FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND
AUCTION AGENCY AGREEMENT
dated as of November __, 2003
relating to the
Money Market Cumulative Preferred(R) Shares
of
FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND
Deutsche Bank Trust Company Americas
as Auction Agent
Cover Page
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (this "Agreement"), dated as of November
__, 2003, is between First Trust/Four Corners Senior Floating Rate Income Fund
(the "Fund") and Deutsche Bank Trust Company Americas.
The Fund proposes to issue an aggregate amount of ___ shares of its
Money Market Cumulative Preferred(R) Shares, $0.01 par value per share,
liquidation preference of $25,000 per share (the "Preferred Shares"), authorized
by, and subject to the terms and conditions of, the Statement Establishing and
Fixing the Rights and Preferences of Money Market Cumulative Preferred(R) Shares
(the "Statement").
The Fund desires that Deutsche Bank Trust Company Americas perform
certain duties as agent in connection with each Auction of Preferred Shares (in
such capacity, the "Auction Agent"), and as the transfer agent, registrar,
dividend paying agent and redemption agent with respect to the Preferred Shares
(in such capacity, the "Paying Agent"), upon the terms and conditions set forth
in this Agreement, and the Fund hereby appoints Deutsche Bank Trust Company
Americas as said Auction Agent and Paying Agent in accordance with those terms
and conditions.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Fund and the Auction Agent agree as follows:
I. DEFINITIONS AND RULES OF CONSTRUCTION.
1.1 Terms Defined by Reference to the Statement.
Capitalized terms used herein but not defined herein shall have the
respective meanings specified in the Statement.
1.2 Certain Defined Terms.
As used herein and in the Settlement Procedures, the following terms
shall have the following meanings, unless the context otherwise requires:
(a) "Agent Member" shall mean a member of, or participant in, the
Securities Depository that will act on behalf of a Beneficial Owner of one or
more Preferred Shares or on behalf of a Potential Beneficial Owner.
(b) "Auction" shall have the meaning specified in Section 2.1
hereof.
(c) "Auction Procedures" shall mean the procedures as from time to
time in effect for conducting Auctions that are set forth in Part II of the
Statement.
(d) "Authorized Officer" shall mean each Vice President, Assistant
Vice President and Associate of the Auction Agent and every other officer or
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employee of the Auction Agent designated as an "Authorized Officer" for purposes
hereof in a written communication from the Auction Agent to the Fund.
(e) "Broker-Dealer Agreement" shall mean each agreement between
the Auction Agent and a broker-dealer substantially in the form attached hereto
as Exhibit A.
(f) "Closing" shall mean the date the Fund consummates the
transactions for the issuance and sale of the Preferred Shares.
(g) "Fund Officer" shall mean the President, each Vice President
(whether or not designated by a number or word or words added before or after
the title "Vice President"), the Secretary, the Treasurer, each Assistant
Secretary and each Assistant Treasurer of the Fund and every other officer or
employee of the Fund designated as a "Fund Officer" for purposes hereof in a
notice from the Fund to the Auction Agent.
(h) "Holder" means, with respect to Preferred Shares, the
registered holder of Preferred Shares as the same appears on the share ledger or
share records of the Fund.
(i) "Rate Multiple" shall have the meaning assigned to it in
Section 2.8.
(j) "Statement" shall mean the Statement Establishing and Fixing
the Rights and Preferences of Money Market Cumulative Preferred(R) Shares of the
Fund in effect at the time the Registration Statement relating to the Preferred
Shares is declared effective by the Securities and Exchange Commission,
specifying the powers, preferences and rights of the Preferred Shares.
(k) "Settlement Procedures" shall mean the Settlement Procedures
attached as Exhibit A to the Broker-Dealer Agreement.
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.
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II. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Board of Trustees of the Fund has adopted a resolution
appointing Deutsche Bank Trust Company Americas as Auction Agent for purposes of
the Auction Procedures. The Auction Agent hereby accepts such appointment and
agrees that, on each Auction Date, it shall follow (i) the procedures set forth
in this Section 2 and (ii) the Auction Procedures for the purpose of determining
the Applicable Rate for the Preferred Shares for the next Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."
