XXXX XXXXXXX PREFERRED INCOME FUND III
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AUCTION AGENCY AGREEMENT
dated as of August 19, 2003
Relating to
Auction Preferred Shares
Series M, Series T, Series W, Series TH and Series F
of
XXXX XXXXXXX PREFERRED INCOME FUND III
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DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of August
19, 2003, is by and between Xxxx Xxxxxxx Preferred Income Fund III, a
Massachusetts business trust (the "Trust") and Deutsche Bank Trust Company
Americas, a New York banking corporation.
The Trust proposes to issue an aggregate of 14,000 preferred shares, no
par value per share, liquidation preference $25,000 per share, designated as
Auction Preferred Shares, Series M, Series T, Series W, Series TH and Series F
(collectively, the "Auction Preferred Shares" or "APS"), pursuant to the Amended
By-Laws of the Trust (as defined below).
The Trust desires that Deutsche Bank Trust Company Americas perform
certain duties as agent in connection with each Auction (as defined below) (in
such capacity, the "Auction Agent"), and as the transfer agent, registrar,
dividend paying agent and redemption agent with respect to the APS (in such
capacity, the "Paying Agent"), upon the terms and conditions of this Agreement,
and the Trust hereby appoints Deutsche Bank Trust Company Americas as said
Auction Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Trust and the Auction Agent agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined By Reference to the Amended By-Laws.
Capitalized terms not defined herein shall have the respective meanings
specified in the Amended By-Laws.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Agent Member" of any Person shall mean the member of, or
participant in, the Securities Depository that will act on behalf of a Bidder.
(b) "Agreement" shall mean the Auction Agency Agreement relating
to one or more series of APS.
(c) "APS" shall mean the preferred shares, Series M, Series T,
Series W, Series TH and Series F, no par value per share, of the Trust
designated as its "Auction Preferred Shares" and bearing such further
designation as to series as the Board of Trustees of the Trust or any committee
thereof shall specify.
(d) "Auction" shall have the meaning specified in Section 2.1
hereof.
(e) "Auction Procedures" shall mean the auction procedures
constituting Section 8.9 of the Amended By-Laws.
(f) "Authorized Officer" of the Auction Agent shall mean each
Vice President, Assistant Vice President, and Associate 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 hereof in a communication to the Trust.
(g) "Broker-Dealer Agreement" shall mean each agreement between
the Auction Agent and a Broker-Dealer substantially in the form attached
hereto as Exhibit A.
(h) "Amended By-Laws" shall mean the By-Laws of the Trust, as the
same may be amended, supplemented or modified from time to time.
(i) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit B.
(j) "Trust 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 Vice President, each Assistant Secretary and each Assistant Treasurer
of the Trust and every other officer or employee of the Trust designated as
a "Trust Officer" for purposes hereof in a notice to the Auction Agent.
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 the 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 the 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 the 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 Board of Trustees of the Trust has adopted a resolution
appointing Deutsche Bank Trust Company Americas as Auction Agent for purposes
of the Auction Procedures. The Auction Agent hereby accepts such appointment
and agrees that, on each Auction Date for a series of APS, it shall follow the
procedures set forth in this Section 2 and the Auction Procedures for the
purpose of determining the Applicable Rate for any Subsequent Rate Period of
any series of APS for which the Applicable Rate is to be determined by such
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.
2.2 Preparation for Each Auction; Maintenance of Registry of Beneficial
Owners.
(a) Not later than seven days prior to the first Auction Date for
the first series of APS subject to an Auction, the Trust shall provide the
Auction Agent with a list of the Broker-Dealers. Not later than seven days
prior to any Auction Date for any series of APS for which any change in such
list of Broker-Dealers is to be effective, the Trust will notify the Auction
Agent in writing of such change and, if any such change involves the addition of
a Broker-Dealer to such list, shall cause to be delivered to the Auction Agent
for execution by the Auction Agent a Broker-Dealer Agreement signed by such
Broker-Dealer; provided, however, that if the Trust proposes to designate any
Special Rate Period of any series of APS pursuant to Section 8.4(c) of the
Amended By-Laws, not later than 11:00 A.M. on the Business Day immediately
preceding the Auction immediately preceding the first day of such Rate Period
(or by such later time or date, or both, as may be agreed to by the Auction
Agent), the Trust shall provide the Auction Agent with a list of the
Broker-Dealers for such series and a manually signed copy of each Broker-Dealer
Agreement or a new Schedule A to a Broker-Dealer Agreement (which Schedule A
shall replace and supersede any previous Schedule A to such Broker-Dealer
Agreement) with each Broker-Dealer for such series. The Auction Agent 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) In the event that any Auction Date for any series of APS
shall be changed after the Auction Agent shall have given the notice referred
to in paragraph (a) of the Settlement Procedures, or after the notice referred
to in Section 2.3 hereof, if applicable, the Auction Agent, by such means
as the Auction Agent deems practicable, shall give notice of such change to the
Broker-Dealers for such series not later than the earlier of either 9:15 A.M. on
the new Auction Date or 9:15 A.M. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a registry of the
beneficial owners of the APS of each series who shall constitute Existing
Holders of APS of such series for purposes of Auctions. The Auction Agent shall
indicate thereon the identity of the respective Broker-Dealer of each Existing
Holder on whose behalf such Broker-Dealer submitted the most recent Order
in any Auction which resulted in such Existing Holder continuing to hold or
purchasing APS of such series. The Auction Agent shall keep such registry
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current and accurate based on the information provided to it from time to time
by the Broker-Dealer. The Trust shall provide or cause to be provided to the
Auction Agent at or prior to the Date of Original Issue of the APS of each
series a list of the initial Existing Holders of the shares of each such series
of APS, the number of shares purchased by each such Existing Holder and the
respective Broker-Dealer of each such Existing Holder or the affiliate thereof
through which each such Existing Holder purchased such shares. The Auction
Agent may rely upon, as conclusive evidence of the identities of the Existing
Holders of APS of any series, (A) such list, (B) the results of Auctions, (C)
notices from any Broker-Dealer as described in the first sentence of Section
2.2(c)(iii) hereof and (D) the results of any procedures approved by the Trust
that have been devised for the purpose of determining the identities of
Existing Holders in situations where APS may have been transferred without
complying with any restrictions on the transfer thereof as set forth in the
Auction Procedures.
