any Existing Holder on whose behalf BD has submitted a Bid or
Sell Order for shares of APS that was accepted in whole or in part fails to
instruct its Agent Member to deliver the shares of APS subject to such Bid or
Sell Order against payment therefor, BD shall instruct such Agent Member to
deliver such shares against payment therefor and BD may deliver to the Potential
Holder on whose behalf BD submitted a Bid for shares of
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APS that was accepted in whole or in part a number of shares of APS that is less
than the number of shares of APS specified in such Bid to be purchased by such
Potential Holder. Notwithstanding the foregoing terms of this Section, 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 non-delivery in accordance with the terms of Section 2.3(d) (ii)
hereof. The Auction Agent shall have no duty or liability with respect to
enforcement of this Section 2.9.
(b) Neither the Auction Agent nor the Fund shall have any
responsibility or liability with respect to the failure of an Existing Holder, a
Potential Holder or its respective Agent Member to deliver shares of APS or to
pay for shares of APS sold or purchased pursuant to the Auction Procedures or
otherwise.
3. The Auction Agent.
3.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any other Person, other than the Fund,
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 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 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 or judgment made
in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts.
3.2 Rights of the Auction Agent.
(a) The 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. 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 Fund or by a Broker-Dealer. The
Auction
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Agent may record telephone communications with the Broker- Dealers.
(b) The 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) 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.
3.3 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or
adequacy of this Agreement, the Auction Agency Agreement or the shares of APS.
4. Miscellaneous.
4.1 Termination.
Either party may terminate this Agreement at any time on five days'
notice to the other party, provided that neither BD nor the Auction Agent may
terminate this Agreement without first obtaining prior written consent of the
Fund to such termination, which consent shall not be unreasonably withheld. This
Agreement shall automatically terminate upon the termination of the Auction
Agency Agreement.
4.2 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 participant in, the Securities Depository (or an affiliate of such
a member or participant).
(b) BD represents that it (or if such 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
such BD or affiliate as Agent Member.
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4.3 Communications.
Except for (i) communications authorized to be by telephone by this
Agreement or the Auction Procedures 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 hereunder 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 BD, BT Securities Corporation
addressed: 000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Auction Bankers Trust Company
Agent, addressed: 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
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
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
4.4 Entire Agreement.
This Agreement contains the entire agreement among the parties
hereto relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or implied, among the parties hereto relating to the subject matter
hereof.
4.5 Benefits
Nothing in this Agreement, express or implied, shall give to any
person, other than the Fund, the Auction Agent, BD and their respective
successors and assigns, any benefit of any legal or equitable right, remedy or
claim hereunder.
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4.6 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 any party hereto to exercise any right or remedy
hereunder in the event of a breach hereof 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.
This Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the respective successors and assigns of each of the Auction
Agent and BD. 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 Fund without the consent of BD.
4.8 Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
4.9 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.
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4.10 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
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Name:
Title:
BT SECURITIES CORPORATION
By /s/
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Name:
Title:
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