(b) All of the provisions contained in the Auction Procedures and
in the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part of this Agreement to the same extent
as if such provisions were set forth fully herein. In the case of any conflict
between the terms of any document incorporated herein by reference and the terms
hereof, the terms in this agreement shall control.
2.2 Preparation for Each Auction; Maintenance of Registry of Existing
Holders.
(a) As of the date hereof, the Fund shall provide the Auction
Agent with a list of the Broker-Dealers and shall deliver to the Auction Agent
for execution by the Auction Agent a Broker-Dealer Agreement signed by each such
Broker-Dealer. The Auction Agent shall keep such list current and accurate and
shall indicate thereon the identity of each Existing Holder, if any, whose most
recent Order was submitted and resulted in such Existing Holder continuing to
hold or purchase Preferred Shares. Not later than five Business Days prior to
any Auction Date for which any change in such list of Broker-Dealers is to be
effective, the Fund shall notify the Auction Agent in writing of such change
and, if any such change is the addition of a Broker-Dealer to such list, the
Fund shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by such Broker-Dealer. The
Auction Agent shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.
(b) In the event that the Auction Date for any Auction shall be
changed after the Auction Agent shall have given the notice referred to in
clause (vii) of paragraph (a) of the Settlement Procedures, the Auction Agent,
by such means as the Auction Agent reasonably deems practicable, shall give
notice of such change to the Broker-Dealers not later than the earlier of 9:15
a.m. on the new Auction Date or 9:15 a.m. on the old Auction Date.
(c) The provisions contained in Section 4(b) of Part I of the
Statement concerning Special Dividend Periods and the notification of a Special
Dividend Period will be followed by the Fund and, to the extent applicable, the
Auction Agent, and the provisions contained therein are incorporated herein by
reference in their entirety and shall be deemed to be a part of this Agreement
to the same extent as if such provisions were set forth fully herein.
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(d) (i) On each Auction Date, the Auction Agent shall determine
the Maximum Rate. 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 Rate.
(ii) If the Reference Rate is the applicable "AA" Composite
Commercial Paper Rate and such rate is to be based on rates supplied by
Commercial Paper Dealers and one or more of the Commercial Paper Dealers shall
not provide a quotation for the determination of the applicable "AA" Composite
Commercial Paper Rate, the rate shall be determined on the basis of the
quotations (or quotation) furnished by the remaining Commercial Paper Dealer(s),
if any, or, if there are no such Commercial Paper Dealers, by a nationally
recognized dealer in commercial paper of such issuers then making such
quotations selected by the Fund.
(e) (i) The Auction Agent shall maintain a current registry of the
Existing Holders of the Preferred Shares for purposes of each individual Auction
based on the information provided to it from time to time by the Broker-Dealer.
The Fund shall use commercially reasonable efforts to provide or cause to be
provided to the Auction Agent within ten Business Days following the date of the
Closing a list of the initial Existing Holders of Preferred Shares, the number
of shares purchased by each such Existing Holder and the respective
Broker-Dealer of each such Existing Holder through which such Existing Holder
purchased such Preferred Shares. The Auction Agent may rely upon, as conclusive
evidence of the identities of the Existing Holders, such list, the results of
each Auction and notices from any Existing Holder, the Agent Member of any
Existing Holder or the Broker-Dealer of any Existing Holder with respect to such
Existing Holder's transfer of any Preferred Shares to another Person.
(ii) In the event of any partial redemption of Preferred Shares,
upon notice by the Fund to the Auction Agent of such partial redemption, the
Auction Agent promptly shall request the Securities Depository to notify the
Auction Agent of the identities of the Agent Members (and the respective numbers
of Preferred Shares) from the accounts of which Preferred Shares have been
called for redemption and the person or department at such Agent Member to
contact regarding such redemption. At least two Business Days prior to the
Auction preceding the date of redemption, the Auction Agent shall request each
Agent Member so identified to disclose to the Auction Agent (upon selection by
such Agent Member of the Existing Holders whose Preferred Shares are to be
redeemed) the number of Preferred Shares of each such Existing Holder, if any,
to be redeemed by the Fund, provided that the Auction Agent has been furnished
with the name and telephone number of a person or department at such Agent
Member from which it is to request such information. In the absence of receiving
any such information with respect to an Existing Holder, from such Existing
Holder's Agent Member or otherwise, the Auction Agent may continue to treat such
Existing Holder as having ownership of the number of Preferred Shares shown in
the Auction Agent's registry of Existing Holders.