(ii) In the event of any partial redemption of any series of APS,
the Auction Agent shall, at least two Business Days prior to the next Auction
for such series, request each Broker-Dealer to provide the Auction Agent
with a list of Persons who such Broker-Dealer believes are Existing Holders
after giving effect to such redemption based upon inquiries of the Persons
reflected in such Broker-Dealer's records as Beneficial Owners as a result of
the most recent Auction and with respect to each such Person, the number of
APS of such series such Broker-Dealer believes are owned by such Person after
giving effect to such redemption. In the absence of receiving any such
information from any Broker-Dealer, the Auction Agent may continue to treat the
Persons listed in its registry of Existing Holders as the beneficial owner of
the number of APS of such series shown in such registry.
(iii) The Auction Agent shall be required to register a transfer
of APS of any series from an Existing Holder of such APS only if such transfer
is to another Existing Holder, or other Person if permitted by the Trust, and
only if such transfer is made (A) pursuant to an Auction, or (B) the Auction
Agent has been notified in writing (I) in a notice substantially in the form of
Exhibit B to the Broker-Dealer Agreements by a Broker-Dealer of such transfer
or (II) in a notice substantially in the form of Exhibit C to the Broker-Dealer
Agreements by the Broker-Dealer of any Existing Holder, or other Person if
permitted by the Trust, that purchased or sold such APS in an Auction of the
failure of such APS to be transferred as a result of such Auction. The
Auction Agent is not required to accept any notice described in clause (B)
of the preceding sentence for an Auction unless the Auction Agent receives
it by 3:30 P.M. on the Business Day preceding such Auction.
(d) The Auction Agent may, but shall have no obligation to,
request the Broker-Dealers, as set forth in the Broker-Dealer Agreements,
to provide the Auction Agent with a list of Persons who such Broker-Dealer
believes are Existing Holders based upon inquiries of those Persons such
Broker-Dealer's records indicate are Beneficial Owners as a result of the most
recent Auction and with respect to each such Person, the number of shares
of such series of APS such Broker-Dealer believes to be owned by such
Person. The Auction Agent shall keep confidential such registry of Existing
Holders and shall not disclose the identities of the Existing Holders of such
APS to any Person other than the Trust and the Broker-Dealer that provided
such information; provided, however, that the Auction Agent reserves the
right and is authorized to disclose any such information if (A) it is ordered
to do so by a court of competent jurisdiction or a regulatory body, judicial
or quasi-judicial agency or authority having the authority to compel such
disclosure, (B) it is advised by its counsel that its failure to do so would
be unlawful or (C) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity or
security satisfactory to it.
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2.3 Auction Schedule.
The Auction Agent shall conduct Auctions in accordance with the schedule
set forth below. Such schedule may be changed by the Auction Agent with the
consent of the Trust, 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 immediately preceding the first Auction Date on which any such
change shall be effective.
Time Event
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By 9:30 A.M. Auction Agent advises the Trust and Broker-Dealers of
the applicable Maximum Applicable Rate and the "AA"
Financial Composite Commercial Paper Rate used in determining
such Maximum Applicable Rate as set forth in Section 2.7
hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information communicated to it by
Broker-Dealers as provided in Section 8.9(b) of the Auction
Procedures. Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant to Section 8.9(c) of
the Auction Procedures.
By approximately 3:30 P.M. Auction Agent advises Trust of results of Auction as provided in
Section 8.9(c) of the Auction Procedures.
Submitted Bids and Submitted Sell Orders are accepted and
rejected and APS allocated as provided in Section 8.9(d) of
the Auction Procedures. Auction Agent gives notice of Auction
results as set forth Section 2.4 hereof.
The Auction Agent shall follow the notification procedures set forth in
paragraph (a) of the Settlement Procedures.
2.4 Notice of Auction Results.
The Auction Agent will advise each Broker-Dealer who submitted a Bid or
Sell Order in an Auction whether such Bid or Sell Order was accepted or rejected
in whole or in part and of the Applicable Rate for the next Dividend Period for
the related APS by telephone or through the Auction Agent's auction processing
system as set forth in paragraph (a) of the Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 12:00 Noon on each Auction Date for any series of
APS, the Trust shall pay to the Auction Agent an amount in cash equal to the
aggregate fees payable to the Broker-Dealers for such series pursuant to
Section 3.5 of the Broker-Dealer Agreements for such series. The Auction Agent
shall apply such moneys as set forth in Section 3.5 of each such Broker-Dealer
Agreement.
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(b) The Trust shall notify the Auction Agent in writing prior to
selecting any Person to act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as
set forth therein if so directed by the Trust, provided that at least one
Broker-Dealer Agreement would be in effect for each series of APS after such
termination.
(d) Subject to the Auction Agent's having received notice of the
selection of the relevant Broker-Dealer pursuant to Section 2.5(b) hereof, the
Auction Agent shall from time to time enter into such Broker-Dealer Agreements
with one or more Broker-Dealers as the Trust shall request, and shall enter
into such schedules to any such Broker-Dealer Agreements as the Trust shall
request, which schedules, among other things, shall set forth the series of
APS to which such Broker-Dealer Agreement relates.
2.6 Special Rate Periods.
The provisions contained in Section 8.4(c) of the Amended By-Laws
concerning Special Rate Periods and the notification of a Special Rate Period
will be followed by the Trust 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.
