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AUCTION AGENT AGREEMENT
between
THE NEW AMERICA HIGH INCOME FUND, INC.
and
BANKERS TRUST COMPANY
Dated as of May __, 1997
Relating to
Auction Term Preferred Stock
of
THE NEW AMERICA HIGH INCOME FUND, INC.
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
1. Definitions and Rules of Construction............................................................1
1.1 Terms Defined by Reference to ATP Provisions............................................1
1.2 Terms Defined Herein....................................................................1
1.3 Rules of Construction...................................................................2
2. The Auction......................................................................................3
2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement
Procedures..............................................................................3
2.2 Preparation of Each Auction; Maintenance of Registry of Beneficial Owners...............3
2.3 Information Concerning Rates............................................................5
2.4 Auction Schedule........................................................................6
2.5 Designation of Dividend Period..........................................................7
2.6 Notice of Auction Results...............................................................8
2.7 Broker-Dealers..........................................................................8
2.8 Ownership of ATP........................................................................8
2.9 Access to and Maintenance of Auction Records............................................8
2.10 Dividend and Redemption Price Deposit...................................................9
3. The Auction Agent as Dividend and Redemption Price Disbursing Agent..............................9
4. The Auction Agent as Transfer Agent and Registrar................................................9
4.1 Issue of Share Certificates.............................................................9
4.2 Registration of Transfer of Shares......................................................9
4.3 Removal of Legend on Restricted Shares..................................................9
4.4 Lost Share Certificates................................................................10
4.5 Disposition of Canceled Certificates; Record Retention.................................10
4.6 Share Transfer Books...................................................................10
4.7 Return of Funds........................................................................10
5. Representations and Warranties of the Fund......................................................11
6. The Auction Agent...............................................................................12
6.1 Duties and Responsibilities............................................................12
6.2 Rights of the Auction Agent............................................................12
6.3 Auction Agent's Disclaimer.............................................................13
(i)
Page
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6.4 Compensation, Expenses and Indemnification.............................................13
7. Miscellaneous...................................................................................13
7.1 Term of Agreement......................................................................13
7.2 Communications.........................................................................14
7.3 Entire Agreement.......................................................................15
7.4 Benefits...............................................................................15
7.5 Amendment; Waiver......................................................................15
7.6 Successors and Assigns.................................................................15
7.7 Severability...........................................................................15
7.8 Execution in Counterparts..............................................................15
7.9 Governing Law..........................................................................16
(ii)
EXHIBITS
--------
EXHIBIT A - Form of Broker-Dealer Agreement
EXHIBIT B - Form of Master Purchaser's Letter
EXHIBIT C - Settlement Procedures
EXHIBIT D - Form of ATP Provisions
EXHIBIT E - Form of Notice of Auction Dates
EXHIBIT F - Form of Notice of Proposed Designation of Alternate Term Period
EXHIBIT G - Form of Notice of Designation of Alternate Term Period
EXHIBIT H - Form of Notice of Determination Not to Designate Alternate Term
Period
(iii)
AUCTION AGENT AGREEMENT dated as of May __, 1997 between THE NEW
AMERICA HIGH INCOME FUND, INC., a Maryland corporation (the "Fund"), and BANKERS
TRUST COMPANY, a New York banking corporation (the "Auction Agent").
WHEREAS, the Fund has issued two series of preferred stock, par value
$1.00 per share, liquidation preference $50,000 per share, designated Auction
Term Preferred Stock, Series A ("ATP Series A"), and Auction Term Preferred
Stock, Series B ("ATP Series B"); proposes to issue an additional series of
preferred stock, par value $1.00 per share, liquidation preference $25,000,
designated Auction Term Preferred Stock, Series C ("ATP Series C") and may in
the future designate additional series of Auction Term Preferred Stock (together
with the ATP Series A, ATP Series B, and ATP Series C, referred to as the "ATP")
pursuant to the ATP Provisions (as hereinafter defined), and desires that the
Auction Agent perform certain duties in connection with the ATP upon the terms
and subject to the conditions of this Agreement, and hereby appoints the Auction
Agent to act in the capacities set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to ATP Provisions. Capitalized terms not
defined herein shall have the respective meanings specified in the ATP
Provisions.
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.
(b) "ATP Provisions" shall mean the Articles Supplementary
designating the ATP Series A, ATP Series B, ATP Series C, and any additional
series of Auction Term Preferred Stock as may be designated at some future time,
and establishing the rights and preferences thereof pursuant to the Articles of
Incorporation, as amended, attached hereto as Exhibit D.
(c) "Auction" shall have the meaning specified in Section 2.1
hereof.
(d) "Auction Procedures" shall mean the auction procedures
constituting Part II of the ATP Provisions.
(e) "Authorized officer" shall mean each Senior Vice
President, 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 hereof in a
communication to the Fund.
(f) "Broker-Dealer" shall mean any broker-dealer, commercial
bank or other entity permitted by law to perform the functions of a
Broker-Dealer that is a member of or a participant in, the Securities Depository
or is an affiliate of such member or participant, has been selected by the Fund
and has entered into a Broker-Dealer Agreement that remains effective.
(g) "Broker-Dealer Agreement" shall mean each agreement
between the Auction Agent as agent for the Fund and a Broker-Dealer
substantially in the form attached hereto as Exhibit A.
(h) "Existing Holder" means (a) a person who has signed a
Master Purchaser's Letter and beneficially owns shares of a series of ATP listed
in that person's name in the records of the Auction Agent or (b) the beneficial
owner of shares of a series of ATP which are listed under such person's
Broker-Dealer's name in the records of the Auction Agent, which Broker-Dealer
shall have signed a Master Purchaser's Letter.
(i) "Fund Officer" shall mean the Chairman of the Board of
Directors of the Fund, 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 to the Auction
Agent.
(j) "Master Purchaser's Letter" means a letter substantially
in the form of or containing provisions similar to those in the form attached
hereto as Exhibit B which is required to be executed by (1) each prospective
purchaser of shares of a series of the ATP or (2) the Broker-Dealer through whom
such shares will be held.
(k) "Person" means and includes an individual, a partnership,
a corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(l) "Potential Holder," when used with respect to shares of a
series of the ATP, means any person, including any Existing Holder of shares of
such series, (i) who shall have executed a Master Purchaser's Letter or whose
shares will be listed under such person's Broker-Dealer in the records of the
Auction Agent, which Broker-Dealer shall have executed a Master Purchaser's
Letter, and (ii) who may be interested in acquiring shares of such series (or,
in the case of an Existing Holder or such person, additional shares of such
series).
(m) "Settlement Procedures" shall mean the Settlement
Procedures attached hereto as Exhibit C.
(n) "Underwriter" shall mean Xxxxxx Brothers Inc. and any
other person named as an underwriter of the ATP in the Underwriting Agreement or
any schedule thereto.
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(o) "Underwriting Agreement" shall mean the Underwriting
Agreement dated May __, 1997 among the Fund, the Underwriter and the Adviser.
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.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The ATP Provisions provide that the Applicable Rate per
annum for each series of ATP for each Dividend Period after the Initial Dividend
Period with respect to each series of ATP shall, except under certain
conditions, be equal to the rate per annum that a bank or trust company
appointed by the Fund advises has resulted on the Business Day preceding the
first day of such Dividend Period from implementation of the Auction Procedures
for such series. Each periodic implementation of the Auction Procedures is
hereinafter referred to as an "Auction." The Board of Directors has adopted a
resolution appointing Bankers Trust Company as Auction Agent for purposes of the
Auction Procedures for each series of the ATP. The Auction Agent accepts such
appointment and agrees to follow the procedures set forth in this Section 2 and
the Auction Procedures for the purpose of determining the Applicable Rate for
each series of ATP for each Dividend Period thereof for which the Applicable
Rate is to be determined by 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 of Each Auction; Maintenance of Registry of Beneficial
Owners.
(a) Not later than seven days prior to the first Auction Date
for any series of ATP, the Fund shall provide the Auction Agent with a list of
the Broker-Dealers and a
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manually signed copy of each Broker-Dealer Agreement for execution by the
Auction Agent. Not later than seven days prior to any Auction Date for any
series of ATP for which any change in such list of Broker-Dealers is to be
effective, the Fund 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 Fund proposes to designate any Alternate Term Period of any series of ATP
pursuant to Section 4 of Part I of the ATP Provisions, not later than 11:00
A.M., New York City time, on the Business Day next-preceding the Auction next
preceding the first day of such Alternate Term Period, upon the written request
of the Auction Agent, the Fund 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 the 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 and the Fund 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 ATP
shall be changed after the Auction Agent shall have given the notice referred to
in clause (vii) of paragraph (a) of the Settlement Procedures, or after the
notice referred to in Section 2.5(a) hereof, if applicable, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of such
change to the Broker-Dealers for such series 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) (i) The Auction Agent shall maintain a registry of the
beneficial owners of the shares of each series of ATP who shall constitute
Existing Holders of shares of such series of ATP for purposes of Auctions and
shall indicate thereon the identity of the respective Broker-Dealer of each
Existing Holder, if any, 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 shares of such series of ATP. The Auction Agent shall keep
such registry current and accurate. The Fund shall provide or cause to be
provided to the Auction Agent at or prior to the Date of Original Issue of each
series of ATP a list of the initial Existing Holders of the shares of each such
series, 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. At the request of
the Fund, the Auction Agent shall advise the Fund in writing as to whether the
number of Existing Holders is 500 or more or any Existing Holder owns 5% or more
of the outstanding shares of any series of ATP. The Auction Agent may rely upon,
as conclusive evidence of the identities of the Existing Holders of shares of
any series of ATP, (A) such list, (B) the results of Auctions and (C) notices
from any Existing Holder, the Agent Member of any Existing Holder or the
Broker-Dealer of any Existing Holder as described in the first sentence of
Section 2.2(c)(iii) hereof.
