XXXXX & STEERS REIT AND PREFERRED INCOME FUND, INC.
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FORM OF AUCTION AGENCY AGREEMENT
dated as of April [ ], 2004
Relating
to Auction Market Preferred Shares (AMPS), Series TH28
of
XXXXX & STEERS REIT AND PREFERRED INCOME FUND, INC.
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THE BANK OF NEW YORK
as Auction Agent
This Auction Agency Agreement (this "Agreement"), dated as of April
[ ], 2004, is between XXXXX & STEERS REIT AND PREFERRED INCOME FUND, INC. (the
"Fund") and The Bank of New York, a New York banking corporation.
The Fund proposes to issue auction market preferred shares, par value
$.001 per share, designated Series TH28 AMPS, liquidation preference $25,000 per
share (the "AMPS"), pursuant to the Fund's Articles Supplementary (as defined
below).
The Fund desires that The Bank of New York perform certain duties as
agent in connection with each Auction (as defined below) of AMPS (in such
capacity, the "Auction Agent"), and as the transfer agent, registrar, dividend
paying agent and redemption agent with respect to the AMPS (in such capacity,
the "Paying Agent"), upon the terms and conditions of this Agreement, and the
Fund hereby appoints The Bank of New York as said Auction Agent and Paying Agent
in accordance with those terms and conditions (hereinafter generally referred to
as the "Auction Agent," except in Sections 3 and 4 below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Articles Supplementary.
Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.
1.2 Certain Defined Terms.
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean such Person's
agent member of a participant in the Securities Depository that will act on
behalf of a Bidder.
(b) "Articles Supplementary" shall mean the Articles
Supplementary dated April [_], 2004 specifying the powers, preferences and
rights of the AMPS, attached as Appendix B to the Statement of Additional
Information relating to the AMPS dated April [_], 2004.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Procedures" shall mean the Auction Procedures
that are set forth in Part II of the Articles Supplementary.
(e) "Authorized Officer" shall mean each Vice President,
Assistant Vice President and Assistant Treasurer of the Auction Agent and every
other officer or employee of the Auction Agent designated as an "Authorized
Officer" for purposes hereof in a written communication from the Auction Agent
to the Fund.
(f) "Broker-Dealer Agreement" shall mean each agreement
between the Auction Agent and a broker-dealer substantially in the form attached
hereto as Exhibit A.
(g) "Closing" shall mean the date the Fund consummates the
transactions for the issuance and sale of the AMPS.
(h) "Fund Officer" shall mean the Chairman, the President,
each Vice President (whether or not designated by a number or word or words
added before or after the title "Vice President"), the Secretary, the Treasurer,
each Assistant Secretary and each Assistant Treasurer of the Fund and every
other officer or employee of the Fund designated as a "Fund Officer" for
purposes hereof in a written notice from the Fund to the Auction Agent.
(i) "Holder" shall be a holder of record of one or more AMPS,
listed as such in the share register maintained by the Paying Agent pursuant to
Section 4.6 hereof.
(j) "Interest Equivalent" means a yield on a 360-day basis of
a discount basis security which is equal to the yield on an equivalent
interest-bearing security.
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. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures.
(a) The Articles Supplementary provides that the Applicable
Rate on the AMPS for each Dividend Period therefor after the initial Dividend
Period shall be the rate per annum that a commercial bank, trust company or
other financial institution appointed by the Fund advises results from the
implementation of the Auction Procedures. The Board of Directors of the Fund has
adopted a resolution appointing The Bank of New York as Auction Agent for
purposes of the Auction Procedures. The Auction Agent hereby accepts such
appointment and agrees that, on each Auction Date, it shall follow the
procedures set forth in this Section 2 and the Auction Procedures for the
purpose of determining the Applicable Rate for the AMPS for the next Dividend
Period. Each periodic operation of such procedures is hereinafter referred to as
an "Auction."
(b) All of the provisions contained in the Auction 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 set forth fully
herein.
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2.2 Preparation for Each Auction; Maintenance of Registry of Existing
Holders.
(a) As of the date hereof, the Fund shall provide the Auction
Agent with a list of the Broker-Dealers previously approved by the Auction Agent
and shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by each such Broker-Dealer. The
Auction Agent shall keep such list current and accurate based upon information
provided to it by Broker-Dealers and shall indicate thereon, or on a separate
list, the identity of each Existing Holder, if any, whose most recent Order was
submitted by a Broker-Dealer on such list and resulted in such Existing Holder
continuing to hold or purchase AMPS. Not later than five Business Days prior to
any Auction Date for which any change in such list of Broker-Dealers is to be
effective, the Fund shall notify the Auction Agent in writing of such change
and, if any such change is the addition of a Broker-Dealer to such list, the
Fund shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by such Broker-Dealer. The
Auction Agent shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.
(b) The provisions contained in Section 4 of Part I of the
Articles Supplementary concerning Special Dividend Periods and the notification
of a Special Dividend Period will be followed by the Fund and, to the extent
applicable, the Auction Agent, 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.
(c) (i) On each Auction Date, the Auction Agent shall
determine the dividend rate and the Maximum Rate. If any Treasury Index Rate is
not quoted on an interest or bond equivalent, as the case may be, basis, the
Auction Agent shall convert the quoted rate to the interest or bond equivalent
thereof as set forth in the definition of such rate in the Articles
Supplementary if the rate obtained by the Auction Agent is quoted on a discount
basis, or if such rate is quoted on a basis other than an interest or bond
equivalent or discount basis the Auction Agent shall convert the quoted rate to
an interest or bond equivalent rate after consultation with the Fund as to the
method of such conversion.