2.7 Determination of Maximum Applicable Rate.
(a) (i) On each Auction Date, the Auction Agent shall determine the
Maximum Applicable Rate. If any "AA" Financial Composite Commercial Paper Rate
is not quoted on an interest equivalent basis, the Auction Agent shall convert
the quoted rate to the interest equivalent thereof as set forth in the
definition of such rate in the Amended By-Laws 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 equivalent or discount basis the Auction Agent
shall convert the quoted rate to an interest equivalent rate after consultation
with the Trust as to the method of such conversion.
(ii) If any "AA" Financial Composite Commercial Paper Rate is to be
based on rates supplied by Commercial Paper Dealers and one or more of the
Commercial Paper Dealers shall not provide a quotation for the determination of
such "AA" Financial Composite Commercial Paper Rate, the Auction Agent shall
immediately notify the Trust so that the Trust can determine whether to select a
substitute Commercial Paper Dealer or substitute Commercial Paper Dealers to
provide the quotation or quotations not being supplied by any Commercial Paper
Dealer or Commercial Paper Dealers. The Trust shall promptly advise the Auction
Agent of any such selection.
2.8 Ownership of Shares of APS.
The Trust shall notify the Auction Agent if the Trust or any affiliate of
the Trust acquires any APS of any series. Neither the Trust nor any affiliate of
the Trust shall submit any Order in any Auction for APS, except as set forth in
the next sentence. Any Broker-Dealer that is an affiliate of the Trust may
submit Orders in Auctions, but only if such Orders are not for its own account.
For purposes of this Section 2.8, a Broker-Dealer shall not be deemed to be an
affiliate of the Trust solely because one or more of the directors or executive
officers of such Broker-Dealer or of any Person controlled by, in control of or
under common control with such Broker-Dealer is also a director of the Trust.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 2.8.
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2.9 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Trust, its agents, independent public
accountants and counsel and the Broker-Dealers, access at reasonable times
during normal business hours to review and make extracts or copies of all books,
records, documents and other information concerning the conduct and results of
Auctions (at no cost to the Auction Agent), provided that any such agent,
accountant, counsel or Broker-Dealer shall furnish the Auction Agent with a
letter from the Trust requesting that the Auction Agent afford such person
access. The Auction Agent shall maintain records relating to any Auction for a
period of two years after such Auction, and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder.
3. The Auction Agent as Dividend and Redemption Price Disbursing Agent.
The Auction Agent, as dividend and redemption price disbursing agent,
shall pay to the Holders of APS of any series (i) on each Dividend Payment Date
for such series, dividends on the APS of such series, (ii) on any date fixed for
redemption of APS of any series, the Redemption Price of any shares of such
series called for redemption and (iii) any Late Charge related to any payment of
dividends or Redemption Price, in each case after receipt of the necessary funds
from the Trust with which to pay such dividends, Redemption Price or Late
Charge. The amount of dividends for any Rate Period for any series of APS to be
paid by the Auction Agent to the Holders of such shares of such series will be
determined by the Trust as set forth in Sections 8.4 and 8.9 of the Amended
By-Laws with respect to such series. The Redemption Price of any shares to be
paid by the Auction Agent to the Holders will be determined by the Trust as set
forth in Sections 8.4, 8.6 and 8.9 of the Amended By-Laws with respect to such
series. The Trust shall notify the Auction Agent in writing of a decision to
redeem shares of any series of APS at least five days prior to the date a notice
of redemption is required to be mailed to the Holders of the shares to be
redeemed by Section 8.6 of the Amended By-Laws. Such notice by the Trust to the
Auction Agent shall contain the information required by paragraph (c) of Section
8.6 of the Amended By-Laws to be stated in the notice of redemption required to
be mailed by the Trust to such Holders.
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Stock or Shares Certificates.
Upon the Date of Original Issue of each series of APS, one or more
certificates representing all of the shares of such series issued on such date
shall be issued by the Trust and, at the request of the Trust, registered in the
name of Cede & Co. and countersigned by the Auction Agent.
4.2 Registration of Transfer of Shares.
Shares of each series of APS may be registered solely in the name of the
Securities Depository or its nominee.
4.3 Removal of Legend on Restricted Shares.
All requests for removal of legends on APS of any series indicating
restrictions on transfer shall be accompanied by an opinion of counsel stating
that such legends may be removed and such shares freely transferred, such
opinion to be delivered under cover of a letter from a Trust Officer authorizing
the Auction Agent to remove the legend on the basis of said opinion.
4.4 Lost Stock or Share Certificates.
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The Auction Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed upon the
fulfillment of such requirements as shall be deemed appropriate by the Trust and
the Auction Agent, subject at all times to provisions of law, the Declaration of
Trust and Amended By-Laws governing such matters and resolutions adopted by the
Trust with respect to lost securities. The Auction Agent may issue new
certificates in exchange for and upon the cancellation of mutilated
certificates. Any request by the Trust to the Auction Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall be deemed to
be a representation and warranty by the Trust to the Auction Agent that such
issuance will comply with such provisions of law and the Amended By-Laws and
resolutions of the Trust.
4.5 Disposition of Cancelled Certificates; Record Retention.
The Auction Agent shall retain all stock or share certificates which have
been cancelled in transfer or exchange and all accompanying documentation in
accordance with applicable rules and regulations of the Securities and Exchange
Commission for two calendar years. The Trust shall also undertake to furnish to
the Securities and Exchange Commission and to the Board of Governors of the
Federal Reserve System, upon demand, at either the principal office or at any
regional office, complete, correct and current hard copies of any and all such
records.