4
(ii) In the event of any partial redemption of any
series of ATP, the Auction Agent shall, at least two Business Days prior to the
next Auction for such series, request the Agent Member of each Existing Holder
of shares of ATP of such series to disclose to the Auction Agent (upon selection
by such Agent Member of the Existing Holders whose shares of ATP of such series
are to be redeemed) the number of shares of ATP of such series, if any, of such
Existing Holder which are subject to such redemption, provided the Auction Agent
has been furnished with the name and telephone number of a person or department
at such Agent Member from which it shall request such information. Upon any
refusal of an Agent Member to release such information, the Auction Agent shall
deliver to such Agent Member a facsimile copy of the Existing Holder's Master
Purchaser's Letter, which authorizes and instructs such Agent Member to release
such information to the Auction Agent. 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 the beneficial owner of the number of shares of ATP of such series
shown in the Auction Agent's registry.
(iii) The Auction Agent shall be required to register
a transfer of shares of ATP of any series from an Existing Holder of such shares
of ATP to another Person only if such transfer is made to a Person that has
delivered, or on whose behalf has been delivered, a signed Master Purchaser's
Letter to the Auction Agent and if (A) such transfer is pursuant to an Auction
or (B) the Auction Agent has been notified in writing (I) in a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreement by such
Existing Holder, the Agent Member of such Existing Holder or the Broker-Dealer
of such Existing Holder of such transfer or (II) in a notice substantially in
the form of Exhibit E to the Broker-Dealer Agreement by the Broker-Dealer of any
Person that purchased or sold such ATP in an Auction of the failure of such
shares of ATP to be transferred as a result of such Auction. The Auction Agent
is not required to accept any such notice for an Auction unless it is received
by the Auction Agent by 3:00 P.M. on the Business Day preceding such Auction.
(iv) The Auction Agent is not required to accept the
Master Purchaser's Letter of any Potential Holder who wishes to submit a Buy
Order for the first time in an Auction or of any Potential Holder or Existing
Holder who wishes to amend its Master Purchaser's Letter unless such letter or
amendment is received by the Auction Agent by 3:00 P.M. on the Business Day
preceding such Auction.
(d) The Auction Agent may request the Broker-Dealers, as set
forth in the Broker-Dealer Agreement, to provide the Auction Agent with a list
of their respective customers that such Broker-Dealers believe are Existing
Holders of shares of any series of ATP. The Auction Agent shall keep
confidential such registry of Existing Holders and shall not disclose the
identities of the Existing Holders of such shares of ATP to any Person other
than the Fund and the Broker-Dealer that provided such information.
5
2.3 Information Concerning Rates.
(a) On each Auction Date, the Auction Agent shall determine
the AA Composite Commercial Paper Rate or the Treasury Index Rate, as the case
may be, and the Maximum Applicable Rate. if the AA Composite Commercial Paper
Rate or the Treasury Index Rate, as the case may be, is not quoted on an
interest basis, if the rate obtained by the Auction Agent is quoted on a
discount basis, or if the rate obtained by the Auction Agent is quoted on
another 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-Dealers of the Maximum Applicable Rate so determined and the
AA Composite Commercial Paper Rate or the Treasury Index Rate, as the case may
be, used to make such determination.
(b) If any AA 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
Composite Commercial Paper Rate, the Auction Agent shall immediately notify the
Fund so that the Fund can determine whether to subject 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 shall promptly advise the Auction Agent of any such selection.
(c) If any Treasury Index Rate is to be based on rates
supplied by U.S. Government Securities Dealers and one or more of the U.S.
Government Securities Dealers shall not provide a quotation for the
determination of such Treasury Rate, the Auction Agent shall immediately notify
the Fund so that the Fund can determine whether to select a Substitute U.S.
Government Securities Dealer or Substitute U.S. Government Securities Dealers to
provide the quotation or quotations not being supplied by any U.S. Government
Securities Dealers. The Fund shall promptly advise the Auction Agent of any such
selection.
2.4 Auction Schedule. The Auction Agent shall conduct Auctions for each
series of ATP in accordance with the schedule set forth below. Such schedule may
be changed by the Auction Agent with the consent of the Fund, which consent
shall not be unreasonably withheld or delayed. The Auction Agent shall give
written notice of any such change to each Broker-Dealer. Such notice shall be
given prior to the close of business on the Business Day next preceding the
first Auction Date on which any such change shall be effective.
Time Event
By 9:30 A.M. Auction Agent advises the Fund and
Broker-Dealers of the Maximum Applicable Rate
and the Reference Rate(s), used in determining
such Maximum Applicable Rate as set forth in
Section 2.3(a) hereof, with respect to each
series of ATP.
6
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Section
4(a) of the Auction Procedures. Submission
Deadline 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent makes determination pursuant to
Section 5(a) of the Auction Procedures.
By approximately 3:00 P.M. Auction Agent advises Fund of results of Auction
as provided in Section 5(b) of the Auction
Procedures. Submitted Orders are accepted and
rejected and shares of ATP of the respective
Series allocated as provided in Section 6 of the
Auction Procedures. Auction Agent gives notice
of Auction results as set forth in Paragraph (a)
of the Settlement Procedures.
2.5 Designation of Dividend Period.
(a) The ATP Provisions provide that, subject to the Fund's
option to designate an Alternate Term Period as referred to in paragraph (b) of
this Section 2.5, (i) the Dividend Period (other than the initial Dividend
Period) for each series of ATP will be a Standard Term Period. Any such
designation of an Alternate Term Period shall be effective only if (i) notice
thereof shall have been given as provided herein, (ii) any failure to pay in a
timely manner to the Auction Agent the full amount of any dividend on, or the
redemption price of, the ATP shall have been cured, (iii) Sufficient Clearing
orders shall have existed in an Auction held on the Auction Date immediately
preceding the first day of such proposed Dividend Period other than a Standard
Term Period, (iv) if the Fund shall have mailed a Notice of Redemption with
respect to any shares, the Redemption Price with respect to such shares shall
have been deposited with the Auction Agent, and (v) in the case of an Alternate
Term Period, the Fund has provided notice and an ATP Basic Maintenance Report to
Fitch (if Fitch is then rating the ATP) and Moody's (if Xxxxx'x is then rating
the ATP).
(b) Pursuant to the ATP Provisions, the Fund may, at its
option, designate an Alternate Term Period for any series of ATP in the manner
described below and in Section 4 of Part I of the ATP Provisions. If the Fund
proposes to designate any succeeding Alternate Term Period the Fund shall
deliver to the Auction Agent:
(i) A notice of such proposed Alternate Term Period
in the form of Exhibit F hereto not less than 15 nor more than 30 days prior to
the first day of such proposed Alternate Term Period. The Auction Agent on
behalf of the Fund shall deliver such notice by first-class mail, postage
prepaid, to each Existing Holder of shares of such series of ATP at the address
specified in such Existing Holder's Master Purchaser's Letter and to the
Broker-Dealers for such series as promptly as practicable after its receipt of
such notice from the Fund.
(ii) A notice in the form of Exhibit G hereto not
later than 3:00 P.M. on the second Business Day next preceding the first day of
such proposed Alternate Term Period, of either (x) its determination, subject to
certain conditions, to proceed with such Alternate Term Period, in which case
the Fund shall specify the terms of the Specific
7
Redemption Provisions, if any, or (y) its determination not to proceed with such
Alternate Period in which latter event the succeeding Dividend Period shall be a
Standard Term Period. The Auction Agent shall promptly deliver such notice to
the Broker-Dealers, but in no event later than 3:00 P.M. on the date of such
notice.
(iii) If the Fund fails to deliver either such notice
with respect to any designation of any proposed Alternate Term Period to the
Auction Agent by 3:00 P.M., New York City time, on the second Business Day next
preceding the first day of such proposed Alternate Term Period, the Fund shall
be deemed to have delivered a notice to the Auction Agent with respect to such
Dividend Period to the effect that it has determined not to proceed with the
designation of an Alternate Term Period, thereby resulting in a Standard Term
Period.
2.6 Notice of Auction Results. On each Auction Date for any series of
ATP, the Auction Agent shall notify Broker-Dealers of the results of the Auction
held on such date by telephone as set forth in paragraph (a) of the Settlement
Procedures.
2.7 Broker-Dealers.
(a) Not later than 12:00 Noon on each Auction Date for any
series of ATP, the Fund 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 2.8 of the Broker-Dealer Agreement for such series. The Auction Agent
shall apply such moneys as set forth in Section 2.8 of each such Broker-Dealer
Agreement.
(b) The Fund shall obtain the consent of the Auction Agent
prior to selecting any Person to act as a Broker-Dealer, which consent shall not
be unreasonably withheld.
(c) The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed by the Fund.
(d) Subject to the Auction Agent's having consented to the
selection of the relevant Broker-Dealer pursuant to Section 2.8(b) hereof, the
Auction Agent shall from time to time enter into such Broker-Dealer Agreements
with one or more Broker-Dealers as the Fund shall request, and shall enter into
such schedules to any such Broker-Dealer Agreements as the Fund shall request,
which schedules, among other things, shall set forth the series of ATP to which
such Broker-Dealer Agreement relates.
2.8 Ownership of ATP. The Fund shall notify the Auction Agent if the
Fund or any affiliate of the Fund acquires any shares of ATP of any series.
Neither the Fund nor any affiliate of the Fund shall submit any Order in any
Auction for ATP, except as set forth in the next sentence. Any Broker-Dealer
that is an affiliate of the Fund 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 Fund solely because
one or
8
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 Fund. The Auction Agent shall have no
duty or liability with respect to enforcement of this Section 2.8.
