EXHIBIT (k)(2)
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AUCTION AGENT AGREEMENT
between
MUNIHOLDINGS FLORIDA INSURED FUND
and
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY
Dated as of _____________, 1997
Relating to
AUCTION MARKET PREFERRED SHARES
("AMPS"),
Series A and B
of
MUNIHOLDINGS FLORIDA INSURED FUND
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(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
THIS AUCTION AGENT AGREEMENT, dated as of __________, 1997, is between
MUNIHOLDINGS FLORIDA INSURED FUND, a Massachusetts business trust (the "Fund"),
and IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY, a New York banking corporation.
The Fund proposes to duly authorize and issue _____ Auction Market
Preferred Shares(R), Series A ("Series A AMPS"), and _____ Auction Market
Preferred Shares(R), Series B ("Series B AMPS"), each with a par value of $.10
per share and a liquidation preference of $25,000 per share plus an amount equal
to accumulated but unpaid dividends (whether or not earned or declared),
pursuant to the Fund's Certificate of Designation (as defined below). The
Series A AMPS and Series B AMPS are sometimes herein referred to together as the
"AMPS". A separate Auction (as defined below) will be conducted for each series
of AMPS. The Fund desires that IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company perform
certain duties as agent in connection with each Auction of AMPS (in such
capacity, the "Auction Agent"), and as the transfer agent, registrar, dividend
disbursing 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 IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company 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.
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1.1. Terms Defined by Reference to
Certificate of Designation.
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Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate of Designation.
______________________
(R) Registered trademark of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
1.2. Terms Defined Herein.
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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) "Affiliate" shall mean any Person, other ▇▇▇▇ ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, made known to the Auction Agent to be
controlled by, in control of, or under common control with, the Fund or its
successors.
(b) "Agent Member" of any Person shall mean such Person's agent member
of the Securities Depository that will act on behalf of a Bidder.
(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 Paragraph ___ of the Certificate of Designation.
(e) "Authorized Officer" shall mean each Senior Vice President, Vice
President, Assistant Vice President, Fund Officer, and Assistant Secretary
and Assistant Treasurer 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 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) "Certificate of Designation" shall mean the Certificate of
Designation of the Fund, establishing the powers, preferences and rights of
the AMPS, filed on _________, 1997 in the Office of the Secretary of State
of the Commonwealth of Massachusetts.
(h) ""Fund Officer" shall mean the Chairman and Chief Executive
Officer, 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 notice from the
Fund to the Auction Agent.
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(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) "Settlement Procedures" shall mean the Settlement Procedures
attached as Exhibit A to the Broker-Dealer Agreement.
1.3. Rules of Construction.
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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.
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2.1. Purpose; Incorporation by Reference of Auction
Procedures and Settlement Procedures.
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(a) The Certificate of Designation provides that the Applicable Rate
on shares of each series of AMPS, as the case may be, 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 implementation of the Auction
Procedures. The Board of Trustees of the Fund has adopted a resolution
appointing IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company 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 therefor. Each periodic operation of such procedures is
hereinafter referred to as an "Auction."
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(b) All of the provisions contained in the Auction Procedures and in
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 set forth fully herein.
2.2. Preparation for Each Auction; Maintenance
of Registry of Existing Holders.
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(a) Pursuant to Section 2.5 hereof, the Fund shall not designate any
Person to act as a Broker-Dealer without the prior written approval of the
Auction Agent (which approval shall not be withheld unreasonably). 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 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 purchasing 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) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent shall have given the notice referred to in
clause (vii) of Paragraph (a) of the Settlement Procedures, the Auction
Agent, by such means as the Auction Agent deems practicable, shall give
notice of such change to the Broker-Dealers not later than the earlier of
9:15 A.M. on the new Auction Date or 9:15 A.M. on the old Auction Date.
(c) The provisions contained in paragraph _____ of the Certificate of
Designation 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.
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(d)(i) Except as otherwise provided in paragraph _____ of the
Certificate of Designation, whenever the Fund intends to include any net
capital gains or other income subject to regular Federal income tax in any
dividend on AMPS, the Fund will notify the Auction Agent of the amount to
be so included at least five Business Days prior to the Auction Date on
which the Applicable Rate for such dividend is to be established. Whenever
the Auction Agent receives such notice from the Fund, in turn it will
notify each Broker-Dealer, who, on or prior to such Auction Date, in
accordance with its Broker-Dealer Agreement, will notify its Beneficial
Owners and Potential Beneficial Owners believed to be interested in
submitting an Order in the Auction to be held on such Auction Date.