(ii) If any LIBOR Rate is to be determined by reference to
Telerate Page 3750 or by rate quotations provided by LIBOR Dealer(s), as the
case may be, and Telerate Page 3750 is unavailable or the LIBOR Dealer(s) fail
to provide rate quotations, as the case may be (as described in the Articles
Supplementary), then the Auction Agent shall immediately notify the Fund so that
the Fund can determine whether to select a Substitute LIBOR Dealer(s) to provide
such rate quotation(s) not being supplied.
(iii) If any Treasury Index Rate is to be based on rates
supplied by U.S. Government Securities Dealers and one or more of the U.S.
Government Securities Dealers shall not provide a quotation for the
determination of such Treasury Index Rate, the Auction Agent shall immediately
notify the Fund so that the Fund can determine whether to select a substitute
U.S. Government Securities Dealer or substitute U.S. Government Securities
Dealers to provide the quotation or quotations not being supplied by any U.S.
Government Securities Dealer or U.S. Government Securities Dealers. The Fund
shall promptly advise the Auction Agent of any such selection.
(d) (i) The Auction Agent shall maintain a current registry of
the Existing Holders of the AMPS based upon information provided to it by
Broker-Dealers for purposes of each individual Auction. The Fund shall use
commercially reasonable efforts to provide or cause to be provided to the
Auction Agent within ten Business Days following the date of the Closing a list
of the initial Existing Holders of AMPS, and the Broker-Dealer of each such
Existing Holder through which such Existing
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Holder purchased such shares. The Auction Agent may conclusively rely upon, as
evidence of the identities of the Existing Holders, such list, the results of
each Auction and notices from any Existing Holder, the Agent Member of any
Existing Holder or the Broker-Dealer of any Existing Holder with respect to such
Existing Holder's transfer of any AMPS to another Person.
(ii) In the event of any partial redemption of AMPS, upon
notice in writing by the Fund to the Auction Agent of such partial redemption,
the Auction Agent promptly shall request the Securities Depository to notify the
Auction Agent in writing of the identities of the Agent Members (and the
respective numbers of shares) from the accounts of which shares have been called
for redemption and the person or department at such Agent Member to contact
regarding such redemption. At least two Business Days prior to the Auction
preceding the date of redemption, the Auction Agent shall request each Agent
Member so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose shares are to be redeemed) the number
of AMPS of each such Existing Holder, if any, to be redeemed by the Fund,
provided that the Auction Agent has been furnished with the name and telephone
number of a person or department at such Agent Member from which it is to
request such information. In the absence of receiving any such information with
respect to an Existing Holder, from such Existing Holder's Agent Member or
otherwise, the Auction Agent may continue to treat such Existing Holder as
having ownership of the number of AMPS shown in the Auction Agent's registry of
Existing Holders.
(iii) The Auction Agent shall register a transfer of the
ownership of AMPS from an Existing Holder to another Existing Holder, or to
another Person if permitted by the Fund, only if such transfer is made pursuant
to an Auction or, if such transfer is made other than pursuant to an Auction,
the Auction Agent has been notified of such transfer in writing, in a notice
substantially in the form of Exhibit B attached hereto, by such Existing Holder
or by the Agent Member of such Existing Holder. The Auction Agent is not
required to accept any notice of transfer delivered for an Auction unless it is
received by the Auction Agent by 3:00 p.m. on the Business Day next preceding
the Auction Date. The Auction Agent shall rescind a transfer made on the
registry of the Existing Holders of any AMPS if the Auction Agent has been
notified in writing, in a notice substantially in the form of Exhibit C attached
hereto, by the Agent Member or the Broker-Dealer of any Person that (i)
purchased any AMPS and the seller failed to deliver such shares or (ii) sold any
AMPS and the purchaser failed to make payment to such Person upon delivery to
the purchaser of such shares.
(e) The Auction Agent may, but shall not be obligated to,
request that the Broker Dealers, as set forth in Section 3.2(b) of the
Broker-Dealer Agreements, provide the Auction Agent with a list of their
respective customers that such Broker-Dealers believe are Beneficial Owners of
AMPS. The Auction Agent shall keep confidential any such information and shall
not disclose any such information so provided to any Person other than the
relevant Broker-Dealer and the Fund; provided, however, that the Auction Agent
reserves the right and is authorized to disclose any such information if (a) it
is ordered to do so by a court of competent jurisdiction or a regulatory body,
judicial or quasi-judicial agency or authority having the authority to compel
such disclosure, (b) it is advised by its counsel that its failure to do so
would be unlawful or (c) failure to do so would expose the Auction Agent to
loss, liability, claim, damage or expense for which it has not received
indemnity or security satisfactory to it.
2.3 Auction Schedule.
The Auction Agent shall normally conduct Auctions every 28 days after
the first Auction, in the case of the AMPS, 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 withheld unreasonably. The
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Auction Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.
Time Event
---- -----
By 9:30 am. Auction Agent shall advise the Fund and the
Broker-Dealers of Maximum Rate as set forth in
Section 2.2(c)(i) hereof.
9:30 a.m. - 1:00 p.m. Auction Agent shall assemble information
communicated to it by Broker-Dealers as provided in
Section 3(a) of Part II of the Articles
Supplementary. Submission deadline is 1:00 p.m.
Not earlier than 1:00p.m. Auction Agent shall make determinations pursuant to
Section 4(a) of Part II of the Articles
Supplementary.
By approximately 3:30 p.m. Auction Agent shall advise the Fund of the results
of the Auction as provided in Section 4(b) of Part
II of the Articles Supplementary.
Submitted Bid Orders and Submitted Sell Orders will
be accepted and rejected in whole or in part and
AMPS will be allocated as provided in Section 5 of
Part II of the Articles Supplementary. Auction
Agent shall give notice of the Auction results as
set forth in Section 2.4 hereof.