2.9 Access to and Maintenance of Auction Records. The Auction Agent
shall, upon the receipt of prior written notice from the Fund, afford to the
Fund access at reasonable times during normal business hours to all books,
records, documents and other information concerning the conduct and results of
Auctions. The Auction Agent shall maintain records relating to an Auction for a
period of six years after such Auction and such records shall, in reasonable
detail, accurately and fairly reflect the actions taken by the Auction Agent
hereunder.
2.10 Dividend and Redemption Price Deposit. The Fund shall pay to the
Auction Agent, not later than 12:00 noon, New York City time, (A) on the
Business Day next preceding any Dividend Payment Date for any series of ATP, in
funds available on such Dividend Payment Date in The City of New York, New York,
the full amount of any dividends to be paid on such Dividend Payment Date on any
share of such series, and (B) on the Business Day next preceding any redemption
date for any series of ATP in funds available on such redemption date for such
series in The City of New York, New York, the Redemption Price to be paid on
such redemption date for the shares of any such series after notice of
redemption is given as set forth in the ATP Provisions.
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 shares of ATP of any series (i) on each Dividend Payment Date for
such series, dividends on the shares of ATP of such series, (ii) an any date
fixed for redemption of shares of ATP 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 Fund with which to pay such dividends, Redemption Price
or late charge. The amount of dividends for any Dividend Period for any series
of ATP to be paid by the Auction Agent to the Holders of such shares of such
series will be determined by the Fund as set forth in Section 2 of Part I of the
ATP Provisions 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 Fund as
set forth in Section 3 of Part I of the ATP Provisions with respect to such
series. The Fund shall notify the Auction Agent in writing of a decision to
redeem shares of any series of ATP 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 paragraph (b) of Section 3 of Part I of the ATP Provisions. Such
notice by the Fund to the Auction Agent shall contain the information required
by paragraph (b) of Section 3 of Part I of the ATP Provisions to be stated in
the notice of redemption required to be mailed by the Auction Agent to such
Holders.
9
4. The Auction Agent as Transfer Agent and Registrar.
4.1 Issue of Share Certificates. Upon the Date of original Issue of
each series or ATP, one certificate representing all of the shares of each
series issued on such date shall be issued by the Fund and, at the request of
the Fund, 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 ATP
shall 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 shares of any series of ATP 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 Fund Officer authorizing the Auction Agent to remove the legend
on the basis of said opinion.
4.4 Lost Share Certificates. 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 Fund and the Auction 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 securities. The Auction
Agent may issue new certificates in exchange for and upon the cancellation of
mutilated certificates. Any request by the Fund 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 Fund to the Auction Agent that such
issuance will comply with such provisions of law and the By-Laws and resolutions
of the Fund.
4.5 Disposition of Canceled Certificates; Record Retention. The Auction
Agent shall retain all 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. Upon the expiration of this two-year period, the Auction Agent shall
deliver to the Fund the cancelled certificates and accompanying documentation.
The Fund also shall 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. Thereafter such
records shall not be destroyed by the Fund without the concurrence of the
Auction Agent.
4.6 Share Transfer Books. For so long as the Auction Agent, Bankers
Trust Company, is acting as the transfer agent for any series of ATP pursuant to
this Agreement, it shall maintain a share transfer book containing a list of the
Holders of the shares of each series of ATP, the number of shares of each series
held by such Holders and the address of each Holder. The Auction Agent shall
record in such share transfer books any change of address of a Holder upon
notice by such Holder. In case of any request or demand for the inspection of
10
the share transfer books of the Fund or any other books in the possession of the
Auction Agent, the Auction Agent will notify the Fund and secure instructions as
to permitting or refusing such inspection. The Auction Agent reserves the right,
however, to exhibit the share transfer books or other books to any Person in
case it is advised by its counsel that its failure to do so would be unlawful.
4.7 Return of Funds. Any funds deposited with the Auction Agent
hereunder by the Fund for any reason, including but not limited to redemption of
shares of ATP of any series, the remain unpaid after 90 days shall be repaid to
the Fund upon the written request of the Fund, together with interest, if any,
earned thereon.
5. Representations and Warranties of the Fund. The Fund represents and
warrants to the Auction Agent that:
(a) The Fund has been duly organized and is validly existing
as a corporation under the laws of the State of Maryland and has all necessary
corporate power and authority to execute and deliver this Agreement and to
authorize, create and issue the shares of each series of ATP;
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Fund and, assuming due authorization, execution
and delivery by the Auction Agent, constitutes the legal, valid and binding
obligation of the Fund subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium, receivership or similar laws, whether statutory or
decisional, relating to or affecting creditors' rights and to general equitable
principles (regardless of whether enforcement is sought in equity or at law);
(c) The form of the certificate evidencing the shares of ATP
complies with all applicable laws of the State of Maryland;
(d) The shares of ATP, when issued, delivered and paid for on
the Date of Original Issue as contemplated by the Underwriting Agreement, will
have been duly authorized, validly issued, fully paid and nonassessable, except
as provided under Maryland law;
(e) Assuming the Underwriter complies with its obligations
under the Underwriting Agreement and that the purchasers of the ATP comply with
their obligations in the Master Purchaser's Letters, no consent, authorization
or order of, or filing or registration with, any court, governmental agency or
official (except such as have been obtained and such as may be required under
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or under the blue sky or state securities laws) is required in
connection with the execution and delivery of this Agreement or the issuance of
the shares of the ATP; and
11
(f) The issuance and sale of the ATP, the execution, delivery
and performance of this Agreement, the compliance by the Fund with all
provisions hereof, and the consummation of the transactions contemplated hereby
or by the Underwriting Agreement or the Broker-Dealer Agreements, will not
conflict with, constitute a breach of any of the terms or provisions of, or a
default under, or result in the creation or imposition of any material lien,
charge or encumbrance upon any of the assets of the Fund pursuant to the terms
of any agreement, indenture or instrument to which the Fund is a party or by
which the Fund is bound, or result in a violation of the Articles of
Incorporation, ATP Provisions or By-Laws of the Fund or of any order, rule or
regulation of any court or governmental agency having jurisdiction over the Fund
or its property which conflict, breach, default, lien or violation, individually
or in the aggregate, would have a material adverse effect on the business,
financial position or results of operations of the Fund.
6. 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 other Person by reason of this
Agreement.
(b) The Auction Agent undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement and the
Broker-Dealer Agreements, and no implied covenants or obligations shall be read
into this Agreement against the Auction Agent.
(c) In the absence of bad faith or gross negligence on its
part, the Auction Agent shall not be liable for any action taken, suffered, or
omitted or for any effort of judgment made by it in the performance of its
duties under this Agreement except that the Auction Agent shall be liable for
any effort of judgment made in good faith if the Auction Agent shall have been
grossly negligent in ascertaining the pertinent facts.
(d) Any funds deposited with the Auction Agent hereunder by
the Fund for any reason, including the payment of dividends or the redemption of
shares of ATP of any series, that remain with the Auction Agent after 90 days
shall be repaid to the Fund as provided in Section 4.7 hereof.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
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 any Broker-Dealer. The
12
Auction Agent may record telephone communications with the Fund or with any
Broker-Dealer.
(b) The Auction Agent may consult with counsel reasonably
acceptable to the Fund 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 on the part of any agent or attorney
appointed by it with due care hereunder except as set forth above in Section
6.1(c).
6.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the validity or adequacy of this Agreement (except as to
the Auction Agent's duties hereunder and as to the due authorization, execution
and delivery of this Agreement), the Broker-Dealer Agreements (except as to the
Auction Agent's duties thereunder) or the shares of any series of ATP.
6.4 Compensation, Expenses and Indemnification.
(a) The Fund shall pay the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
the Broker-Dealer Agreements in such amounts as may be agreed to by the Fund and
the Auction Agent from time to time.
(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 the
Broker-Dealer Agreements (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any expense or disbursement
attributable to its gross 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 gross
negligence or bad faith on its part, arising out of or in connection with its
agency under this Agreement and the Broker-Dealer Agreements, including the
costs and expenses of defending itself against any claim or liability in
connection with its exercise or performance of its duties hereunder and
thereunder for which indemnification is provided by this subsection.
13
7. 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 any time by so notifying the Auction Agent in writing, provided that
the Fund has entered into an agreement in substantially the form of this
Agreement with a successor auction agent. The Auction Agent may terminate this
Agreement upon written notice to the Fund, such termination to be effective on
the earlier of (i) the date specified in such notice which shall not be earlier
than 90 days after the giving of such notice or (ii) the date on which a
successor trust company is appointed by the Fund pursuant to an agreement
containing substantially the same terms and conditions as this Agreement.
(b) Except as otherwise provided in this paragraph (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 obligations
under Section 6.4 hereof and its representations and warranties contained in
Section 5 hereof and the Auction Agent's obligations and liabilities under
Sections 2.9 and 4.5 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall, at the Fund's request,
promptly deliver to the Fund copies of all books and records maintained by it in
connection with its duties hereunder.
7.2 Communications. Except for (a) communications authorized to be by
telephone pursuant to this Agreement or the Auction Procedures and (b)
communications in connection with Auctions (other than those expressly required
to be in writing) and unless otherwise specified by the terms of this Agreement
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) given to such person at its
address or telecopy number set forth below:
14
If to the Company, addressed: The New America High Income Fund, Inc.
00 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
With a copy sent to:
Xxxx X. XxXxxxxx, P.C.
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to the Auction Agent, addressed: Bankers Trust Company
Four Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Auction Rate Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
or to such other address as the party to whom the communication is addressed
shall have previously communicated to the other party. Communications shall be
given on behalf of the Fund by a Fund Officer and on behalf of the Auction Agent
by an Authorized Officer. Communications shall be effective when received at the
proper address.
7.3 Entire Agreement. This Agreement contains the entire agreement
among 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. This Agreement supersedes terminates
all prior agreements between the parties including without limitation the
Auction Agent Agreement dated January 4, 1994.