4.6 Stock or Record Books.
For so long as the Auction Agent is acting as the transfer agent for any
series of APS pursuant to the Agreement, it shall maintain a stock or record
book containing a list of the Holders of the APS of each such series. In case of
any request or demand for the inspection of the stock or record books of the
Trust or any other books in the possession of the Auction Agent, the Auction
Agent will notify the Trust and secure instructions as to permitting or refusing
such inspection. The Auction Agent reserves the right, however, to exhibit the
stock or record books or other books to any Person if (a) it is ordered to do so
by a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure, (b) it is advised by its counsel that its failure to do so would be
unlawful or (c) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity or
security satisfactory to it.
4.7 Return of Funds.
Any funds deposited with the Auction Agent hereunder by the Trust for any
reason, including but not limited to redemption of APS of any series, that
remain unpaid after sixty days shall be repaid to the Trust upon the written
request of the Trust.
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Representations and Warranties.
5.1 Representations and Warranties of the Trust.
The Trust represents and warrants to the Auction Agent that:
(a) the Trust is a duly organized and existing business trust in good
standing under the laws of the State of its organization and has full trust
power or all requisite power to execute and deliver the Agreement and to
authorize, create and issue the APS of each series, and the APS of each
series when issued, will be duly authorized, validly issued, fully paid and
nonassessable;
(b) the Agreement has been duly and validly authorized, executed and
delivered by the Trust and constitutes the legal, valid and binding
obligation of the Trust;
(c) the form of the certificate evidencing the APS of each series
complies or will comply with all applicable laws of the State of its
organization;
(d) when issued, the APS of each series will have been duly registered
under the Securities Act of 1933, as amended, and no further action by or
before any governmental body or authority of the United States or of any
state thereof is required in connection with the execution and delivery of
the Agreement or will have been required in connection with the issuance of APS
of each series;
(e) the execution and delivery of the Agreement and the issuance and
delivery of the APS of each series do not and will not conflict with,
violate or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, the Declaration or the Amended By-Laws of the Trust,
any law or regulation, any order or decree of any court or public authority
having jurisdiction, or any mortgage, indenture, contract, agreement or
undertaking to which the Trust is a party or by which it is bound the effect of
which conflict, violation, default or breach would be material to the Trust or
the Trust and its subsidiaries taken as a whole; and
(f) no taxes are payable upon or in respect of the execution of the
Agreement or the issuance of the APS of any series.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Trust that:
(a) the Auction Agent is duly organized and is validly existing as a
banking corporation in good standing under the laws of New York and has the
corporate power to enter into and perform its obligations under this
Agreement; and
(b) 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.
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The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any Person, other than the Trust, by
reason of the Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth in the Agreement, and no implied
covenants or obligations shall be read into the 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 the
Agreement. The Auction Agent shall not be liable for any error of judgment
made in good faith unless the Auction Agent shall have been negligent in
ascertaining the pertinent facts.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely and shall be protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document
believed in good faith by it to be genuine. The Auction Agent shall not be
liable for acting upon any telephone communication authorized hereby which the
Auction Agent believes in good faith to have been given by the Trust or by a
Broker-Dealer. The Auction Agent may record telephone communications with the
Trust or with the Broker-Dealers or 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 reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in
the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder.
(e) The Auction Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, it being understood that the Auction Agent shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.
6.3 Compensation, Expenses and Indemnification.
(a) The Trust shall pay the Auction Agent an annual fee as
compensation for all services rendered by it under the Agreement and the
Broker-Dealer Agreements as the Trust and the Auction Agent have agreed to from
time to time.
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(b) The Trust shall reimburse the Auction Agent upon its request for
all reasonable out-of-pocket expenses, disbursements and advances incurred or
made by the Auction Agent in accordance with any provision of the Agreement
and the Broker-Dealer Agreements (including the compensation and the reasonable
expenses and disbursements of its agents (unless such agent is providing a
service for which the Auction Agent is already being compensated by the
Trust) and counsel), except any expense or disbursement attributable to its
negligence or bad faith. In no event shall the Auction Agent be responsible or
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including, but not limited to, loss of profit), even if the
Auction Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(c) The Trust shall indemnify the Auction Agent for and hold it
harmless against any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with its agency under
the Agreement and the Broker-Dealer Agreements, including the costs and expenses
of defending itself against any such claim or liability in connection with
its exercise or performance of any of its duties hereunder and thereunder.
6.4 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or adequacy of
the Agreement, the Broker-Dealer Agreements or the APS of any series except that
the Auction Agent hereby represents that the Agreement has been duly authorized,
executed and delivered by the Auction Agent and constitutes a legal and binding
obligation of the Auction Agent.
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of the Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Trust may terminate the
Agreement at any time by so notifying the Auction Agent, provided that the
Trust has entered into an agreement in substantially the form of the
Agreement with a successor Auction Agent. The Auction Agent may terminate the
Agreement upon written notice to the Trust on the date specified in such
notice, which date shall be no earlier than 45 days after the date of delivery
of such notice.
(b) Except as otherwise provided in this paragraph (b), the respective
rights and duties of the Trust and the Auction Agent under the Agreement with
respect to any series of APS shall cease upon termination of the Agreement
with respect to such series. The Trust's representations, warranties,
covenants and obligations to the Auction Agent under Sections 5 and 6.4 hereof
shall survive the termination of the Agreement with respect to any series of
APS. Upon termination of the Agreement with respect to any series of APS, the
Auction Agent shall, at the Trust's request, promptly deliver to the Trust
copies of all books and records maintained by it with respect to APS in
connection with its duties hereunder and to any successor Auction Agent any
funds then held by the Auction Agent for the benefit of the Holders of APS or
the Trust.