The Auction Agent will follow the Bond Market Association's Market
Practice U.S. Holiday Recommendations for shortened trading days for the bond
markets (the "BMA Recommendation") unless the Auction Agent is instructed
otherwise. In the event of a BMA Recommendation on an Auction Date, the
Submission Deadline will be 11:30 a.m., instead of 1:00 p.m., and as a result
the notice set forth in Section 2.4 will occur earlier.
2.4 Notice of Auction Results.
On each Auction Date, the Auction Agent shall notify Broker-Dealers of
the results of the Auction held on such date by telephone or other electronic
means acceptable to the parties.
2.5 Broker-Dealers.
(a) Not later than 12:00 noon on each Auction Date, the Fund
shall pay to the Auction Agent in Federal Funds or similar same-day funds an
amount in cash equal to (i) in the case of any Auction Date immediately
preceding a 28 day Dividend Period, the product of (A) a fraction the numerator
of which is the number of days in such Dividend Period (calculated by counting
the first day of such Dividend Period but excluding the last day thereof) and
the denominator of which is 360, times (B) 1/4 of 1%, times (C) $25,000 times
(D) the sum of the aggregate number of outstanding AMPS for which the Auction is
conducted and (ii) in the case of any Special Dividend Period, the amount
determined by mutual consent of the Fund and the Broker-Dealers pursuant to
Section 3.5 of the Broker-Dealer Agreements. The Auction Agent shall apply such
moneys as set forth in Section 3.5 of the Broker-Dealer Agreements and shall
thereafter remit to the Fund any remaining funds paid to the Auction Agent
pursuant to this Section 2.5(a).
(b) The Fund shall not designate any Person to act as a
Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to
participate in Auctions through any Person other than
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a Broker-Dealer, without the prior written approval of the Auction Agent, which
approval shall not be withheld unreasonably. The Fund may designate an Affiliate
or Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated to act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed in writing by the Fund.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from
time to time shall enter into such Broker-Dealer Agreements as the Fund shall
request in writing.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6 Ownership of AMPS and Submission of Bids by the Fund and Its
Affiliates.
Neither the Fund nor any Affiliate of the Fund may submit any Sell
Order or Bid, directly or indirectly, in any Auction, except that an Affiliate
of the Fund that is a Broker-Dealer may submit a Sell Order or Bid on behalf of
a Beneficial Owner or a Potential Beneficial Owner. The Fund shall notify the
Auction Agent in writing if the Fund or, to the best of the Fund's knowledge,
any Affiliate of the Fund becomes a Beneficial Owner of any AMPS. Any AMPS
redeemed, purchased or otherwise acquired (i) by the Fund shall not be reissued,
except in accordance with the requirements of the Securities Act of 1933, as
amended ("Securities Act") or (ii) by its Affiliates shall not be transferred
(other than to the Fund). The Auction Agent shall have no duty or liability with
respect to enforcement of this Section 2.6.
2.7 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Fund, its agents, independent
public accountants and counsel, access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole cost
and expense) of all books, records, documents and other information concerning
the conduct and results of Auctions, provided that any such agent, accountant or
counsel shall furnish the Auction Agent with a letter from the Fund requesting
that the Auction Agent afford such person access at least one Business Day prior
to the date of such access. The Auction Agent shall maintain records relating to
any Auction for a period of at least two years after such Auction (unless
requested in writing by the Fund to maintain such records for such longer period
not in excess of four years, then for such longer period), and such records, in
reasonable detail, shall accurately and fairly reflect the actions taken by the
Auction Agent hereunder. The Fund agrees to keep confidential any information
regarding the customers of any Broker-Dealer received from the Auction Agent in
connection with this Agreement or any Auction, and shall not disclose such
information or permit the disclosure of such information without the prior
written consent of the applicable Broker-Dealer to anyone except such agent,
accountant or counsel engaged to audit or review the results of Auctions as
permitted by this Section 2.7. The Fund reserves the right to disclose any such
information if it is advised by its counsel that its failure to do so would (i)
be unlawful or (ii) expose it to liability, unless the Broker-Dealer shall have
offered indemnification satisfactory to the Fund. Any such agent, accountant or
counsel, before having access to such information, shall agree to keep such
information confidential and not to disclose such information or permit
disclosure of such information without the prior written consent of the
applicable Broker-Dealer, provided that such agent, accountant or counsel may
reserve the right to disclose any such information if it is advised by its
counsel that its failure to do so would (i) be unlawful or (ii) expose it to
liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to such agent, accountant or counsel. The Auction Agent shall have
no responsibility for, and shall have no liability in connection with, the
Fund's performance of its duties under this Section 2.7.
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III. THE AUCTION AGENT AS PAYING AGENT.
3.1 The Paying Agent.
The Board of Directors of the Fund has adopted a resolution appointing
The Bank of New York as Auction Agent and Paying Agent. The Paying Agent hereby
accepts such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Articles Supplementary which are specified
herein with respect to the AMPS and as set forth in this Section 3.
3.2 The Fund's Notices to the Paying Agent.
Whenever any AMPS are to be redeemed, the Fund promptly shall deliver
to the Paying Agent a Notice of Redemption, which will be mailed by the Paying
Agent to each Holder at least five Business Days prior to the date such Notice
of Redemption is required to be mailed pursuant to the Articles Supplementary.
The Paying Agent shall have no responsibility to confirm or verify the accuracy
of any such Notice.