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.
15
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged. The Fund shall notify the auction Agent and each Broker-Dealer of
any change in the Fund's Articles, prior to the effective date of any 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 rights or remedies 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 of each of
the Fund 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 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
7.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
16
IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent
Agreement to be duly executed and delivered by their proper authorized officers
as of the date first above written.
THE NEW AMERICA HIGH INCOME FUND,INC.
By: ________________________________
Name:
Title:
BANKERS TRUST COMPANY
By: _______________________________
Name:
Title:
17
EXHIBIT A
FORM OF BROKER-DEALER AGREEMENT
BROKER-DEALER AGREEMENT dated as of May __, 1997 between BANKERS TRUST
COMPANY (the "Auction Agent"), a New York banking corporation (not in its
individual capacity but solely as agent of The New America High Income Fund,
Inc. (the "Fund") pursuant to authority granted it in the Auction Agent
Agreement, and XXXXXX BROTHERS INC. (together with its successors and assigns,
the "BD") .
The Fund has currently issued two series of shares of Auction Term
Preferred Stock, par value $1.00 per share, liquidation preference $50,000 per
share, and proposes to designate a third series of shares of Auction Term
Preferred Stock, par value $1.00 per share, liquidation preference $25,000 per
share, pursuant to its Articles of Incorporation, as amended, and the Articles
Supplementary establishing each such series. In the event that the Fund
establishes one or more additional series of Auction Term Preferred Stock to
which it desires that this Agreement be applicable, the Fund shall so notify the
BD in writing. If the BD is willing to render such services on the terms
provided for herein, it shall notify the Fund in writing, whereupon such series
of Auction Term Preferred Stock (such series, together with the Auction Term
Preferred Stock then subject to this Agreement, the "ATP") shall become subject
to this Agreement.
The Articles Supplementary will provide that, for each Dividend Period
of any series of ATP then outstanding, the Applicable Rate for such series for
such Dividend Period shall, under certain conditions, be the rate per annum that
a bank or trust company appointed by the Fund advises results from
implementation of the Auction Procedures for such series. The Board of Directors
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures for each series of ATP
The Auction Procedures contemplate the participation of one or more
Broker-Dealers for each series of ATP.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein the Auction Agent and BD agree as follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Articles Supplementary. Capitalized
terms not defined herein shall have the respective meanings specified in the
Articles Supplementary.
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:
18
(a) "Articles Supplementary" shall mean the Articles
Supplementary authorizing the issuance of the relevant series of ATP filed by
the Fund with the office of the secretary of the State of Maryland.
(b) "Auction" shall have the meaning specified in Section 2.1
hereof.
(c) "Auction Agent Agreement" shall mean any Auction Agent
Agreement between the Fund and the Auction Agent relating to the ATP.
(d) "Auction Procedures" shall mean the auction procedures
constituting Part II of the Articles Supplementary.
(e) "Authorized Officer" shall mean each Senior Vice
President, Vice President, Assistant Vice President, Trust officer, Assistant
Treasurer and Assistant Secretary of the Auction Agent assigned to its Corporate
Trust and Agency Group and every other officer or employee of the Auction Agent
designated as an "Authorized Officer" for purposes of this Agreement in a
communication to the BD.
(f) "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.
(g) "Broker-Dealer Agreement" shall mean this Agreement and
any substantially similar agreement between the Auction Agent and a
Broker-Dealer.
(h) "Existing Holder" shall have the meaning set forth in the
Articles Supplementary, and for purposes of this Broker-Dealer Agreement and
with respect to the Auction Procedures as referred to in this Agreement, shall
also include, as the circumstances may require, a Person who is listed as the
beneficial owner of ATP in the records of a Broker-Dealer.
(i) "Master Purchaser's Letter" means a letter substantially
in the form of or containing provisions similar to those in the form attached
hereto as Exhibit A, which is required to be executed by (1) each prospective
purchaser of shares of ATP or (2) the Broker- Dealer through whom such shares
will be held.
(j) "Potential Holder" shall have the meaning set forth in the
Articles Supplementary, and for purposes of this Broker-Dealer Agreement and
with respect to the Auction Procedures as referred to in this Agreement, shall
also include, as the circumstances may require, any other Person, including any
Existing Holder of shares of ATP, who may be interested in acquiring shares of
ATP (or, in the case of an Existing Holder, additional shares of ATP).
(k) "Settlement Procedures" shall mean the Settlement
Procedures attached hereto as Exhibit B.
19
8.3 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 the
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.
2. The Auction.
2.1 Purposes; Incorporation by Reference of Auction Procedures
and Settlement Procedures.
(a) The provisions of the Auction Procedures will be followed
by the Auction Agent for the purposes of determining the Applicable Rate for any
Dividend Period of any series of ATP for which the Applicable Rate is to be
determined by an Auction. Each periodic operation of such procedures is
hereinafter referred to as an "Auction".
(b) All of the provisions contained in the Auction Procedures
and the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part hereof to the same extent as if such
provisions were fully set forth herein.
(c) Before any series of the ATP becomes subject to this
Broker-Dealer Agreement, the BD shall have delivered a Master Purchaser's Letter
executed by the BD. The BD agrees to act as, and assumes the obligations of, and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement
for each series of ATP. The BD shall act as the exclusive Broker-Dealer for the
Fund until the later of (i) January 30, 1998 and (ii) such date on which the
Fund appoints one or more additional Broker-Dealers. The BD understands that,
subject to the preceding sentence, other Persons meeting the requirements
specified in the definition of "Broker-Dealer" contained in the Auction
Procedures may execute Broker-Dealer Agreements and Master Purchaser's Letters
and participate as Broker-Dealers in Auctions.
2.2 Preparation of Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for the ATP,
the Auction Agent shall advise the Broker-Dealers for such series by telephone
of the Maximum
20
Applicable Rate therefor and the AA Composite Commercial Paper Rate(s) and the
Treasury Index Rate(s), as the case may be, used in determining the Maximum
Applicable Rate.
(b) In the event that any Auction Date for the ATP shall be
changed after the Auction Agent has given the notice referred to in clause (vi)
of paragraph (a) of the Settlement Procedures, or after the notice referred to
in Section 2.5(a) hereof, if applicable, the Auction Agent, by such means as the
Auction Agent deems practicable shall give notice of such change to the BD not
later than the earlier of 9:15 A.M. on the new Auction Date or 9:15 A.M. on the
old Auction Date. Thereafter, the BD shall notify customers of the BD who the BD
believes are Existing Holders of shares of ATP of such change in the Auction
Date.
(c) The Auction Agent from time to time may request the
Broker-Dealers to provide the Auction Agent with a list of their respective
customers that such Broker-Dealers believe are Existing Holders of shares of
ATP. BD shall comply with any such request, and the Auction Agent shall keep
confidential any such information so provided by BD and shall not disclose any
information so provided by BD to any Person other than the Fund and BD.
(d) The Auction Agent is not required to accept the Master
Purchaser's Letter of any Potential Holder who wishes to submit an Order for the
first time in an Auction or of any Potential Holder or Existing Holder who
wishes to amend its Master Purchaser's Letter unless such letter or amendment is
received by the Auction Agent by 3:00 P.M. on the Business Day preceding such
Auction.
2.3 Auction Schedule; Method of Submission of Order.
(a) The Fund and the Auction Agent shall conduct Auctions for
ATP in accordance with the schedule set forth below. Such schedule may be
changed by the Auction Agent with the consent of the Fund, which consent shall
not be unreasonably withheld or delayed. 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 preceding the first Auction
Date on which such change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises Fund and the
Broker-Dealers of the Maximum Applicable Rate
and the AA Composite Commercial Paper Rate(s)
and the Treasury Index Rate(s), as the case may
be, used in determining such Maximum Applicable
Rate as set forth in Section 2.2(a) hereof, with
respect to the relevant series of ATP.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as provided
21
in Section 4(a) of the Auction Procedures.
Submission Deadline is 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent makes
determination pursuant to
Section 5(a) of the Auction
Procedures.
By approximately 3:00 P.M. Auction Agent advises the Fund of results of
Auction as provided in Section 5(b) of the
Auction Procedures. Submitted Orders are
accepted and rejected and shares of ATP of the
respective series allocated as provided in
Section 6 of the Auction Procedures. Auction
Agent gives notice of Auction results as set
forth in Section 2.4(a) hereof.
(b) BD agrees to maintain a list of Potential Holders and to
contact the Potential Holders on such list whom the BD believes may be
interested in participating in the Auction on such Auction Date on or prior to
such Auction Date for the purposes set forth in the Auction Procedures. To the
extent required under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, BD shall deliver a Prospectus to each such
Potential Holder. BD agrees, upon the request of a Potential Holder, to deliver
to such Potential Holder either (i) a Prospectus with such legends or stamps
regarding non-reliance by Potential Holders of certain information therein
(other than with respect to information concerning the ATP and Settlement and
Auction Procedures) as XX xxxxx appropriate or (ii) the Fund's summary
description of the ATP and the Settlement Procedure and Auction Procedures.
(c) BD shall submit Orders to the Auction Agent in writing
substantially in the form attached hereto as Exhibit C. BD shall submit a
separate Order to the Auction Agent for each Potential Holder or Existing Holder
on whose behalf BD is submitting an Order and shall not net or aggregate the
Orders of different Potential Holders or Existing Holders on whose behalf BD is
submitting Orders.