Whenever the Fund includes any additional amounts in a dividend as provided
in paragraph _____ of the Certificate of Designation, the Fund will notify
the Auction Agent of such additional amounts to be so included in such
dividend at least five Business Days prior to the applicable Dividend
Payment Date. Whenever the Auction Agent receives such notice from the
Fund, in turn it will notify the Securities Depository and each Broker-
Dealer, who, on or prior to the applicable Dividend Payment Date, in
accordance with its Broker-Dealer Agreement, will notify its Beneficial
Owners.
(ii) If the Fund makes a Retroactive Taxable Allocation, the Fund,
within 90 days (and generally within 60 days) after the end of its fiscal
year for which a Retroactive Taxable Allocation is made, will provide
notice thereof to the Auction Agent and to each Holder (initially the
Securities Depository) during such fiscal year at such Holder's address as
the same appears or last appeared on the share books of the Fund. The
Fund, within 30 days after such notice is given to the Auction Agent, will
pay to the Auction Agent (who then will distribute to such Holders), out of
funds legally available therefor, a cash amount equal to the aggregate
Additional Dividend with respect to all Retroactive Taxable Allocations
made to such Holders during the fiscal year in question.
(e)(i) On each Auction Date, the Auction Agent shall determine the
Reference Rate and the Maximum Applicable Rate. If the Reference Rate is
not quoted on an interest basis but is quoted on a discount basis, the
Auction Agent shall convert the quoted rate to an Interest Equivalent, as
set forth in paragraph _____ of the Certificate of Designation; or, if the
rate obtained by the Auction Agent is not quoted on an interest or discount
basis, the Auction Agent shall convert the quoted rate to an interest rate
after consultation with the Fund as to the method of such conversion. Not
later than 9:30 A.M. on each Auction Date, the Auction Agent shall notify
the Fund and the Broker-
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Dealers of the Reference Rate so determined and of the Maximum Applicable
Rate.
(ii) If the Reference Rate is the applicable "AA" Composite
Commercial Paper Rate and such 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 the applicable "AA"
Composite Commercial Paper Rate, the Auction Agent immediately shall notify
the Fund so that the Fund 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 Fund promptly shall advise the
Auction Agent of any such selection. If the Fund does not select any such
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers,
then the rates shall be supplied by the remaining Commercial Paper Dealer
or Commercial Paper Dealers.
(iii) If, after the date of this Agreement, there is any change in
the prevailing rating of AMPS by either of the rating agencies (or
substitute or successor rating agencies) referred to in the definition of
the Maximum Applicable Rate, thereby resulting in any change in the
corresponding applicable percentage for the AMPS, as set forth in said
definition (the "Percentage"), the Fund shall notify the Auction Agent in
writing of such change in the Percentage prior to 9:00 A.M. on the Auction
Date for AMPS next succeeding such change. The Percentage for the AMPS on
the date of this Agreement is as specified in paragraph ______ of the
Certificate of Designation. The Auction Agent shall be entitled to rely on
the last Percentage of which it has received notice from the Fund (or, in
the absence of such notice, the Percentage set forth in the preceding
sentence) in determining the Maximum Applicable Rate as set forth in
Section 2.2(e)(i) hereof.
(f)(i) The Auction Agent shall maintain a current registry of the
Existing Holders of the shares of each series of AMPS for purposes of each
Auction. The Fund shall use its best 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 each series of
AMPS, and the Broker-Dealer of each such Existing Holder through which such
Existing Holder purchased such shares. The Auction Agent may 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.
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(ii) In the event of any partial redemption of any series of AMPS, upon
notice 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 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, and at least two Business Days prior to
the Auction preceding the date of redemption with respect to shares of the
series being partially redeemed, 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 shares of such series 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 shares of the series of AMPS shown in the Auction Agent's
registry of Existing Holders.
(iii) The Auction Agent shall register a transfer of the ownership
of shares of a series of AMPS from an Existing Holder to another Existing
Holder, or to another Person if permitted by the Fund, only if (A) such
transfer is made pursuant to an Auction or (B) 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 C
to the Broker-Dealer Agreements, 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 applicable 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 D to the Broker-Dealer Agreement, 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.
(g) The Auction Agent may request that the Broker Dealers, as set
forth in Section 3.2(c) of the Broker-Dealer Agreements, provide the
Auction Agent with a list of their
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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 that the Auction
Agent reserves the right to disclose any such information if it is advised
by its counsel that its failure to do so would be unlawful.