3.3 The Fund to Provide Funds for Dividends and Redemptions.
(a) Not later than 12:00 noon on each Dividend Payment Date,
the Fund shall deposit with the Paying Agent an aggregate amount of Federal
Funds or similar same-day funds equal to the declared dividends to be paid to
Holders on such Dividend Payment Date, and shall give the Paying Agent
irrevocable written instructions to apply such funds to the payment of such
dividends on such Dividend Payment Date.
(b) If the Fund shall give a Notice of Redemption, then by
noon of the date fixed for redemption, the Fund shall deposit in trust with the
Paying Agent an aggregate amount of Federal Funds or similar same-day funds
sufficient to redeem such AMPS called for redemption and shall give the Paying
Agent irrevocable written instructions and authority to pay the redemption price
to the Holders of AMPS called for redemption upon surrender of the certificate
or certificates therefor.
3.4 Disbursing Dividends and Redemption Price.
After receipt of the Federal Funds or similar same-day funds and
instructions from the Fund described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
Dividend Payment Date, dividends on the AMPS, and (ii) on any date fixed for
redemption, the redemption price of any shares of AMPS called for redemption.
The amount of dividends for any Dividend Period to be paid by the Paying Agent
to Holders will be determined by the Fund as set forth in Section 2 of Part I of
the Articles Supplementary. The redemption price to be paid by the Paying Agent
to the Holders of any shares of AMPS called for redemption will be determined as
set forth in Section 3 of Part I of the Articles Supplementary. The Paying Agent
shall have no duty to determine the redemption price and may rely on the amount
thereof set forth in the Notice of Redemption.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Original Issue of Share Certificates.
On the Date of Original Issue of the AMPS, one certificate for the
series of AMPS shall be issued by the Fund and registered in the name of Cede &
Co., as nominee of the Securities Depository, and countersigned by the Paying
Agent.
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4.2 Registration of Transfer or Exchange of Shares.
Except as provided in this Section 4.2, the AMPS shall be registered
solely in the name of the Securities Depository or its nominee. If the
Securities Depository shall give notice of its intention to resign as such, and
if the Fund shall not have selected a substitute Securities Depository
acceptable to the Paying Agent prior to such resignation, then upon such
resignation the AMPS at the Fund's request, may be registered for transfer or
exchange, and a new certificate thereupon shall be issued in the name of the
designated transferee or transferees, upon surrender of the old certificate in
form deemed by the Paying Agent to be properly endorsed for transfer with (a)
all necessary endorsers' signatures guaranteed in such manner and form and by
such guarantor as the Paying Agent may reasonably require, (b) such assurances
as the Paying Agent shall deem necessary or appropriate to evidence the
genuineness and effectiveness of each necessary endorsement and (c) satisfactory
evidence of compliance with all applicable laws relating to the collection of
taxes in connection with any registration of transfer or exchange or funds
necessary for the payment of such taxes. If the certificate for the AMPS is not
held by the Securities Depository or its nominee, payments upon transfer of
shares in an Auction shall be made in Federal Funds or similar same-day funds to
the Auction Agent against delivery of certificates therefor.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing AMPS shall be accompanied by an opinion
of counsel stating that such legend may be removed and such shares may be
transferred free of the restriction described in such legend, said opinion to be
delivered under cover of a letter from a Fund Officer authorizing the Paying
Agent to remove the legend on the basis of said opinion.
4.4 Lost, Stolen or Destroyed Shares Certificates.
The Paying Agent shall issue and register a replacement certificate for
a certificate represented to have been lost, stolen or destroyed, upon the
fulfillment of such requirements as shall be deemed appropriate by the Fund and
by the Paying Agent, subject at all times to provisions of law, the Articles
Supplementary governing such matters and resolutions adopted by the Fund with
respect to lost, stolen or destroyed securities. The Paying Agent may issue a
new certificate in exchange for and upon the cancellation of a mutilated
certificate. Any request by the Fund to the Paying Agent to issue a replacement
or new certificate pursuant to this Section 4.4 shall be deemed to be a
representation and warranty by the Fund to the Paying Agent that such issuance
will comply with provisions of applicable law and the Articles Supplementary and
resolutions of the Fund.
4.5 Disposition of Canceled Certificates: Record Retention.
The Paying Agent shall retain stock certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Securities and Exchange Commission
(the "Commission") for at least two calendar years from the date of such
cancellation. The Paying Agent, upon written request by the Fund, shall afford
to the Fund, its agents and counsel access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole cost
and expense) of such certificates and accompanying documentation. Upon written
request by the Fund at any time within the six month period commencing
immediately after the expiration of this two-year period, the Paying Agent shall
deliver to the Fund the canceled certificates and accompanying documentation.
The Fund, at its expense, shall retain such records for a minimum additional
period of at least four calendar years from the date of delivery of the records
to the Fund and shall make such records available during this period at any
time, or from time to time, for reasonable periodic, special, or other
examinations by representatives of the Commission. The Fund also shall
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undertake to furnish to the Commission, upon demand, either at its principal
office or at any regional office, complete, correct and current hard copies of
any and all such records. Thereafter, such records shall not be destroyed by the
Fund without the approval of the Paying Agent, which approval shall not be
withheld unreasonably, but will be safely stored for possible future reference.
4.6 Stock Register.
The Paying Agent shall maintain the stock register, which shall contain
a list of the Holders, the number of shares held by each Holder and the address
of each Holder. The Paying Agent shall record in the stock register any change
of address of a Holder upon written notice by such Holder. In case of any
written request or demand for the inspection of the share register or any other
books of the Fund in the possession of the Paying Agent, the Paying Agent will
notify the Fund and secure instructions as to permitting or refusing such
inspection. The Paying Agent reserves the right, however, to exhibit the stock
register or other records to any person in case it is advised by its counsel
that its failure to do so would (i) be unlawful or (ii) expose it to liability,
unless the Fund shall have offered indemnification satisfactory to the Paying
Agent.