(d) BD shall deliver to the Auction Agent (i) a written
notice, substantially in the form attached hereto as Exhibit D, of transfers of
shares of ATP made by or through BD by an Existing Holder to another Person
other than pursuant to an Auction and shall deliver or cause to be delivered the
related Master Purchaser's Letter executed by such Person if such Person will be
listed as the holder of such shares on the books of the Auction Agent and such
Person has not previously so delivered a Master Purchaser's Letter and (ii) a
written notice, substantially in the form attached hereto as Exhibit E, of the
failure of any shares of ATP to be transferred to or by any Person that
purchased or sold shares of ATP through BD pursuant to an Auction if such
Person's shares were to be or were listed in the Person's name on the books of
the Auction Agent. The Auction Agent is not required to accept any such
22
notice for an Auction unless it is received by the Auction Agent by 3:00 p.m.
on the Business Day preceding such Auction.
(e) BD and other Broker-Dealers which have delivered duly
executed Master Purchaser's Letters may submit Orders in Auctions for their own
accounts unless the Fund shall have notified BD and all other Broker-Dealers
that they may no longer do so, in which case Broker-Dealers may continue to
submit Hold Orders and Sell Orders for their own accounts.
(f) BD agrees to handle its customers' Orders in accordance
with its duties under applicable securities laws and rules.
(g) To the extent that pursuant to Section 6 of the Auction
Procedures, BD continues to hold, sells, or purchases a number of shares that is
fewer than the number of shares in an Order submitted by BD to the Auction Agent
on behalf of Existing or Potential Holders whose shares are or will be held in
BD's name, BD shall make appropriate pro rata allocations among such Existing or
Potential Holders. If as a result of such allocations, any Potential Holder
would be entitled or required to sell, or any Potential Holder would be entitled
or required to purchase, a fraction of a share of ATP on any Auction Date, BD
shall, in such manner as it shall determine in its sole discretion, round up or
down the number of shares of ATP to be purchased or sold on such Auction Date by
any Existing Holder or Potential Holder on whose behalf BD submitted an Order so
that the number of shares so purchased or sold by each such Existing Holder or
Potential Holder on such Auction Date shall be whole shares of ATP.
2.4 Notices of Auction Results.
(a) On each Auction Date for ATP, the Auction Agent shall
notify BD by telephone of he results of the Auction as set forth in paragraph
(a) of the Settlement Procedures. As soon as reasonably practicable, the Auction
Agent shall confirm to BD in writing the disposition of all Orders submitted by
BD in such Auction.
(b) BD shall notify each Existing Holder or Potential Holder
on whose behalf BD has submitted an Order as set forth in paragraph (a) of the
Settlement Procedures and take such other action as is required of BD pursuant
to the Settlement Procedures.
2.5 Designation of Alternate Term Period.
(a) If the Fund delivers to the Auction Agent a notice of the
Auction Date for any series of ATP for a Dividend Period thereof that next
succeeds a Dividend Period that is not a Standard Term Period in the form of
Exhibit E to the Auction Agent Agreement, the Auction Agent shall deliver such
notice to BD as promptly as practicable after its receipt of such notice from
the Fund.
23
(b) If the Board of Directors proposes to designate any
succeeding Dividend Period of any series of ATP as an Alternate Term Period and
the Fund delivers to the Auction Agent a notice of such proposed Alternate Term
Period in the form of Exhibit F to the Auction Agent Agreement, the Auction
Agent shall deliver such notice to BD as promptly as practicable after its
receipt of such notice from the Fund.
(c) If the Board of Directors determines to designate such
succeeding Dividend Period as an Alternate Term Period and the Fund delivers to
the Auction Agent a notice of such Period in the form of Exhibit G to the
Auction Agent Agreement not later than 3:00 p.m. on the second Business Day next
preceding the first day of such proposed Alternate Term Period, the Auction
Agent shall deliver such notice to BD not later than 3:00 p.m. on such Business
Day.
(d) If the Fund shall deliver to the Auction Agent a notice
not later than 3:00 p.m. on the second Business Day next preceding the first day
of any Dividend Period stating that the Fund has determined not to exercise its
option to designate such succeeding Dividend Period as an Alternate Term Period,
in the form of Exhibit H to the Auction Agent Agreement, or shall fail to timely
deliver either such notice or a notice in the form of Exhibit G to the Auction
Agent Agreement, the Auction Agent shall deliver a notice in the form of Exhibit
H to the Auction Agent Agreement to BD not later than 3:00 p.m. on such Business
Day.
2.6 Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date for any
series of ATP, the Auction Agent shall pay to BD from moneys received from the
Fund an amount equal to (a)(i) in the case of any Auction Date for any series of
ATP immediately preceding a Dividend Period of such series consisting of less
than one year, 1/4 of 1% unless otherwise advised by the Fund in writing or (ii)
in the case of any Auction Date immediately preceding a Dividend Period of such
series consisting of one year or more, a percentage agreed upon in writing by
the Fund and the Broker-Dealers times (b) a fraction, the numerator of which is
the number of days in the Dividend Period for such series beginning on such
Business Day and the denominator of which is 360, times (c) the liquidation
preference per share for such series times (d) the aggregate number of
Outstanding shares of such series placed by BD in such Auction (for this purpose
shares will be deemed placed by BD if such shares were (i) the subject of Hold
Orders deemed to have been made by Existing Holders and were acquired by such
Existing Holders through BD or (ii) the subject of an Order submitted by BD that
is (A) a Submitted Order of an Existing Holder that resulted in such Existing
Holder continuing to hold such shares as a result of the Auction or (B) a
Submitted Order of a Potential Holder that resulted in such Potential Holder
purchasing such shares as a result of the Auction or (C) a valid Hold Order;
provided that in the event an Auction scheduled to occur on an Auction Date
fails to occur for any reason while the ATP remains Outstanding, BD will be
entitled to service charges as if the Auction had occurred and all Holders of
shares placed by them submitted valid Hold Orders).
24
For purposes of subclause (d)(i) of the foregoing paragraph, if any
Existing Holder who acquired shares of any series of ATP through BD transfers
those shares to another Person other than pursuant to an Auction, then such
Existing Holder shall be deemed to have acquired such shares through BD unless
the transfer was affected by, or transferee is, a Broker-Dealer other than BD.
2.7 Settlement.
(a) If any Existing Holder on whose behalf the BD submitted a
Hold/Sell Order that was accepted as a Sell Order or a Sell Order that was
accepted, in either case, in whole or in part, fails to instruct its Agent
Member to deliver the shares of ATP with respect to which such Order was
accepted against payment therefor, the BD shall instruct such Agent Member to
deliver such shares against payment therefor. If (i) any Existing Holder on
whose behalf a Broker-Dealer other than the BD has submitted a Hold/Sell Order
that was accepted as a Sell Order or a Sell Order that was accepted, in either
case, in whole or in part, fails to instruct its Agent Member to so deliver the
shares of ATP with respect to which such Order was accepted against payment
therefor, (ii) such other Broker-Dealer fails to instruct such Existing Holder's
Agent Member to deliver such shares and (iii) such Existing Holder is identified
to BD by the Auction Agent as provided in Section (a) (v) of the Settlement
Procedures as an Existing Holder from whom a Potential Holder on whose behalf BD
submitted a Buy Order is to purchase such shares, BD may deliver to such
Potential Holder a number of shares of ATP that is less than the number of
shares of ATP to be purchased by such Potential Holder by the number of shares
to be purchased from such Existing Holder. Notwithstanding the foregoing terms
of this Section 2.7, any delivery or non-delivery of shares of ATP which
represents any departure from the results of an Auction for such series, as
determined by the Auction Agent, shall be of no effect unless and until the
Auction Agent shall have been notified of such delivery or non-delivery in
accordance with the terms of Section 2.3(d)(ii) hereof. The Auction Agent shall
have no duty or liability with respect to enforcement of this Section 2.7.
(b) Neither the Auction Agent nor the Fund shall have any
responsibility of liability with respect to the failure of an Existing Holder or
a Potential Holder or its Agent Member to deliver shares of ATP of any series or
to pay for shares of ATP of any series sold or purchased pursuant to the Auction
Procedures or otherwise.
3. The Auction Agent.
3.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any other Person, other than the Fund
by reason of this Agreement.
25
(b) The Auction Agent undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered, or omitted or
for any error of judgment made by it in the performance of its duties under this
Agreement. The Auction Agent shall not be liable for any error or judgment made
in good faith unless the Auction Agent shall have been negligent in ascertaining
the pertinent facts.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
in good faith by it to be genuine. The Auction Agent shall not be liable for
acting upon any telephone communication authorized by this Agreement which the
Auction Agent believes in good faith to have been given by the Fund or by a
Broker-Dealer. The Auction Agent may record telephone communications with the
Broker-Dealers.
(b) The Auction Agent may consult with counsel of its choice
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend
or risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder.
3.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the validity of adequacy of this Agreement, the Auction
Agent Agreement or the shares of ATP of any series.
4. Miscellaneous.
4.1 Termination. Either party may terminate this Agreement at any time
on five (5) days notice to the other party, provided that neither BD nor the
Auction Agent may terminate this Agreement without first obtaining prior written
consent of the Fund to such termination, which consent shall not be unreasonably
withheld. This Agreement shall automatically terminate upon the termination of
the Auction Agent Agreement.
4.2 Participant in Securities Depository. BD is, and shall remain for
the term of this Agreement, a member of, or participant in, the Securities
Depository (or an affiliate of such a member participant).
26
4.3 Communications. Except (i) communications authorized to be by
telephone by this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party, addressed to it, at its addressed or telecopy number set forth below:
If to BD, addressed: Xxxxxx Brothers Inc.
3 World Financial Center
000 Xxxxx Xxxxxx 0xx xxxxx
Xxx Xxxx, XX 00000-0000
If to the Auction Agent,
addressed: Bankers Trust Company
Four Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Auction Rate/Remarketed
Securities
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other parties. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
4.4 Entire Agreement. This Agreement contains the entire agreement
among the parties hereto relating to the subject matter hereof, and there are no
other representations, endorsements, promises, agreements or understandings,
oral, written or implied, among the parties hereto relating to the subject
matter hereof. This Agreement supersedes and terminates all prior Broker-Dealer
Agreements between the parties.