7.2 Communications
Except for (i) communications authorized to be by telephone pursuant to the
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:
11
If to the Trust: Xxxx Xxxxxxx Preferred Income Fund III
Xxxxx X. Xxxxxx
Senior Vice President, Secretary and
Chief Legal Officer
c/o Xxxx Xxxxxxx Advisers, LLC
000 Xxxxxxxxxx Xxxxxx
Xxxxxx XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Auction Agent: Deutsche Bank Trust Company Americas
Corporate Trust & Agency Services
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Each such notice, request or communication shall be effective when
delivered at the address specified herein. Communications shall be given on
behalf of the Trust by a Trust Officer and on behalf of the Auction Agent by
telephone (confirmed by telecopy or in writing) by an Authorized Officer.
7.3 Entire Agreement.
The Agreement (including the Auction and Settlement Procedures incorporated
herein) contains the entire agreement between the parties relating to, and
superseding any prior 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 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 Trust, 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) The Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to be
charged.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any
subsequent breach.
12
7.6 Successors and Assigns.
The Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and assigns of each of the Trust and
the Auction Agent.
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.
7.8 Disclosure of Information.
The Auction Agent agrees that it will not disclose or use any "non-public
personal information" about the Trust's shareholders other than such uses or
disclosures as are permitted by Regulation S-P under Section 504 of the
Xxxxx-Xxxxx Xxxxx Act ("Regulation S-P"). "Nonpublic personal information" about
a shareholder shall mean: (i) personally identifiable financial information;
(ii) any list, description, or other grouping of consumers that is derived from
using any personally identifiable information that is not publicly available;
and (iii) any other information that a customer or the transfer agent is
prohibited from using or disclosing pursuant to Regulation S-P.
7.9 Governing Law.
The Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
13
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the Trust and
the Auction Agent in accordance with its terms.
XXXX XXXXXXX PREFERRED INCOME FUND III
By: __________________________________
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: __________________________________
Name: Xxxxx Xxxxx
Title: Vice President
EXHIBIT A
---------
FORM OF
BROKER-DEALER AGREEMENT
BROKER-DEALER AGREEMENT
between
DEUTSCHE BANK TRUST COMPANY AMERICAS
and
UBS SECURITIES LLC
Dated as of August 19, 2003
Relating to
AUCTION PREFERRED SHARES
Series M, Series T, Series W, Series TH and Series F
of
XXXX XXXXXXX PREFERRED INCOME FUND III
A-1
BROKER-DEALER AGREEMENT dated as of August 19, 2003, between DEUTSCHE BANK
TRUST COMPANY AMERICAS, a New York banking corporation (the "Auction Agent")
(not in its individual capacity, but solely as agent of Xxxx Xxxxxxx Preferred
Income Fund III, a Massachusetts business trust (the "Trust"), pursuant to
authority granted to it in the Auction Agency Agreement dated as of August 19,
2003, between the Trust and the Auction Agent (the "Auction Agency Agreement"))
and UBS Securities LLC (together with its successors and assigns, "BD").
The Trust proposes to issue 2,800 preferred shares of beneficial interest, no
par value, liquidation preference $25,000 per share, designated Series M Auction
Preferred Shares, 2,800 preferred shares of beneficial interest, no par value,
liquidation preference $25,000 per share, designated Series T Auction Preferred
Shares, 2,800 preferred shares of beneficial interest, no par value, liquidation
preference $25,000 per share, designated Series W Auction Preferred Shares,
2,800 preferred shares of beneficial interest, no par value, liquidation
preference $25,000 per share, designated Series TH Auction Preferred Shares, and
2,800 preferred shares of beneficial interest, no par value, liquidation
preference $25,000 per share, designated Series F Auction Preferred Shares
(collectively with the Series M Auction Preferred Shares, the Series T Auction
Preferred Shares, the Series W Auction Preferred Shares, the Series TH Auction
Preferred Shares, and the Series F Auction Preferred Shares, the "APS"),
pursuant to the Trust's Amended By-laws (as defined below).
The Trust's Amended By-laws provide that the dividend rate on each series
of APS for each Dividend Period therefore after the Initial Dividend Period
shall be the Applicable Rate therefore, which in each case, in general shall be
the rate per annum that a commercial bank, trust company or other financial
institution appointed by the Company advises results from implementation of the
Auction Procedures (as defined below). The Board of Trustees of the Trust has
adopted a resolution appointing Deutsche Bank Trust Company Americas as Auction
Agent for purposes of the Auction Procedures, and pursuant to the Auction Agency
Agreement, the Trust has requested and directed the Auction Agent to execute and
deliver this Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
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NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Auction Agent and BD agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1. Terms Defined by Reference to the Amended By-laws.
Capitalized terms not defined herein shall have the respective meanings
specified in the Amended By-laws of the Trust.
1.2. Terms Defined Herein. As used herein and in the Settlement Procedures
(as defined below), the following terms shall have the following meanings,
unless the context otherwise requires:
(a) "Amended By-laws" shall mean the By-laws of the Trust, as amended
through the date hereof, establishing the powers, preferences and rights of the
APS.
(b) "Auction" shall have the meaning specified in Section 3.1 hereof.
(c) "Auction Procedures" shall mean the Auction Procedures that are set
forth in Section 8.9 of Article VIII of the Amended By-laws.
(d) "Authorized Officer" shall mean each Managing Director, Vice President,
Assistant Vice President, Assistant Treasurer and Assistant Secretary of the
Auction Agent and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes of this Agreement in a
communication to BD.
(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) "Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit A.
1.3. Rules of Construction. Unless the context or use indicates another or
different meaning or intent, the following rules shall apply to the construction
of 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.
A-3
II. NOTIFICATION OF DIVIDEND PERIOD.
2.1. The provisions contained in paragraph 8.4 of Article VIII of the
Amended By-laws 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 and
Settlement 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 APS, for the next Dividend Period
therefor. Each periodic operation of such procedures is hereinafter
referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part of this Agreement to the same
extent as if such provisions were set forth fully herein.