4.7 Return of Funds.
Any funds deposited with the Paying Agent by the Fund for any reason
(other than for the payment of amounts due to the Paying Agent) under this
Agreement, including for the payment of dividends or the redemption of AMPS,
that remain with the Paying Agent after 12 months shall be repaid to the Fund
upon written request by the Fund.
V. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(i) the Fund is duly organized and is validly existing as
a corporation under the laws of the State of Maryland, and has full power to
execute and deliver this Agreement and to authorize, create and issue the AMPS;
(ii) the Fund is registered with the Commission under the
1940 Act as a closed-end, non-diversified, management investment company;
(iii) this Agreement has been duly and validly authorized,
executed and delivered by the Fund and constitutes the legal, valid and binding
obligation of the Fund, enforceable against the Fund in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equitable principles;
(iv) the form of the certificate evidencing the AMPS
complies with all applicable laws of the State of Maryland;
(v) the AMPS have been duly and validly authorized by the
Fund and, upon completion of the initial sale of the AMPS and receipt of payment
therefor, will be validly issued by the Fund, fully paid and nonassessable;
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(vi) at the time of the offering of the AMPS, the shares
offered will be registered under the Securities Act and no further action by or
before any governmental body or authority of the United States or of any state
thereof is required in connection with the execution and delivery of this
Agreement or will be required in connection with the issuance of shares of the
AMPS, except such action as required by applicable state securities laws;
(vii) the execution and delivery of this Agreement and the
issuance and delivery of the AMPS do not and will not conflict with, violate, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, the Articles of Incorporation, any order or decree of any court
or public authority having jurisdiction over the Fund, or any mortgage,
indenture, contract, agreement or undertaking to which the Fund is a party or by
which it is bound; and
(viii) no taxes are payable upon or in respect of the
execution of this Agreement or will be payable upon or in respect of the
issuance of the AMPS.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Fund that:
(i) the Auction Agent is duly organized and is validly
existing as a banking corporation in good standing under the laws of the State
of New York and has the corporate power to enter into and perform its
obligations under this Agreement; and
(ii) this Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal, valid and
binding obligation of the Auction Agent, enforceable against the Auction Agent
in accordance with its terms, subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equitable principles.
VI. THE AUCTION AGENT.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any Person.
(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 willful misconduct or gross 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.
(d) In no event shall the Auction Agent be liable for special,
punitive, indirect or consequential loss or damage of any kind whatsoever
(including, but not limited to, lost profits), even if the Auction Agent has
been advised of the likelihood of such loss or damage and regardless of the form
of action.
10
6.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be
fully protected in acting or refraining from acting upon, any communication
authorized hereby and any written instruction, notice, request, direction,
consent, report, certificate, share certificate or other instrument, paper or
document reasonably believed by it to be genuine. The Auction Agent shall not be
liable for acting or refraining from acting upon any telephone communication
authorized hereby which the Auction Agent reasonably believes in good faith to
have been given by the Fund or by a Broker-Dealer. The Auction Agent may record
telephone communications with the Fund or with the Broker-Dealers or with both.
(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 reasonable 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. The Auction Agent shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Fund.
(d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys and, in
the absence of willful misconduct or gross negligence on the part of any such
agent or attorney, shall not be responsible for the conduct on the part of any
such agent or attorney appointed by it with due care.
(e) The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been grossly
negligent in ascertaining the pertinent facts necessary to make such judgment.
In no event shall the Auction Agent be liable for special, indirect or
consequential loss or damages of any kind whatsoever (including, but not limited
to, loss of profits), even if the Auction Agent has been advised of the
likelihood of such loss or damages and regardless of the form of action, except
in the event of willful misconduct or gross negligence on the part of the
Auction Agent.
(f) The Auction Agent shall not be required to and shall make
no representations and have no responsibilities as to the validity, accuracy,
value or genuineness of any signatures or endorsements, other than its own. The
Auction Agent makes no representations as to and shall have no liability with
respect to the correctness of the recitals in, or the validity, accuracy or
adequacy of this Agreement, any Broker-Dealer Agreement, any offering material
used in connection with the offer and sale of the AMPS or any other agreement or
instrument executed in connection with the transactions contemplated herein or
in any thereof. The Auction Agent shall have no obligation or liability in
respect of the registration or exemption therefrom of the AMPS under federal or
state securities laws in respect of the sufficiency or the conformity of any
transfer of the AMPS pursuant to the terms of the Auction Agency Agreement, any
Broker Dealer Agreement, or any other document contemplated thereby or related
thereto.
(g) Whenever in the administration of the provisions of this
Agreement the Auction Agent shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering any action to be taken
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of gross negligence or willful
misconduct on the part of the Auction Agent, be deemed to be conclusively proved
and established by a certificate signed by the Fund or the Broker-Dealer, and
delivered to the Auction Agent and such certificate, in the absence of gross
11
negligence or willful misconduct on the part of the Auction Agent, shall be full
warrant to the Auction Agent for any action taken or omitted by it under the
provisions of this Agreement upon the faith thereof.
(h) The Auction Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, entitlement
order, approval or other paper or document furnished by Fund or the
Broker-Dealer, except to the extent that such failure to investigate would be
deemed grossly negligent.
(i) Any corporation into which the Auction Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Auction Agent shall be
a party, or any corporation succeeding to the Dealing and Trading business of
the Auction Agent shall be the successor of the Auction Agent hereunder, with
the consent of the Fund but without the execution of filing any paper with any
party hereto or any further act on the part of any of the parties hereto, except
where any instrument of transfer or assignment is required by law to effect such
succession, anything herein to the contrary notwithstanding.