2.3. Auction Schedule.
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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 Fund, which consent shall not be withheld unreasonably. The
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 A.M. Auction Agent advises the Fund and the Broker-
Dealers of the Reference Rate and the Maximum
Applicable Rate as set forth in Section 2.2(e)(i)
hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Paragraph
_____ of the Certificate of Designation.
Submission deadline is 1:00 P.M.
Not earlier than Auction Agent makes determinations
1:00 P.M. pursuant to Paragraph ______ of the Certificate of
Designation.
By approximately Auction Agent advises the Fund
3:00 P.M. of the results of the Auction as provided in
Paragraph ______ of the Certificate of
Designation.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part and AMPS
are allocated as provided in Paragraph _____ of
the Certificate of Designation.
Auction Agent gives notice of
the Auction results as set
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forth in Section 2.4 hereof.
2.4. Notice of Auction Results.
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On each Auction Date, the Auction Agent shall notify Broker-Dealers of the
results of the Auction held on such date 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.
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(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 7-Day Dividend Period or 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 a Existing Holder or a Potential Beneficial Owner to participate
in Auctions through any Person other than 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 ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated 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 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.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
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2.6. Ownership of AMPS and Submission of Bids
by the Fund and its Affiliates.
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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 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, 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.
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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. The Auction Agent shall maintain
records relating to any Auction for a period of two years after such Auction
(unless requested 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, provided that 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
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unlawful or (ii) expose it to liability, unless the Broker-Dealer shall have
offered indemnification satisfactory to such agent, accountant or counsel.
III. THE AUCTION AGENT AS PAYING AGENT.
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3.1. The Paying Agent.
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The Board of Trustees of the Fund has adopted a resolution appointing IBJ
▇▇▇▇▇▇▇▇ Bank & Trust Company as transfer agent, registrar, dividend disbursing
agent and redemption agent for the Fund in connection with any AMPS (in such
capacity, the "Paying Agent"). The Paying Agent hereby accepts such appointment
and agrees to act in accordance with its standard procedures and the provisions
of the Certificate of Designation 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.
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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 Fund to
each Holder at least five Business Days prior to the date such Notice of
Redemption is required to be mailed pursuant to the Certificate of Designation.
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,
Redemptions and Additional Dividends.
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(a) Not later than 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 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 instructions and authority to pay the redemption
price to the Holders of AMPS called for redemption upon surrender of the
certificate or certificates therefor.
(c) If the Fund provides notice to the Auction Agent of a Retroactive
Taxable Allocation, the Fund, within 30
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days after such notice is given and by noon of the date fixed for payment
of an Additional Dividend, shall deposit in trust with the Paying Agent an
aggregate amount of Federal Funds or similar same-day funds equal to such
Additional Dividend and shall give the Paying Agent irrevocable
instructions and authority to pay the Additional Dividend to Holders (or
former Holders) entitled thereto.
3.4. Disbursing Dividends, Redemption Price
and Additional Dividends.
--------------------------------------
After receipt of the Federal Funds or similar same-day funds and
instructions from the Fund described in Sections 3.3(a), (b) and (c) above, the
Paying Agent shall pay to the Holders (or former Holders) entitled thereto (i)
on each corresponding Dividend Payment Date, dividends on the AMPS, (ii) on any
date fixed for redemption, the redemption price of any AMPS called for
redemption and (iii) on the date fixed for payment of an Additional Dividend,
such Additional Dividend. 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 Paragraph _____ of the Certificate of Designation. The redemption price to
be paid by the Paying Agent to the Holders of any AMPS called for redemption
will be determined as set forth in Paragraph ______ of the Certificate of
Designation. The amount of Additional Dividends to be paid by the Paying Agent
in the event of a Retroactive Taxable Allocation to Holders will be determined
by the Fund pursuant to paragraph ______ of the Certificate of Designation. The
Fund shall notify the Paying Agent in writing of a decision to redeem any AMPS
on or prior to the date specified in Section 3.2 above, and such notice by the
Fund to the Paying Agent shall contain the information required to be stated in
a Notice of Redemption required to be mailed by the Fund to such Holders. The
Paying Agent shall have no duty to determine the redemption price and may rely
on the amount thereof set forth in a Notice of Redemption.
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IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
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4.1. Original Issue of Share Certificates.
------------------------------------
On the Date of Original Issue for any AMPS, one certificate for each 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.
The Fund will give the Auction Agent prior written notice and instruction as to
the issuance and redemption of AMPS.