(iii) The Auction Agent shall register a transfer of the ownership
of Preferred Shares from an Existing Holder to another Existing Holder, or to
another Person if permitted by the Fund, only if (A) such transfer is made
pursuant to an Auction or (B) if such transfer is made other than pursuant to an
Auction, the Auction Agent has been notified of such transfer in writing, in a
notice substantially in the form of Exhibit C to the Broker-Dealer Agreement, by
such Existing Holder or by the Agent Member of such Existing Holder only to or
through a Broker-Dealer that has entered into a Broker-Dealer Agreement with the
Auction Agent and the Fund or other persons as the Fund permits. The Auction
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Agent is not required to accept any notice of transfer delivered for an Auction
unless it is received by the Auction Agent by 3:00 p.m. on the Business Day
preceding the Auction. The Auction Agent shall rescind a transfer made on the
registry of the Existing Holders of any Preferred Shares if the Auction Agent
has been notified in writing, in a notice substantially in the form of Exhibit D
to the Broker-Dealer Agreement, by the Agent Member or the Broker-Dealer of any
Person that (i) purchased any Preferred Shares and the seller failed to deliver
such Preferred Shares or (ii) sold any Preferred Shares and the purchaser failed
to make payment to such Person upon delivery to the purchaser of such Preferred
Shares.
(f) The Auction Agent may, but shall have no obligation to,
request that the Broker-Dealers, as set forth in Section 3.2(b) of the
Broker-Dealer Agreements, provide the Auction Agent with a list of their
respective customers that such Broker-Dealers believe are Beneficial Owners of
Preferred Shares. The Auction Agent shall keep confidential any such information
and shall not disclose any such information so provided to any Person other than
the relevant Broker-Dealer and the Fund, provided that the Auction Agent
reserves the right to disclose any such information if (a) it is ordered to do
so by a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure or (b) it is advised by its counsel in writing that its failure to do
so would be unlawful.
2.3 Auction Schedule.
The Auction Agent shall conduct Auctions on the Business Day
immediately prior to the start of each Dividend Period in accordance with the
schedule set forth below. Such schedule may be changed by the Auction Agent with
the consent of the Fund, which consent shall not be withheld unreasonably. The
Auction Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.
Time Event
--------------------- -----------------------------------------
By 9:30 a.m. The Auction Agent shall advise the Fund and
the Broker-Dealers of the Reference Rate and
the Maximum Rate as set forth in Section
2.2(d)(i) hereof.
9:30 a.m. - 1:00 p.m. The Auction Agent shall assemble information
communicated to it by Broker-Dealers as
provided in Section 2 of Part II of the
Statement. Submission deadline is 1:00 p.m.
Not earlier than 1:00 p.m. The Auction Agent shall make determinations
pursuant to Section 3 of Part II of the
Statement.
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By approximately 3:00 p.m. The Auction Agent shall advise the Fund of
the results of the Auction as provided in
Section 3(b) of Part II of the Statement.
Submitted Bid Orders and Submitted Sell
Orders will be accepted and rejected in
whole or in part and Preferred Shares will
be allocated as provided in Section 4 of
Part II of the Statement.
The Auction Agent shall give notice of the
Auction results as set forth in Section 2.4
hereof.
The Auction Agent will follow the Bond Market Association's Market
Practice U.S. Holiday Recommendations for shortened trading days for the bond
markets (the "BMA Recommendation") unless the Auction Agent is instructed
otherwise. In the event of a BMA Recommendation on an Auction Date, the
Submission Deadline will be 11:30 a.m., instead of 1:00 p.m., and as a result
the notice set forth in Section 2.4 will occur earlier.