4.5 Benefits. Nothing in this Agreement, express or implied, shall
give to any person, other than the Fund, the Auction Agent, BD and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim hereunder.
4.6 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.
27
(b) Failure of any party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by any other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
4.7 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by, the respective successors and
assigns of each of the Auction Agent and BD. This Agreement may not be assigned
by either party hereto absent the prior written consent of the other party;
provided, however, that this Agreement may be assigned by the Auction Agent to a
successor Auction Agent selected by the Fund without the consent of BD.
4.8 Severability. If any clause, provision or section hereof shall be
ruled invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections thereof.
4.9 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
4.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in said State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
BANKERS TRUST COMPANY
By: _____________________________
Name:
Title:
XXXXXX BROTHERS INC.
By: _____________________________
Name:
Title:
28
EXHIBIT A
MASTER PURCHASER'S LETTER
Relating to
Securities Involving Rate Settings
Through Auctions or Remarketings
THE COMPANY
A REMARKETING AGENT
THE AUCTION AGENT
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS
Dear Sirs:
1. This letter is designed to apply to publicly or privately offered
debt or equity securities ("Securities") of any issuer ("Company") which are
described in any final prospectus or other offering materials relating to such
Securities as the same may be amended or supplemented (collectively, with
respect to the particular Securities concerned, the "Prospectus") and which
involve periodic rate settings through auctions ("Auctions") or procedures
("Remarketings"). This letter shall be for the benefit of any Company and of any
auction agent, paying agent (collectively, "auction agent"), remarketing agent,
broker-dealer, agent member, securities depository or other interested person in
connection with any Securities and related Auctions or Remarketings (it being
understood that such persons may be required to execute specified agreements and
nothing herein shall alter such requirements). The terminology used herein is
intended to be general in its application and not to exclude any Securities in
respect of which (in the Prospectus or otherwise) alternative terminology is
used.
2. We may from time to time offer to purchase, purchase, offer to sell
and/or sell Securities of any Company as described in the Prospectus relating
thereto. We agree that this letter shall apply to all such purchases, sales and
offers and to Securities owned by us. We understand that the dividend/interest
rate on Securities may be based from time to time on the results of Auctions or
Remarketings as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us in an Auction or a
Remarketing shall constitute an irrevocable offer (except as otherwise described
in the Prospectus) by us to purchase or sell Securities subject to such bid or
sell order, or such lesser amount of Securities as we shall be required to sell
or purchase as a result of such Auction or Remarketing, at the applicable price,
all as set forth in the Prospectus, and that if we fail to place a bid or sell
order with respect to Securities owned by us with a broker-dealer on any Auction
or Date, or a broker-dealer to which we communicate a bid or sell order fails to
submit such bid or sell order to the auction agent or remarketing agent
concerned, we shall be deemed to have placed a hold or a sell order with respect
to such Securities as described in the Prospectus. We authorize any
broker-dealer that submits a bid or sell order as our agent in Auctions or
Remarketings to execute contracts for the sale of Securities by such bid or sell
order. We
recognize that the payment of such broker-dealer for Securities purchased on our
behalf shall not relieve us of any liability to such broker-dealer for payment
for such Securities.
4. We understand that in a Remarketing, the dividend or interest rate
or rates on the Securities and the allocation of Securities tendered for sale
between dividend or interest periods of different lengths will be based from
time to time on the determinations of one or more remarketing agent(s), and we
agree to be conclusively bound by such determinations. We further agree to the
payment of different dividend or interest rates to different holders of
Securities depending on the length of the dividend or interest period elected by
such holders. We agree that any notice given by us to a remarketing agent (or a
broker-dealer for transmission to a remarketing agent) of our desire to tender
Securities in a Remarketing shall constitute an irrevocable (except to the
limited extent set forth in the Prospectus) offer by us to sell the securities
specified in such Notice, or such lesser number of Securities as we shall be
required to sell as a result of such Remarketing, in accordance with the terms
set forth in the Prospectus, and we authorize the remarketing agent to sell,
transfer or otherwise dispose of such Securities as set forth in the Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell, transfer or otherwise dispose of any
Securities held by us from time to time only pursuant to a bid or sell order
placed in an Auction, in a Remarketing, to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and delivered to the
applicable auction agent or a remarketing agent a letter substantially in the
form of this letter (or other applicable purchaser's letter), provided that in
the case of all transfers other than pursuant to Auctions or Remarketings we or
our broker-dealer or our agent member shall advise such auction agent or a
remarketing agent of such transfer. We understand that a restrictive legend will
be placed on certificates representing the Securities and stop-transfer
instructions will be issued to the transfer agent and/or registrar, all as set
forth in the Prospectus.
6. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by one or more global
certificates registered in the name of the applicable securities depository or
its nominee, that we will not be entitled to receive any certificate
representing the Securities and that our ownership of any Securities will be
maintained in book-entry form by the securities depository for the account of
our agent member, which in turn will maintain records of our beneficial
ownership. We authorize and instruct our agent member to disclose to the
applicable auction agent or remarketing agent such information concerning our
beneficial ownership of Securities as such auction agent or remarketing agent
shall request.
7. We acknowledge that partial deliveries of Securities purchased in
Auctions or Remarketings may be made to us and such deliveries shall constitute
good delivery as set forth in the Prospectus.
2
8. This letter is not a commitment by us to purchase any Securities.
9. This letter supersedes any prior-dated version of this master
purchaser's letter, and supplements any prior to post-dated purchaser's letter
specific to any particular Securities, and this letter may only be revoked by a
signed writing delivered to the original recipients hereof.
10. The descriptions of Auction or Remarketing procedures set forth in
each applicable Prospectus are incorporated by reference herein and in case of
any conflict between this letter, any purchaser's letter specific to particular
Securities and any such description, such description shall control.
11. Any xerographic or other copy of this letter shall be deemed of
equal effect as a signed original.
12. Our agent member of The Depository Trust company currently is
__________.
13. Our personnel authorized to place orders with broker-dealers for
the purposes set forth in the Prospectus in Auctions or Remarketings currently
is/are __________, telephone number (___) ________.
14. Our taxpayer identification number is __________.
15. In the case of each offer to purchase, purchase, offer to sell or
sale by us of Securities not registered under the Securities Act of 1933, as
amended (the "Act"), we represent and agree as follows:
(a) We understand and expressly acknowledge that the
Securities have not been and will not be registered under the Act and,
accordingly, that the Securities may not be reoffered, resold or
otherwise pledged, hypothecated or transferred unless an applicable
exemption from the registration requirements of the Act is available.
(b) We hereby confirm that any purchase of Securities made by
us will be for our own account, or for the account of one or more
parties for which we are acting as trustee or agent with complete
investment discretion and with authority to bind such parties, and not
with a view to any public resale or distribution thereof. We and each
other party for which we are acting which will acquire Securities will
be "accredited investors" within the meaning of Regulation D under the
Act with respect to the Securities to be purchased by us or such party,
as the case may be, will have previously invested in similar types of
instructions and will be able and prepared to bear the economic risk of
investing in and holding such Securities.
(c) We acknowledge that prior to purchasing any Securities we
shall have received a Prospectus (or private placement memorandum)
with respect thereto and
3
acknowledge that we will have had access to such financial and other
information, and have been afforded the opportunity to ask such
questions or representatives of the Company and receive answers
thereto, as we deem necessary in connection with our decision to
purchase Securities.
(d) We recognize that the Company and broker-dealers will rely
upon the truth and accuracy of the foregoing investment representations
and agreements, and we agree that each of our purchases of Securities
now or in the future shall be deemed to constitute our concurrence in
all of the foregoing which shall be binding on us and each party for
which we are acting as set forth in Subparagraph B above.
Dated: ___________________________ ______________________________
(Name of Purchaser)
Mailing Address of Purchaser
__________________________________ By: __________________________
Printed Name:
Title:
__________________________________
__________________________________
4
EXHIBIT B
SETTLEMENT PROCEDURES
Capitalized terms used herein shall have the respective meanings
specified in the Articles Supplementary or herein, as the case may be.
(a) On each Auction Date for any series of ATP, the Auction Agent shall
notify by telephone or telecopy the Broker-Dealers that participated in the
Auction held for such series 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 subsequent Dividend
Period and the Dividend Payment Date therefor;
(ii) whether Sufficient Clearing Orders existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer submitted a Hold/Sell Order or a
Sell Order for such series on behalf of an Existing Holder, whether such
Hold/Sell Order or Sell Order was accepted or rejected, in whole or in part, and
the number of shares, if any, of such series of ATP then outstanding to be sold
by such Existing Holder;
(iv) if such Broker-Dealer submitted a Buy Order on behalf of
a Potential Holder, whether such Buy Order was accepted or rejected, in whole or
in part, and the number of shares, if any, of such series of ATP to be purchased
by such Potential Holder;
(v) if the aggregate number of shares of such series of ATP to
be sold by all Existing Holders on whose behalf such Broker-Dealer submitted
Hold/Sell Orders or Sell Orders for such series is different than the aggregate
number of shares of such series of ATP to be purchased by all Potential Holders
on whose behalf such Broker-Dealer submitted Buy Orders, the name or names of
one or more other Broker-Dealers (and the name of the Agent Member, if any, of
each such other Broker-Dealer) and the number of shares of such series of ATP to
be (x) purchased from one or more Existing Holders on whose behalf such other
Broker-Dealer submitted Hold/Sell Orders or Sell Orders for such series, or (y)
sold to one or more Potential Holders on whose behalf such other Broker-Dealers
submitted Buy Orders for such series; and
(vi) the scheduled Auction Date of the next succeeding
Auction with respect to such series of ATP.