(c) BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this
Agreement. BD understands that other Persons meeting the requirements
specified in the definition of "Broker-Dealer" contained in Section 8.2 of
Article VIII of the Amended By-laws may execute a Broker-Dealer Agreement and
participate as Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.
3.2. Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the APS, the
Auction Agent shall advise BD by telephone of the Reference Rate and the
Maximum Applicable Rate in effect on such Auction Date.
(b) The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
shares of each series of APS. BD shall comply with any such request, and the
Auction Agent shall keep confidential any such information, including
information received as to the identity of Bidders in any Auction, and shall
not disclose any such information so provided to any Person other than the
Trust; and such information shall not be used by the Auction Agent or its
officers, employees, agents or representatives for any purpose other than such
purposes as are described herein. The Auction Agent shall transmit any
A-4
list of customers BD believes are Beneficial Owners of shares of each series of
APS and information related thereto only to its officers, employees, agents or
representatives who need to know such information for the purposes of acting in
accordance with this Agreement, and the Auction Agent shall prevent the
transmission of such information to others and shall cause its officers,
employees, agents and representatives to abide by the foregoing confidentiality
restrictions; provided, however, that the Auction Agent shall have no
responsibility or liability for the actions of any of its officers, employees,
agents or representatives after they have left the employ of the Auction Agent.
3.3. Auction Schedule; Method of Submission of Orders.
(a) The Trust and the Auction Agent shall conduct Auctions for each
series of APS in accordance with the schedule set forth below. Such
schedule may be changed at any time by the Auction Agent with the consent of
the Trust, which consent shall not be withheld unreasonably. The Auction Agent
shall give notice of any such change to BD. Such notice shall be received
prior to the first Auction Date on which any such change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Trust and Broker-Dealers of
the Reference Rate and the Maximum Applicable Rate as
set forth in Section 3.2(a) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information communicated to
it by Broker-Dealers as provided in Section 8.9(b)
of Article VIII of the Amended By-laws. Submission
Deadline is 1:00 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant to Section
8.9(c) of Article VIII of the Amended By-laws.
By approximately 3:00 P.M. Auction Agent advises the Trust of the results of
the Auction. Submitted Bids and Submitted Sell
Orders are accepted and rejected in whole
or in part and shares of APS are allocated as
provided in Section 8.9(d) of Article VIII of
the Amended By-laws. Auction Agent gives notice
of the Auction results as set forth in Section
3.4(a) hereof.
(b) BD agrees to maintain a list of Potential Beneficial Owners and to
contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 8.9 of Article VIII of the
Amended By-laws.
(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 APS, made through BD by an Existing Holder to
another Person other than pursuant to an Auction, and (ii) a written
notice, substantially in the form attached hereto as Exhibit D, of the
A-5
failure of shares of any series of any series of APS to be transferred to or
by any Person that purchased or sold shares of any series of APS through BD
pursuant to an Auction. The Auction Agent is not required to accept any notice
delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next preceding the applicable Auction Date.
3.4. Notice of Auction Results.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone as set forth in paragraph (a) of the Settlement Procedures. On the
Business Day next succeeding such Auction Date, the Auction Agent shall notify
BD in writing of the disposition of all Orders submitted by BD in the Auction
held on such Auction Date.
(b) BD shall notify each Beneficial Owner, Potential Beneficial Owner,
Existing Holder or Potential Holder on whose behalf BD has submitted an
Order as set forth in paragraph (b) of the Settlement Procedures, and take
such other action as is required of BD pursuant to the Settlement
Procedures.
If any Beneficial Owner or Existing Holder selling shares of APS in an
Auction fails to deliver such shares, the BD of any Person that was to have
purchased shares of such series of APS in such Auction may accept delivery from
such Person of a number of whole shares of such series of APS that is less than
the number of shares that otherwise was to be purchased by such Person. In
such event, the number of shares of such series of APS to be so delivered shall
be determined by such BD. Delivery of such lesser number of shares shall
constitute good delivery. Upon the occurrence of any such failure to deliver
shares, such BD shall deliver to the Auction Agent the notice required by
Section 3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section
3.4(b), any delivery or non-delivery of shares of any series 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 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 Trust an amount equal to:
(a) in the case of any Auction Date immediately preceding a Dividend Period
of 7 days or less, 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 APS 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 APS subject to valid Hold Orders (determined in
accordance with Section 8.9 of Article VIII of the Amended By-laws) submitted
to the Auction Agent by BD plus (C) the number of APS deemed to be subject to
Hold Orders by Beneficial Owners pursuant to Section 10 of Article VII of the
Amended By-laws that were acquired by such Beneficial Owners through BD; and
(b) in the case of any Auction Date immediately preceding a Special Dividend
Period, that amount as mutually agreed upon by the Trust 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.
A-6
For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired shares of any series of APS through BD
transfers those shares to another Person other than pursuant to an Auction, then
the Broker-Dealer for the shares so transferred shall continue to be BD,
provided, however, that if the transfer was effected by, or if the transferee
is, a Broker-Dealer other than BD, then such Broker-Dealer shall be the
Broker-Dealer for such shares.
IV. THE AUCTION AGENT.
4.1. Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered or omitted by it, or
for any error of judgment made by it in the performance of its duties under
this Agreement. The Auction Agent shall not be liable for any error of judgment
made in good faith unless the Auction Agent shall have been negligent in
ascertaining (or failing to ascertain) the pertinent facts.
4.2. Rights of the Auction Agent.
(a) The Auction Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or
document believed by it to be genuine. The Auction Agent shall not be
liable for acting upon any telephone communication authorized by this
Agreement which the Auction Agent believes in good faith to have been given by
the Trust or by BD. The Auction Agent may record telephone communications with
BD.
(b) The Auction Agent may consult with counsel of its own choice, and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.
A-7
4.3. Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the validity or adequacy of this Agreement or the APS.