4.2. Registration of Transfer or Exchange of Shares.
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Except as provided in this Section 4.2, the shares of each series of 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 shares of each series of AMPS, at the Fund's request, may
be registered for transfer or exchange, and new certificates 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 properly endorsed for
transfer with (a) all necessary endorsers' signatures guaranteed in such manner
and form as the Paying Agent may require by a guarantor reasonably believed by
the Paying Agent to be responsible, (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 or certificates for AMPS are 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.
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4.4. Lost, Stolen or Destroyed Share Certificates.
--------------------------------------------
The Paying 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 Fund and
by the Paying Agent, subject at all times to provisions of law, the By-Laws of
the Fund governing such matters and resolutions adopted by the Fund with respect
to lost, stolen or destroyed securities. The Paying Agent may issue new
certificates in exchange for and upon the cancellation of mutilated
certificates. 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 By-Laws and
resolutions of the Fund.
4.5. Disposition of Canceled Certificates;
Record Retention.
-------------------------------------
The Paying Agent shall retain share 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 for
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 request by the Fund at any time 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 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 Securities and Exchange Commission. The Fund also shall undertake to
furnish to the Securities and Exchange Commission, upon demand, either at their
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. Share Register.
--------------
The Paying Agent shall maintain the share 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
14
shall record in the share register any change of address of a Holder upon 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 share 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 under
this Agreement, including for the payment of dividends or the redemption of
shares of any series 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 voluntary
association (commonly referred to as a business trust) in good standing
under the laws of the Commonwealth of Massachusetts, 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 Securities and Exchange Commission
under the Investment Company Act of 1940, as amended, 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 as to such enforceability to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles;
(iv) the forms of the certificates evidencing the shares of each
series of AMPS comply with all applicable laws of the Commonwealth of
Massachusetts;
15
(v) the shares of each series of AMPS have been duly and validly
authorized by the Fund and, upon completion of the initial sale of the
shares of such series of AMPS and receipt of payment therefor, will be
validly issued, fully paid and nonassessable;
(vi) at the time of the offering of the shares of each series of AMPS,
the shares offered will be 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 this Agreement or will be
required in connection with the issuance of the AMPS, except such action as
required by applicable state securities or insurance laws, all of which
action will have been taken;
(vii) the execution and delivery of this Agreement and the issuance and
delivery of the shares of each series of 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 Declaration of Trust or
the By-Laws of the Fund, any law or regulation applicable to the Fund, 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
shares of each series of AMPS.
5.2. Representations and Warranties of the Auction Agent.
---------------------------------------------------
The Auction Agent represents and warrants to the Fund that 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.
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 except as provided by this
Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in
16
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.
6.2. 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 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 upon any telephone communication authorized hereby which
the Auction Agent 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
written 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. 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.
6.3. Auction Agent's Disclaimer.
--------------------------
The Auction Agent makes no representation as to the validity or the
adequacy of this Agreement, the Broker-Dealer Agreements or the AMPS.
17
6.4. 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 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 negligence or bad faith.
(c) The Fund 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 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
negligence or bad faith.
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, provided that if
any AMPS remain outstanding the Fund shall have entered into an agreement
in substantially the form of this 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. If the Auction Agent resigns
while any AMPS remain 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.
18
(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 and 6.4 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
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
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, MuniHoldings Florida Insured Fund
addressed to: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Auction IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company
Agent, addressed to: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Auction Window
Subcellar 1
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 the Fund by a Fund
19
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 inferred,
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 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 of any change in
the Certificate of Designation prior to the effective date of any such
change. If any such change in the Certificate of Designation materially
increases the Auction Agent's obligations hereunder, the Fund shall obtain
the written consent to 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
20
section shall not affect any of the remaining clauses, provisions or sections
hereof.
7.8 Liability of Shareholders, Trustees and Officers.
-------------------------------------------------
This agreement is executed by and on behalf of the trustees of the Fund
solely in their capacity as such trustees, and shall not constitute their
personal obligation, either jointly or severally, in their individual
capacities. No trustee, officer or shareholder of the Fund shall be liable for
any obligations of the Fund under this instrument and the Fund shall be solely
liable therefor; all parties hereto shall look solely to the fund estate for the
payment of any claim, or the performance of any obligation, hereunder.
7.9 Execution in Counterparts.
-------------------------
This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.
7.10 Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State.
21
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.
MUNIHOLDINGS FLORIDA INSURED FUND
By: _______________________________
Title:
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY
By: _______________________________
Title:
22