5
(b) On each Auction Date for any series of ATP, each Broker-Dealer that
submitted an Order for such series on behalf of any Existing Holder or Potential
Holder shall:
(i) as soon as practicable, advise each Existing Holder and
Potential Holder on whose behalf such Broker-Dealer submitted a Buy Order,
Hold/Sell Order or Sell Order for such series whether such Buy Order, Hold/Sell
Order or Sell Order was accepted or rejected, in whole or in part;
(ii) instruct each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series 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 shares of such series of ATP to be purchased
pursuant to such Buy Order against receipt of such shares;
(iii) instruct each Existing Holder on whose behalf such
Broker-Dealer submitted a Hold/Sell Order for such series that was accepted, in
whole or in part, as a Sell Order or a Sell Order for such series 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 shares of such series of ATP to be sold pursuant to
such Order against payment therefor;
(iv) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order for such series that will continue to hold
shares of ATP of such series and each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series that was accepted, in whole
or in part, of the Applicable Rate for such series for the next succeeding
Dividend Period for such series;
(v) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order for such series of the Auction Date of the next
succeeding Auction for such series; and
(vi) advise each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series that was accepted, in whole
or in part, of the Auction Date of the next succeeding Auction for such series.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Buy Order, a Hold/Sell Order or a
Sell Order for any series of ATP shall allocate any funds received by it in
respect of such series pursuant to (b)(ii) above, and any shares of such series
of ATP received by it pursuant to (b)(iii) above, among the Potential Holders,
if any, on whose behalf such Broker-Dealer submitted Buy Orders for such series,
the Existing Holders, if any, on whose behalf such Broker-Dealer submitted Buy
Orders, Hold/Sell Orders or Sell Orders for such series, and any Broker-Dealers
identified to it by the Auction Agent pursuant to (a)(v) above.
6
(d) On the Business Day after the Auction Date, the Securities
Depository shall execute the transactions described above, debiting and
crediting the accounts of the respective Agent Members as necessary to effect
the purchases and sales of shares of any series of ATP as determined in the
Auction for such series.
7
EXHIBIT C
(Submit only one Order on this Order Form)
THE NEW AMERICA HIGH INCOME FUND, INC.
AUCTION TERM PREFERRED STOCK, SERIES ____ ("ATP")
ORDER FORM
To: ___________________ Date of Auction
___________________
___________________
New York, New York
The undersigned Broker-Dealer submits the following Order covering the
number of shares indicated (complete only one blank):
__________ shares now held by Bidder (an Existing Holder), and the
Order is a (check one):
____ Hold Order; or
____ Hold/Sell Order at a rate of ________%; or
____ Sell Order;
-or-
____ shares not now held by Bidder (a Potential Holder), and the
Order is a Buy Order at a rate of _____%.
Notes:
(1) If submitting more than one Order for one Bidder, use additional
Order forms.
(2) If one or more Orders covering in the aggregate more than the
number of outstanding shares of ATP held by an Existing Holder are submitted,
such Orders shall be considered valid in the order of priority set forth in the
Auction Procedures.
8
EXHIBIT D
(To be used only for transfers made
other than pursuant to in Auction)
THE NEW AMERICAN HIGH INCOME FUND, INC.
AUCTION TERM PREFERRED STOCK,
SERIES ____ ("ATP") TRANSFER FORM
We are (check one):
____ The Existing Holder named below;
____ The Broker-Dealer for such Existing Holding; or
____ The Agent Member for such Existing Holder.
We hereby notify you that such Existing Holder has transferred _______
shares of the above series of ATP to ______________.
________________________________
(Name of Existing Holder)
________________________________
(Name of Broker-Dealer
________________________________
(Name of Agent Member)
By: ____________________________
Printed Name:
Title:
9
EXHIBIT E
(To be used only for failures to
deliver shares of Auction Term Preferred
Stock sold pursuant to an Auction)
THE NEW AMERICA HIGH INCOME FUND, INC.
AUCTION TERM PREFERRED STOCK, SERIES ____ ("ATP")
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for ___________ (the "Purchaser"), which
purchased ____ shares of the above series of ATP in the Auction held on
_________ from the seller of such shares. We hereby notify you that the Seller
failed to deliver such shares of Auction Term Preferred Stock to the Purchaser.
II. We are a Broker-Dealer for ___________ (the "Seller"), which sold
_____ shares of the above series of ATP in the Auction held on________ to the
purchaser of such shares. We hereby notify you that the Purchaser failed to make
payment to the Seller upon delivery of such shares of Auction Term Preferred
Stock.
Name: ______________________________
(Name of Broker-Dealer)
By: ______________________________
Printed Name:
Title:
10
EXHIBIT B
FORM OF MASTER PURCHASER'S LETTER
MASTER PURCHASER'S LETTER
Relating to
Securities Involving Rate Settings
Through Auctions or Remarketings
THE COMPANY
A REMARKETING AGENT
THE AUCTION AGENT
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS
Dear Sirs:
1. This letter is designed to apply to publicly or privately offered
debt or equity securities ("Securities") of any issuer ("Company") which are
described in any final prospectus or other offering materials relating to such
Securities as the same may be amended or supplemented (collectively, with
respect to the particular Securities concerned, the "Prospectus") and which
involve periodic rate settings through auctions ("Auctions") or procedures
("Remarketings"). This letter shall be for the benefit of any Company and of any
auction agent, paying agent (collectively, "auction agent"), remarketing agent,
broker-dealer, agent member, securities depository or other interested person in
connection with any Securities and related Auctions or Remarketings (it being
understood that such persons may be required to execute specified agreements and
nothing herein shall alter such requirements). The terminology used herein is
intended to be general in its application and not to exclude any Securities in
respect of which (in the Prospectus or otherwise) alternative terminology is
used.
2. We may from time to time offer to purchase, purchase, offer to sell
and/or sell Securities of any Company as described in the Prospectus relating
thereto. We agree that this letter shall apply to all such purchases, sales and
offers and to Securities owned by us. We understand that the dividend/interest
rate on Securities may be based from time to time on the results of Auctions or
Remarketings as set forth in the Prospectus.
3. We agree that any bid or sell order placed by us in an Auction or a
Remarketing shall constitute an irrevocable offer (except as otherwise described
in the Prospectus) by us to purchase or sell Securities subject to such bid or
sell order, or such lesser amount of Securities as we shall be required to sell
or purchase as a result of such Auction or Remarketing, at the applicable price,
all as set forth in the Prospectus, and that if we fail to place a bid or sell
11
order with respect to Securities owned by us with a broker-dealer on any Auction
or Date, or a broker-dealer to which we communicate a bid or sell order fails to
submit such bid or sell order to the auction agent or remarketing agent
concerned, we shall be deemed to have placed a hold or a sell order with respect
to such Securities as described in the Prospectus. We authorize any
broker-dealer that submits a bid or sell order as our agent in Auctions or
Remarketings to execute contracts for the sale of Securities by such bid or sell
order. We recognize that the payment of such broker-dealer for Securities
purchased on our behalf shall not relieve us of any liability to such
broker-dealer for payment for such Securities.
4. We understand that in a Remarketing, the dividend or interest rate
or rates on the Securities and the allocation of Securities tendered for sale
between dividend or interest periods of different lengths will be based from
time to time on the determinations of one or more remarketing agent(s), and we
agree to be conclusively bound by such determinations. We further agree to the
payment of different dividend or interest rates to different holders of
Securities depending on the length of the dividend or interest period elected by
such holders. We agree that any notice given by us to a remarketing agent (or a
broker-dealer for transmission to a remarketing agent) of our desire to tender
Securities in a Remarketing shall constitute an irrevocable (except to the
limited extent set forth in the Prospectus) offer by us to sell the securities
specified in such Notice, or such lesser number of Securities as we shall be
required to sell as a result of such Remarketing, in accordance with the terms
set forth in the Prospectus, and we authorize the remarketing agent to sell,
transfer or otherwise dispose of such Securities as set forth in the Prospectus.
5. We agree that, during the applicable period as described in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell, transfer or otherwise dispose of any
Securities held by us from time to time only pursuant to a bid or sell order
placed in an Auction, in a Remarketing, to or through a broker-dealer or, when
permitted in the Prospectus, to a person that has signed and delivered to the
applicable auction agent or a remarketing agent a letter substantially in the
form of this letter (or other applicable purchaser's letter), provided that in
the case of all transfers other than pursuant to Auctions or Remarketings we or
our broker-dealer or our agent member shall advise such auction agent or a
remarketing agent of such transfer. We understand that a restrictive legend will
be placed on certificates representing the Securities and stop-transfer
instructions will be issued to the transfer agent and/or registrar, all as set
forth in the Prospectus.
6. We agree that, during the applicable period as described in the
Prospectus, ownership of Securities shall be represented by one or more global
certificates registered in the name of the applicable securities depository or
its nominee, that we will not be entitled to receive any certificate
representing the Securities and that our ownership of any Securities will be
maintained in book-entry form by the securities depository for the account of
our agent member, which in turn will maintain records of our beneficial
ownership. We authorize and instruct our agent member to disclose to the
applicable auction agent or remarketing agent
12
such information concerning our beneficial ownership of Securities as such
auction agent or remarketing agent shall request.
7. We acknowledge that partial deliveries of Securities purchased in
Auctions or Remarketings may be made to us and such deliveries shall constitute
good delivery as set forth in the Prospectus.
8. This letter is not a commitment by us to purchase any Securities.
9. This letter supersedes any prior-dated version of this master
purchaser's letter, and supplements any prior to post-dated purchaser's letter
specific to any particular Securities, and this letter may only be revoked by a
signed writing delivered to the original recipients hereof.
10. The descriptions of Auction or Remarketing procedures set forth in
each applicable Prospectus are incorporated by reference herein and in case of
any conflict between this letter, any purchaser's letter specific to particular
Securities and any such description, such description shall control.