2.4 Notice of Auction Results.
The Auction Agent will advise each Broker-Dealer who submitted a Bid or
Sell Order in an Auction whether such Bid or Sell Order was accepted or rejected
in whole or in part and of the Applicable Rate for the next Dividend Period for
the related Preferred Shares by telephone or other electronic means acceptable
to the parties. The Auction Agent, unless instructed otherwise in writing by the
Fund, is authorized to release the Winning Bid Rate after each auction for
public dissemination.
2.5 Broker-Dealers.
(a) Not later than 3:00 p.m. on each Dividend Payment Date, the
Auction Agent after each Auction will pay to each Broker-Dealer, from funds
provided by the Fund, a service charge in the amount equal to: (i) in the case
of any Auction immediately preceding a Dividend Period of less than one year,
the product of (A) a fraction the numerator of which is the number of days in
the Dividend Period (calculated by counting the first day of such Dividend
Period but excluding the last day thereof) and the denominator of which is 360,
times (B) 1/4 of 1%, times (C) $25,000 times (D) the sum of the aggregate number
of Preferred Shares placed by such Broker-Dealer, or (ii) the amount mutually
agreed upon by the Fund and the Broker-Dealers in the case of any Auction
immediately preceding a Dividend Period of one year or longer. For the purposes
of the preceding sentence, the Preferred Shares shall be placed by a
Broker-Dealer if such shares were (1) the subject of Hold Orders deemed to have
been submitted to the Auction Agent by the Broker-Dealer and were acquired by
the Broker-Dealer for its own account or were acquired by the Broker-Dealer for
its customers who are Beneficial Owners or (2) the subject of an order submitted
by the Broker-Dealer that is (a) a Submitted Bid of an Existing Holder that
resulted in the Existing Holder continuing to hold the shares as a result of the
Auction or (b) a Submitted Bid of a Potential Holder that resulted in the
Potential Holder purchasing the shares as a result of the Auction or (3) a valid
Hold Order. For the avoidance of doubt, only one Broker-Dealer shall be
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considered to have placed a particular Preferred Share at any particular Auction
for purposes of this Section 2.5(a).
(b) The Fund shall not designate any Person to act as a
Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to
participate in Auctions through any Person other than a Broker-Dealer, without
the prior written approval of the Auction Agent, which approval shall not be
withheld unreasonably. Notwithstanding the foregoing, the Fund may designate an
Affiliate or Xxxxxx Brothers Inc. to act as a Broker-Dealer.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement
as set forth therein if so directed by the Fund.
(d) Subject to Section 2.5(b) hereof, the Auction Agent from time
to time shall enter into such Broker-Dealer Agreements as the Fund shall request
in writing.
(e) The Auction Agent shall maintain a list of Broker-Dealers.
2.6 Ownership of Preferred Shares and Submission of Bids by the Fund
and Its Affiliates.
Neither the Fund nor any Affiliate of the Fund may submit an Order in
any Auction, except that an Affiliate of the Fund that is a Broker-Dealer may
submit an Order. The Fund shall notify the Auction Agent if the Fund or, to the
best of the Fund's knowledge, any Affiliate of the Fund becomes a Beneficial
Owner of any Preferred Shares. The restrictions in this Section 2.6 shall in no
way limit the activities of the Auction Agent. The Auction Agent shall have no
duty or liability with respect to enforcement of this Section 2.6.
2.7 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Fund, its agents, independent
public accountants and counsel, at reasonable times during normal business
hours, to review and make extracts or copies of (at the Fund's sole cost and
expense), access to all books, records, documents and other information
concerning the conduct and results of Auctions, provided that any such agent,
accountant or counsel shall furnish the Auction Agent with a letter from the
Fund requesting that the Auction Agent afford such person access. The Auction
Agent shall maintain records relating to any Auction for a period of at least
six years after such Auction, and such records, in reasonable detail, shall
accurately and fairly reflect the actions taken by the Auction Agent hereunder.