6.3 Compensation, Expenses and Indemnification.
(a) The Fund shall pay to the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate writing
signed by the Fund and the Auction Agent, subject to adjustments if the AMPS no
longer are held of record by the Securities Depository or its nominee or if
there shall be such other change as shall increase or decrease materially the
Auction Agent's obligations hereunder or under the Broker-Dealer Agreements.
(b) The Fund shall reimburse the Auction Agent upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Auction Agent in accordance with any provision of this Agreement and of
the Broker-Dealer Agreements (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any expense, disbursement
or advance attributable to its gross negligence or willful misconduct.
(c) The Fund shall indemnify the Auction Agent and its
officers, directors, employees and agents for, and hold it harmless against, any
loss, liability or expense incurred without gross negligence or willful
misconduct on the part of the Auction Agent arising out of or in connection with
its agency under this Agreement and under the Broker-Dealer Agreements,
including the costs and expenses of defending itself against any claim of
liability in connection with its exercise or performance of any of its duties
hereunder and thereunder, except such as may result from its gross negligence or
willful misconduct.
6.4 Force Majeure
The Auction Agent shall not be responsible for or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
acts of terrorism; interruptions, loss or malfunctions of utilities; computer
(hardware or software) or communications services; accidents; labor disputes;
acts of civil or military authority or governmental actions; it being understood
that the Auction Agent shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.
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VII. MISCELLANEOUS.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate this
Agreement at any time by so notifying the Auction Agent in writing, provided
that, if any AMPS remain outstanding, the Fund shall have entered into an
agreement with a successor auction agent. The Auction Agent may terminate this
Agreement upon prior notice to the Fund on the date specified in such notice,
which date shall be no earlier than 60 days after delivery of such notice. The
Auction Agent may resign after 30 days following the delivery of notice to the
Fund that the Auction Agent has not been paid amounts due to it. If the Auction
Agent terminates this Agreement while any AMPS remains outstanding, the Fund
shall use its best efforts to enter into an agreement with a successor auction
agent containing substantially the same terms and conditions as this Agreement.
(b) Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Fund and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Fund's
representations, warranties, covenants and obligations to the Auction Agent
under Sections 5.1 and 6.3 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall (i) resign as Auction
Agent under the Broker-Dealer Agreements, (ii) at the Fund's written request,
deliver promptly to the Fund copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the written request of the
Fund, transfer promptly to the Fund or to any successor auction agent any funds
deposited by the Fund with the Auction Agent (whether in its capacity as Auction
Agent or as Paying Agent) pursuant to this Agreement which have not been
distributed previously by the Auction Agent in accordance with this Agreement.
7.2 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 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 at its address or telecopier number set forth below:
If to the Fund, Xxxxx & Steers REIT and Preferred Income Fund, Inc.
addressed to: Attn: Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Auction Agent, The Bank of New York
addressed to: Corporate Trust Administration
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group - Auction Desk
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
13
or such other address or telecopier number as such parry 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 the Fund by a Fund Officer and on
behalf of the Auction Agent by an Authorized Officer.
7.3 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 implied,
between the parties relating to the subject matter hereof, except for written
agreements relating to the compensation of the Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Fund, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, 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. The Fund shall notify the Auction Agent in writing of any change in
the Articles Supplementary prior to the effective date of any such change. If
any such change in the Articles Supplementary materially increases the Auction
Agent's obligations hereunder, the Fund shall obtain the written consent of the
Auction Agent prior to the effective date of such change.
(b) Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6 Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of each of the
Fund and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party, which consent shall
not be withheld unreasonably.
7.7 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.
13
7.8 Execution in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
7.9 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.
7.10 Jurisdiction.
The parties agree that all actions and proceedings arising out of this
Auction Agency Agreement or any of the transactions contemplated hereby shall be
brought in the County of New York, and, in connection with any such action or
proceeding, submit to the jurisdiction of, and venue in, such County. Each of
the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Agreement or the
transactions contemplated hereby.
[Signature pages follow]
15
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.
XXXXX & STEERS REIT AND PREFERRED
INCOME FUND, INC.
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK, As Auction Agent
By:
-----------------------------------
Name:
Title:
16
EXHIBIT A
MASTER BROKER-DEALER AGREEMENT
Broker-Dealer Agreement dated as of _______, 2004, is between The Bank
of New York, a New York banking corporation (the "Auction Agent") (not in its
individual capacity, but solely as agent of the registered investment companies,
which are Maryland corporations, listed in Exhibit A hereto, as the same may be
amended from time to time (individually, a "Fund", and together, the "Funds,"
unless indicated otherwise), pursuant to authority granted to it in the various
Auction Agency Agreements between each of the Funds and the Auction Agent (the
"Auction Agency Agreements") and XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED (together with its successors and assigns, "BD").
The Funds have duly authorized and issued, or intend to issue in
different series shares of Auction Rate Cumulative Preferred Shares, in the case
of the Series M shares and Series W shares of Xxxxx & Steers Advantage Income
Realty Fund, Inc. and Taxable Auction Market Preferred Shares (the "AMPS) in the
case of the other Funds, all with a par value of $.001 per share and a
liquidation preference of $25,000 per share (together, the "Preferred Shares"),
pursuant to the Funds' Articles Supplementary (as defined below).