11. Any xerographic or other copy of this letter shall be deemed of
equal effect as a signed original.
12. Our agent member of The Depository Trust company currently is
__________.
13. Our personnel authorized to place orders with broker-dealers for
the purposes set forth in the Prospectus in Auctions or Remarketings currently
is/are __________, telephone number (___) ________.
14. Our taxpayer identification number is __________.
15. In the case of each offer to purchase, purchase, offer to sell or
sale by us of Securities not registered under the Securities Act of 1933, as
amended (the "Act"), we represent and agree as follows:
(e) We understand and expressly acknowledge that the
Securities have not been and will not be registered under the Act and,
accordingly, that the Securities may not be reoffered, resold or
otherwise pledged, hypothecated or transferred unless an applicable
exemption from the registration requirements of the Act is available.
(f) We hereby confirm that any purchase of Securities made by
us will be for our own account, or for the account of one or more
parties for which we are acting as trustee or agent with complete
investment discretion and with authority to bind such parties, and not
with a view to any public resale or distribution thereof. We and each
other party for which we are acting which will acquire Securities will
be "accredited
13
investors" within the meaning of Regulation D under the Act with
respect to the Securities to be purchased by us or such party, as the
case may be, will have previously invested in similar types of
instructions and will be able and prepared to bear the economic risk of
investing in and holding such Securities.
(g) We acknowledge that prior to purchasing any Securities we
shall have received a Prospectus (or private placement memorandum) with
respect thereto and acknowledge that we will have had access to such
financial and other information, and have been afforded the opportunity
to ask such questions or representatives of the Company and receive
answers thereto, as we deem necessary in connection with our decision
to purchase Securities.
(h) We recognize that the Company and broker-dealers will rely
upon the truth and accuracy of the foregoing investment representations
and agreements, and we agree that each of our purchases of Securities
now or in the future shall be deemed to constitute our concurrence in
all of the foregoing which shall be binding on us and each party for
which we are acting as set forth in Subparagraph B above.
Dated: ______________________________ _________________________________
(Name of Purchaser)
Mailing Address of Purchaser
_____________________________________ By: _____________________________
Printed Name:
Title:
_____________________________________
_____________________________________
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EXHIBIT C
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 Agent Agreement and
each Broker-Dealer Agreement. Nothing contained herein constitutes a
representation by the Fund that in each Auction each party referred to herein
will actually perform the procedures described herein to be performed by such
party. Capitalized terms used herein shall have the respective meanings
specified in the ATP Provisions or herein, as the case may be.
(a) On each Auction Date for any series of ATP, the Auction Agent shall
notify by telephone or telecopy the Broker-Dealers that participated in the
Auction held for such series 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 subsequent Dividend
Period and the Dividend Payment Date therefor;
(ii) whether Sufficient Clearing Orders existed for the
determination of the Applicable Rate;
(iii) if such Broker-Dealer submitted a Hold/Sell Order or a
Sell Order for such series on behalf of an Existing Holder, whether such
Hold/Sell Order or Sell Order was accepted or rejected, in whole or in part, and
the number of shares, if any, of such series of ATP then outstanding to be sold
by such Existing Holder;
(iv) if such Broker-Dealer submitted a Buy Order on behalf of
a Potential Holder, whether such Buy Order was accepted or rejected, in whole or
in part, and the number of shares, if any, of such series of ATP to be purchased
by such Potential Holder;
(v) if the aggregate number of shares of such series of ATP to
be sold by all Existing Holders on whose behalf such Broker-Dealer submitted
Hold/Sell Orders or Sell Orders for such series is different than the aggregate
number of shares of such series of ATP to be purchased by all Potential Holders
on whose behalf such Broker-Dealer submitted Buy Orders, the name or names of
one or more other Broker-Dealers (and the name of the Agent Member, if any, of
each such other Broker-Dealer) and the number of shares of such series of ATP to
be (x) purchased from one or more Existing Holders on whose behalf such other
Broker-Dealer submitted Hold/Sell Orders or Sell Orders for such series, or (y)
sold to one or more Potential Holders on whose behalf such other Broker-Dealers
submitted Buy Orders for such series; and
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(vi) the scheduled Auction Date of the next succeeding Auction
with respect to such series of ATP.
(b) On each Auction Date for any series of ATP, each Broker-Dealer that
submitted an Order for such series on behalf of any Existing Holder or Potential
Holder shall:
(i) as soon as practicable, advise each Existing Holder and
Potential Holder on whose behalf such Broker-Dealer submitted a Buy Order,
Hold/Sell Order or Sell Order for such series whether such Buy Order, Hold/Sell
Order or Sell Order was accepted or rejected, in whole or in part;
(ii) instruct each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series 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 shares of such series of ATP to be purchased
pursuant to such Buy Order against receipt of such shares;
(iii) instruct each Existing Holder on whose behalf such
Broker-Dealer submitted a Hold/Sell Order for such series that was accepted, in
whole or in part, as a Sell Order or a Sell Order for such series 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 shares of such series of ATP to be sold pursuant to
such Order against payment therefor;
(iv) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order for such series that will continue to hold
shares of ATP of such series and each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series that was accepted, in whole
or in part, of the Applicable Rate for such series for the next succeeding
Dividend Period for such series;
(v) advise each Existing Holder on whose behalf such
Broker-Dealer submitted an Order for such series of the Auction Date of the next
succeeding Auction for such series; and
(vi) advise each Potential Holder on whose behalf such
Broker-Dealer submitted a Buy Order for such series that was accepted, in whole
or in part, of the Auction Date of the next succeeding Auction for such series.
(c) On the basis of the information provided to it pursuant to (a)
above, each Broker-Dealer that submitted a Buy Order, a Hold/Sell Order or a
Sell Order for any series of ATP shall allocate any funds received by it in
respect of such series pursuant to (b)(ii) above, and any shares of such series
of ATP received by it pursuant to (b)(iii) above, among the Potential Holders,
if any, on whose behalf such Broker-Dealer submitted Buy Orders for such series,
the Existing Holders, if any, on whose behalf such Broker-Dealer submitted Buy
16
Orders, Hold/Sell Orders or Sell Orders for such series, and any Broker-Dealers
identified to it by the Auction Agent pursuant to (a)(v) above.
(d) On the Business Day after the Auction Date, the Securities
Depository shall execute the transactions described above, debiting and
crediting the accounts of the respective Agent Members as necessary to effect
the purchases and sales of shares of any series of ATP as determined in the
Auction for such series.
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EXHIBIT D
FORM OF ATP PROVISIONS
18
EXHIBIT E
THE NEW AMERICAN HIGH INCOME FUND, INC.
NOTICE OF AUCTION DATE FOR
AUCTION TERM PREFERRED STOCK ("ATP")
NOTICE IS HEREBY GIVEN that the Auction Date of the next Auction for
the ATP Series ___ of THE NEW AMERICA HIGH INCOME FUND, INC. (the "Fund") is
scheduled to be ________ and the next Dividend Payment Date for the Fund's ATP
Series ___ will be ___________.
THE NEW AMERICAN HIGH INCOME FUND, INC.
19
EXHIBIT F
THE NEW AMERICAN HIGH INCOME FUND, INC.
NOTICE OF PROPOSED DESIGNATION OF
ALTERNATE TERM PERIOD FOR
AUCTION TERM PREFERRED STOCK
NOTICE IS HEREBY GIVEN that THE NEW AMERICA HIGH INCOME FUND, INC. (the
"Fund") proposes to exercise its option to designate the Dividend Period of its
Series Auction Term Preferred Stock ("ATP") commencing [the first day of the
proposed Alternate Term Period] and ending (the last day of the proposed
Alternate Term Period] as an Alternate Term Period.
By 9:00 A.M., New York City time, on the Business Day next preceding
the first day of such proposed Alternate Term Period, the Fund will notify the
Auction Agent for the ATP of either (a) its determination to exercise such
option, designating the length of such Alternate Term Period and the terms of
the Specific Redemption Provisions, if any, or (b) its determination not to
exercise such option.
THE NEW AMERICA HIGH INCOME FUND, INC.
Dated: ___________
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EXHIBIT G
THE NEW AMERICAN HIGH INCOME FUND, INC.
NOTICE OF DESIGNATION OF ALTERNATE TERM PERIOD OF
AUCTION TERM PREFERRED STOCK
NOTICE IS HEREBY GIVEN that THE NEW AMERICA HIGH INCOME FUND,
INC. (the "Fund") has determined to designate the Dividend Period of its Series
Auction Term Preferred Stock ("ATP") commencing on (the first day of the
Alternate Term Period] and ending on (the last day of the Alternate Term Period]
as an Alternate Term Period.
The Alternate Term Period will be ___ (days] [year(s]].
The Auction Date for the Alternate Term Period is (the Business Day
next preceding the first day of such Alternate Term Period].
The scheduled Dividend Payment Dates for such series of ATP during such
Alternate Term Period will be __________________.
[Specific Redemption Provisions, if applicable.]
[The Alternate Term Period shall not commence if on such Auction Date
Sufficient Clearing Orders shall not exist.]
THE NEW AMERICA HIGH INCOME FUND, INC.
Dated: ______________
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EXHIBIT H
THE NEW AMERICAN HIGH INCOME FUND, INC.
NOTICE OF DETERMINATION NOT TO DESIGNATION
ALTERNATE TERM PERIOD OF
AUCTION TERM PREFERRED STOCK
NOTICE IS HEREBY GIVEN that THE NEW AMERICA HIGH INCOME FUND, INC. (the
"Fund") has determined not to exercise its option to designate an Alternate Term
Period of its Series Auction Term Preferred Stock. Accordingly, the next
succeeding Dividend Period of such series will be a Standard Term Period.
THE NEW AMERICA HIGH INCOME FUND, INC.
Dated: ______________
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