V. MISCELLANEOUS.
5.1. Termination. Any party may terminate this Agreement at any time
upon five days' prior written notice to the other party; provided, however, that
if BD is UBS Securities LLC or Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Inc.,
neither BD nor the Auction Agent may terminate this Agreement without first
obtaining the prior written consent of the Trust to such termination, which
consent shall not be withheld unreasonably.
5.2. Participant in Securities Depository; Payment of Dividends in
Same-Day Funds.
(a) BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate
of such a member or participant).
(b) BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the APS available
in same-day funds on each Dividend Payment Date to customers that use BD (or its
affiliate) as Agent Member.
5.3. Agent Member. At the date hereof, BD is a participant of the
Securities Depository.
5.4. Communications. Except for (i) communications authorized to be made by
telephone pursuant to this Agreement or the Auction Procedures and (ii)
communications in connection with the Auctions (other than those expressly
required to be in writing), all notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given to such party at its address or telecopier number set forth
below:
If to BD, UBS Securities LLC
addressed to: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Auction Deutsche Bank Trust Company Americas
Agent, addressed to: Corporate Trust & Agency Services
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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.
A-8
5.5. Entire Agreement. This Agreement contains the entire agreement between
the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties relating to the subject matter hereof.
5.6. Benefits. Nothing in this Agreement, express or implied, shall give to
any person, other than the Trust, the Auction Agent and BD and their respective
successors and assigns, any benefit of any legal or equitable right, remedy or
claim under this Agreement.
5.7. Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.
(b) Failure of either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other party
shall not constitute a waiver of any such right or remedy with respect to any
subsequent breach.
5.8. Successors and Assigns. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the respective successors and permitted
assigns of each of BD and the Auction Agent. This Agreement may not be assigned
by either party hereto absent the prior written consent of the other party;
provided, however, that this Agreement may be assigned by the Auction Agent to a
successor Auction Agent selected by the Trust without the consent of BD.
5.9. Severability. If any clause, provision or section of this Agreement
shall be ruled invalid or unenforceable by any court of competent jurisdiction,
the invalidity or unenforceability of such clause, provision or section shall
not affect any remaining clause, provision or section hereof.
5.10. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
5.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said state.
A-9
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.
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: _______________________________
Name: Xxxxx Xxxxx
Title: Vice President
UBS SECURITIES LLC
By: _______________________________
Name:
Title:
A-10
EXHIBIT A
SETTLEMENT PROCEDURES
[Included as Appendix to Auction Agency Agreement]
A-11
EXHIBIT B
DEUTSCHE BANK TRUST COMPANY AMERICAS
AUCTION BID FORM
Submit To: Deutsche Bank Trust Issue: Xxxx Xxxxxxx Preferred
Company Americas Income Fund III
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder: ________________________
BENEFICIAL OWNER
Shares now held _______________ HOLD _____________
BID at rate of _____________
SELL _____________
POTENTIAL BENEFICIAL OWNER
# of shares bid _____________
BID at rate of _____________ Notes:
(1) If submitting more than one Bid for one Bidder, use additional Auction Bid
Forms.
(2) If one or more Bids covering in the aggregate more than the number of
outstanding shares held by any Beneficial Owner are submitted, such bid
shall be considered valid in the order of priority set forth in the Auction
Procedures on the above issue.
(3) A Hold or Sell Order may be placed only by a Beneficial Owner covering a
number of shares not greater than the number of shares currently held.
(4) Potential Beneficial Owners may make only Bids, each of which must specify
a rate. If more than one Bid is submitted on behalf of any Potential
Beneficial Owner, each Bid submitted shall be a separate Bid with the rate
specified.
(5) Bids may contain no more than three figures to the right of the decimal
point (.001 of 1%). Fractions will not be accepted.
NAME OF BROKER-DEALER ________________________
Authorized Signature ________________________
A-12
EXHIBIT C
(Note: To be used only for transfers made
other than pursuant to an Auction)
TRANSFER FORM
Re: Xxxx Xxxxxxx Preferred Income Fund III
Auction Preferred Shares,
Series [M, T, W, TH or F]
We are (check one):
[ ] the Existing Holder named below;
[ ] the Broker-Dealer for such Existing Holder; or
[ ] the Agent Member for such Existing Holder.
We hereby notify you that such Beneficial Owner has transferred __ APS to __.
--------------------------
(Name of Existing Holder)
--------------------------
(Name of Broker-Dealer)
--------------------------
(Name of Agent Member)
By: _________________________
Printed Name:
Title:
A-13
EXHIBIT D
(Note: To be used only for failures to deliver
APS sold pursuant to an Auction)
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for ____________________ (the "Purchaser"), which
purchased _____ shares of APS, Series [M, T, W, TH or F], of Xxxx Xxxxxxx
Preferred Income Fund III in the Auction held on ____________________ from the
seller of such shares.
II. We are a Broker-Dealer for _____________________ (the "Seller"), which sold
____ shares of APS, Series [M, T, W, TH or F], of Xxxx Xxxxxxx Preferred Income
Fund III, in the Auction held on ______________ to the Purchaser of such shares.
We hereby notify you that (check one):
_______ the Seller failed to deliver such shares to the Purchaser
_______ the Purchaser failed to make payment to the Seller upon
delivery of such shares
Name: _________________________
(Name of Broker-Dealer)
By: _________________________
Printed Name:
Title:
A-14
EXHIBIT B
---------
SETTLEMENT PROCEDURES
The following summary of Settlement Procedures sets forth the procedures
expected to be followed in connection with the settlement of each Auction and
will be incorporated by reference in the Auction Agency Agreement and each
Broker-Dealer Agreement. Nothing contained in this Appendix constitutes a
representation by the Trust that in each Auction each party referred to herein
will actually perform the procedures described herein to be performed by such
party.