The Funds' Articles Supplementary provides that for each subsequent
Dividend Period of Preferred Shares then outstanding, the Applicable Rate for
each series of Preferred Shares for each subsequent Dividend Period shall be
equal to the rate per annum that results from an Auction for Outstanding shares
of each Series on the respective Auction Date therefor next preceding the period
from and after the Date of Original Issue to and including the last day of the
initial Dividend Period. The Boards of Directors of the Funds have adopted
resolutions appointing The Bank of New York as Auction Agent for purposes of the
Auction Procedures, and pursuant to Section 2.5 of the Auction Agency
Agreements, the Funds have 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 premises and 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 Articles Supplementary.
Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary of each Fund.
1.2 Terms Defined Herein.
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Articles Supplementary" shall mean the Articles
Supplementary for Preferred Shares of each of the Funds specifying the powers,
preferences and rights of the Preferred Shares filed in the office of the State
Department of Assessments and Taxation of Maryland.
(b) "Auction" shall have the meaning specified in Section 2.1
of the Auction Agency Agreement.
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(c) "Auction Procedures" shall mean the Auction Procedures
that are set forth in Part II of the Articles Supplementary.
(d) "Authorized Officer" of the Auction Agent shall mean each
Vice President, Assistant Vice President and Assistant Treasurer 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 written 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.
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.
The provisions contained in Section 4 of Part I of the Articles
Supplementary concerning the notification of a Special Dividend 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.
III. THE AUCTION.
3.1 Purpose; Incorporation by Reference of Auction Procedures.
(a) On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of determining
the Applicable Rate for each series of Preferred Shares, for each Dividend
Period. Each periodic operation of such procedures is hereinafter referred to as
an "Auction."
(b) All of the provisions contained in the Auction 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.
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(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 Section 17 of Part I of the Articles
Supplementary 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 Fund, 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
Preferred Shares, the Auction Agent shall advise BD by telephone or other
electronic means of communication acceptable to the parties of the Maximum Rate
in effect on such Auction Date.
(b) The Auction Agent from time to time may, but shall not be
obligated to, request BD to provide it with a list of the respective customers
BD believes are Beneficial Owners of shares of each series of Preferred Shares.
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 a Fund; 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; provided,
however, that the Auction Agent reserves the right and is authorized to disclose
any such information if (a) it is ordered to do so by a court of competent
jurisdiction or a regulatory body, judicial or quasi-judicial agency or
authority having the authority to compel such disclosure, (b) it is advised by
its counsel that its failure to do so would be unlawful or (c) failure to do so
would expose the Auction Agent to loss, liability, claim, damage or expense for
which it has not received indemnity or security satisfactory to it. In the event
that the Auction Agent is required to disclose information in accordance with
the foregoing sentence, it shall provide written notice of such requirement to
BD as promptly as practicable. The Auction Agent shall, subject to the terms of
the Auction Agency Agreement, transmit any list of customers BD believes are
Beneficial Owners of shares of each series of Preferred Shares 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 Funds and the Auction Agent shall conduct Auctions for
each series of Preferred Shares 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 Fund, 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.
A-3
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Funds and the
Broker-Dealers of the Maximum Rate as set forth in
Section 3.2(a) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated to
it by Broker-Dealers as provided in Section 3(a) of
Part II of the Articles Supplementary. Submission
Deadline is 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent makes determinations pursuant to
Section 4(a) of Part II of the Articles
Supplementary.
By approximately 3:30 P.M. Auction Agent advises the Funds of the results of
the Auction as provided in Section 4(b) of Part II
of the Articles Supplementary.
Submitted Bids and Submitted Sell Orders will be
accepted and rejected in whole or in part and
shares of Preferred Shares are allocated as
provided in Section 5 of Part II of the Articles
Supplementary.
Auction Agent shall give notice of the Auction
results as set forth in Section 3.4(a) hereof.
The Auction Agent will follow the Bond Market Association's Market
Practice U.S. Holiday Recommendations for shortened trading days for the bond
markets (the "BMA Recommendation") unless the Auction Agent is instructed
otherwise. In the event of a BMA Recommendation on an Auction Date, the
Submission Deadline will be 11:30 a.m., instead of 1:00 p.m., and as a result
the notice set forth in Section 3.3 will occur earlier.
(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 Section 2 of Part II of the
Articles Supplementary.
(c) BD shall submit Orders to the Auction Agent in writing 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 any series of Preferred Shares, 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
Preferred Shares to be transferred to or by any Person that purchased or sold
shares of any series of Preferred Shares 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 or other electronic means acceptable to the parties. On the Business
Day next succeeding such Auction Date, the
A-4
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, and take such other action as is required of BD.
If any Beneficial Owner or Existing Holder selling shares of any series
of Preferred Shares in an Auction fails to deliver such shares, the
Broker-Dealer of any Person that was to have purchased shares of any series of
Preferred Shares in such Auction may deliver to such Person a number of whole
shares of the series of Preferred Shares 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 the series of Preferred Shares to be so delivered shall be determined
by such Broker-Dealer. Delivery of such lesser number of shares shall constitute
good delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer 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 any series of Preferred Shares 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 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, the Auction
Agent shall pay to BD from moneys received from the Funds an amount equal to:
(a) in the case of any Auction Date immediately preceding a Dividend Period of
less than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of shares of any series of Preferred Shares placed by
BD in the applicable Auction that were (x) the subject of a Submitted Bid of a
Beneficial Owner submitted by BD and continued to be held as a result of such
submission and (y) the subject of a Submitted Bid of a Potential Beneficial
Owner submitted by BD and were purchased as a result of such submission plus (B)
the aggregate number of shares of any series of Preferred Shares subject to
valid Hold Orders (determined in accordance with Section 2 of Part II of the
Articles Supplementary) submitted to the Auction Agent by BD plus (C) the number
of shares of any series of Preferred Shares deemed to be subject to Hold Orders
by Beneficial Owners pursuant to Section 2 of Part II of the Articles
Supplementary that were acquired by BD for its own account or were acquired by
such Beneficial Owners through BD; and (b) in the case of any Auction Date
immediately preceding a Special Dividend Period of one year or longer, that
amount as mutually agreed upon by the Funds and BD, based on the selling
concession that would be applicable to an underwriting of fixed or variable rate
Preferred Shares with a similar final maturity or variable rate dividend period,
at the commencement of such Special Dividend Period.
For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired shares of any series of Preferred Shares 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.
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IV. MISCELLANEOUS.
4.1 Termination.
Any party may terminate this Agreement at any time upon five days'
prior written notice to the other party; provided, however, that if the
Broker-Dealer is Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated neither
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated nor the Auction Agent may
terminate this Agreement without first obtaining the prior written consent of
the Fund to such termination, which consent shall not be withheld unreasonably.
This Agreement shall automatically terminate upon the redemption of all
outstanding Preferred Shares or upon termination of the Auction Agent Agreement.
4.2 Force Majeure
Neither party to this Agreement shall be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
acts of terrorism; interruptions, loss or malfunctions or utilities; computer
(hardware or software) or communications services; accidents; labor disputes;
acts of civil or military authority or governmental actions; it being understood
that the parties shall use reasonable efforts which are consistent with accepted
practices in the banking industry to resume performance as soon as practicable
under the circumstances.
4.3 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 shares of
any series of Preferred Shares available in same-day funds on each Dividend
Payment Date to customers that use BD (or its affiliate) as Agent Member.
4.4 Agent Member.
At the date hereof, BD is a participant of the Securities Depository.
4.5 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 or similar writing) and shall be given
to such party at its address or telecopier number set forth below:
If to the Auction Agent,
addressed to: The Bank of New York
Corporate Trust Administration
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group - Auction Desk
A-6
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the BD,
addressed to: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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.
4.6 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 implied,
between the parties relating to the subject matter hereof.
4.7 Benefits.
Nothing in this Agreement, express or implied, shall give to any
person, other than the Funds, the Auction Agent and BD and their respective
successors and permitted assigns, any benefit of any legal or equitable right,
remedy or claim under this Agreement.
4.8 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.
4.9 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.
4.10 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.
A-7
4.11 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.
4.12 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.
4.13 Jurisdiction.
The parties agree that all actions and proceedings arising out of this
Broker-Dealer Agreement or any of the transactions contemplated hereby shall be
brought in the County of New York, and, in connection with any such action or
proceeding, submit to the jurisdiction of, and venue in, such County. Each of
the parties hereto also irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out of this Agreement or the
transactions contemplated hereby.
[Signature pages follow]
A-8
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.
THE BANK OF NEW YORK, as Auction Agent
By:
-----------------------------------
Name:
Title:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-----------------------------------
Name:
Title:
A-9
EXHIBIT A
LIST OF FUNDS
(revised ________, 2004)
Xxxxx & Steers Advantage Income Realty Fund, Inc.
Xxxxx & Steers Premium Income Realty Fund, Inc.
Xxxxx & Steers Quality Income Realty Fund, Inc.
Xxxxx & Steers REIT and Preferred Income Fund, Inc.
Xxxxx & Steers REIT and Utility Income Fund, Inc.
A-1
EXHIBIT B
THE BANK OF NEW YORK
AUCTION BID FORM
Submit To: Issue:
--------- -----
The Bank of New York
Corporate Trust Administration -------------------------------------
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 -------------------------------------
Attention: Dealing and Trading Group -
Auction Desk
Telephone No.: (000) 000-0000
Facsimile 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 of Series now held HOLD
------------------- --------------
BID at rate of
---------------
SELL
--------------
POTENTIAL BENEFICIAL OWNER
# of shares of Series
--------
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.
(6) An Order must be submitted in whole shares of Preferred Shares with
an aggregate liquidation preference of $25,000.
-------------------------------------------------
-------------------------------------------------
Authorized Signature
------------------------------------------
B-1
EXHIBIT C
(Note: To be used only for transfers made other than pursuant to an Auction)
TRANSFER FORM
Re:
--------------------------------------------------------------------
("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
_________ Series ___ Preferred Shares to ___________________________________
-------------------------------
(Name of Existing Holder)
-------------------------------
(Name of Broker-Dealer)
-------------------------------
(Name of Agent Member)
By:
--------------------------------------------
Printed Name:
Title:
C-1
EXHIBIT D
(Note: To be used only for failures to deliver or to pay for
Preferred Shares sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
We are a Broker-Dealer for _____________________ (the "Purchaser"),
which purchased _______ Series ___ Preferred Shares of
_____________________________________________ in the Auction held on
____________________ from the seller 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:
-------------------------------------
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
---------------------------------------
Printed Name:
Title:
D-1
EXHIBIT B
(Note: To be used only for transfers made other than pursuant to an Auction)
TRANSFER FORM
Re: XXXXX & STEERS REIT AND PREFERRED INCOME FUND, INC.
Auction Market Preferred Shares ("AMPS")
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
___________ Series TH28 AMPS to _______________________________.
-------------------------------
(Name of Existing Holder)
-------------------------------
(Name of Broker-Dealer)
-------------------------------
(Name of Agent Member)
By:
-------------------------------------
Printed Name:
Title:
B-1
EXHIBIT C
(Note: To be used only for failures to deliver or to pay for
AMPS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
We are a Broker-Dealer for ___________________ (the "Purchaser"), which
purchased ________ Series TH28 AMPS of XXXXX & STEERS REIT AND PREFERRED INCOME
FUND, INC. in the Auction held on _____________________ from the seller 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:
C-1