(a) On each Auction Date, the Auction Agent shall notify by telephone,
or through the Auction Agent's auction processing system, the Broker-Dealers
that participated in the Auction held on such Auction Date and submitted an
Order on behalf of any Existing Holder or Potential Holder of:
(i) the Applicable Rate fixed for the next succeeding Dividend
Period;
(ii) whether Sufficient Clearing Bids existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer")
submitted a Bid or a Sell Order on behalf of an Existing Holder, the
number of shares, if any, of APS to be sold by such Existing Holder;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted
a Bid on behalf of a Potential Holder, the number of shares, if any,
of APS to be purchased by such Potential Holder;
(v) if the aggregate number of APS to be sold by all Existing
Holders on whose behalf such Broker-Dealer submitted a Bid or a Sell
Order exceeds the aggregate number of APS to be purchased by all
potential Holders on whose behalf such Broker-Dealer submitted a Bid,
the name or names of one or more Buyer's Broker-Dealers (and the name
of the Agent Member, if any, of each such Buyer's Broker-Dealer)
acting for one or more purchasers of such excess number of APS and the
number of such shares to be purchased from one or more Existing
Holders on whose behalf such Broker-Dealer acted by one or more
Potential Holders on whose behalf each of such Buyer's Broker-Dealers
acted;
(vi) if the aggregate number of APS to be purchased by all
Potential Holders on whose behalf such Broker-Dealer submitted a Bid
exceeds the aggregate number of APS to be sold by all Existing Holders
on whose behalf such Broker-Dealer submitted a Bid or a Sell Order,
the name or names of one or more Seller's Broker Dealers (and the name
of the Agent Member, if any, of each such Seller's Broker-Dealer)
acting for one or more sellers of such excess number of APS and the
number of such shares to be sold to one or more Potential Holders on
whose behalf such Broker-Dealer acted by one or more Existing Holders
on whose behalf each of such Seller's Broker-Dealers acted; and
(vii) the Auction Date of the next succeeding Auction with
respect to the APS.
(b) On each Auction Date, each Broker-Dealer that submitted an Order
on behalf of any Existing Holder or Potential Holder shall:
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(i) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, instruct each Potential Holder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part,
to instruct such Potential Holder's Agent Member to pay to such Broker
- Dealer (or its Agent Member) through the Securities Depository the
amount necessary to purchase the number of APS to be purchased
pursuant to such Bid against receipt of such shares and advise such
Potential Holder of the Applicable Rate for the next succeeding
Dividend Period;
(ii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Existing Holder on whose behalf such
Broker-Dealer submitted a Sell Order that was accepted, in whole or in
part, to instruct such Existing Holder's Agent Member to deliver to
such Broker-Dealer (or its Agent Member) through the Securities
Depository the number of APS to be sold pursuant to such Order against
payment therefor and advise any such Existing Holder that will
continue to hold APS of the Applicable Rate for the next succeeding
Dividend Period;
(iii) advise each Existing Holder on whose behalf such
Broker-Dealer submitted a Hold Order of the Applicable Rate for the
next succeeding Dividend Period;
(iv) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order of the Auction Date for the next
succeeding Auction; and
(v) advise each Potential Holder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part,
of the Auction Date for the next succeeding Auction.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a
Potential Holder or an Existing Holder shall, in such manner and at such time
or times as in its sole discretion it may determine, allocated any funds
received by it pursuant to (b)(i) above and any APS received by it pursuant to
(b)(ii) above among the Potential Holders, if any, on whose behalf such
Broker-Dealer submitted Bids, the Existing Holders, if any, on whose behalf
such Broker-Dealer submitted Bids that were accepted or Sell Orders, and any
Broker-Dealer or Broker-Dealers identified to it by the Auction Agent pursuant
to (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Holder and Existing Holder shall instruct its
Agent Member as provided in (b)(i) or (ii) above, as the case may be;
(ii) each Seller's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to the Agent Member of the Existing
Holder delivering shares to such Broker-Dealer pursuant to (b)(ii)
above the amount necessary to purchase such shares against receipt of
such shares, and (B) deliver such shares through the Securities
Depository to a Buyer's Broker-Dealer (or its Agent Member) identified
to such Seller's Broker-Dealer pursuant to (a)(v) above against
payment therefor; and
(iii) each Buyer's Broker-Dealer which is not an Agent Member of
the Securities Depository shall instruct its Agent Member to (A) pay
through the Securities Depository to a Seller's Broker-Dealer (or its
Agent Member) identified pursuant to (a) (vi) above the amount
necessary to purchase the shares to be purchased pursuant to (b) (i)
above against receipt of such shares, and (B) deliver such shares
through the Securities Depository to the Agent Member of the purchaser
thereof against payment therefor.
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(e) On the day after the Auction Date:
(i) each Bidder's Agent Member referred to in (d) (i) above shall
instruct the Securities Depository to execute the transactions
described under (b) (i) or (ii) above, and the Securities Depository
shall execute such transactions;
(ii) each Seller's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions
described in (d) (ii) above, and the Securities Depository shall
execute such transactions; and
(iii) each Buyer's Broker-Dealer or its Agent Member shall
instruct the Securities Depository to execute the transactions
described in (d) (iii) above, and the Securities Depository shall
execute such transactions.
(f) If an Existing Holder selling APS in an Auction fails to deliver
such shares (by authorized book-entry), a Broker-Dealer may deliver to the
Potential Holder on behalf of which it submitted a Bid that was accepted a
number of whole APS that is less than the number of shares that otherwise was to
be purchased by such Potential Holder. In such event, the number of APS to be
so delivered shall be determined solely by such Broker-Dealer. Delivery of
such lesser number of shares shall constitute good delivery. Notwithstanding
the foregoing terms of this paragraph (f), any delivery or non-delivery of
shares which shall represent 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 provisions of the Auction Agency Agreement
and the Broker-Dealer Agreements.
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