The Fund agrees to keep confidential any information regarding the customers of
any Broker-Dealer received from the Auction Agent in connection with this
Agreement or any Auction, and shall not disclose such information or permit the
disclosure of such information without the prior written consent of the
applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section
2.7. The Fund reserves the right to disclose any such information if it is
ordered to do so by a court of competent jurisdiction or a regulatory body,
judicial or quasi-judicial agency or authority having authority to compel such
disclosure, or if it is advised by its counsel that its failure to do so would
be unlawful. Any such agent, accountant or counsel, before having access to such
information, shall agree to keep such information confidential and not to
disclose such information or permit disclosure of such information without the
prior written
Page 7
consent of the applicable Broker-Dealer, provided that such agent, accountant or
counsel may reserve the right to disclose any such information if it is ordered
to do so by a court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having authority to compel such disclosure,
or if it is advised by its counsel that its failure to do so would be unlawful.
2.8 Information Concerning Rates.
If there is any change in the credit rating of Preferred Shares by a
rating agency (or substitute or successor rating agencies) then rating the
Preferred Shares that results in any change in the applicable percentage of the
"AA" Composite Commercial Paper Rate used to determine the Maximum Rate for
Preferred Shares (the "Rate Multiple"), the Fund shall notify the Auction Agent
of such change in the Rate Multiple prior to the Auction Date. In determining
the Maximum Rate on any Auction Date, the Auction Agent shall be entitled to
rely on the last Rate Multiple for Preferred Shares of which it has most
recently received notice from the Fund.
III. THE AUCTION AGENT AS PAYING AGENT.
3.1 The Paying Agent.
The Board of Trustees of the Fund has adopted resolutions appointing
Deutsche Bank Trust Company Americas as Auction Agent and Paying Agent. The
Paying Agent hereby accepts such appointment and agrees to act in accordance
with its standard procedures and the provisions of the Statement which are
specified herein with respect to the Preferred Shares and as set forth in this
Section 3.
3.2 The Fund's Notices to the Paying Agent.
Whenever any Preferred Shares are to be redeemed, the Fund shall mail a
Notice of Redemption by first-class mail, postage prepaid, to each Holder of
Preferred Shares being redeemed and to the Paying Agent pursuant to Section 3(b)
of Part I of the Statement.
3.3 The Fund to Provide Funds for Dividends and Redemptions.
(a) Not later than 3:00 p.m. on the Business Day preceding each
Dividend Payment Date, the Fund shall deposit with the Paying Agent an aggregate
amount of Federal Funds or similar same-day funds equal to the declared
dividends to be paid to Holders on such Dividend Payment Date and shall give the
Paying Agent irrevocable instructions to apply such funds to the payment of such
dividends on such Dividend Payment Date.
(b) If the Fund shall give a Notice of Redemption, then by 12:00
noon on the date fixed for redemption, the Fund shall deposit in trust with the
Paying Agent an aggregate amount of Federal Funds or similar same-day funds
sufficient to redeem such Preferred Shares called for redemption and shall give
the Paying Agent irrevocable instructions and authority to pay the redemption
price to the Holders of Preferred Shares called for redemption upon surrender of
the certificate or certificates therefor.
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3.4 Disbursing Dividends and Redemption Price.
After receipt of the Federal Funds or similar same-day funds and
instructions from the Fund described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
corresponding Dividend Payment Date, dividends on the Preferred Shares, and (ii)
on any date fixed for redemption, the redemption price of any Preferred Shares
called for redemption. The amount of dividends for any Dividend Period to be
paid by the Paying Agent to Holders will be determined by the Fund as set forth
in Section 2 of Part I of the Statement. The redemption price to be paid by the
Paying Agent to the Holders of any Preferred Shares called for redemption will
be determined as set forth in Section 3 of Part I of the Statement. The Paying
Agent shall have no duty to determine the redemption price and may conclusively
rely on the amount thereof set forth in the Notice of Redemption.
IV. THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.
4.1 Original Issue of Share Certificates.
On the Date of Original Issue for any Preferred Share, one certificate
for Preferred Shares shall be issued by the Fund and registered in the name of
Cede & Co., as nominee of the Securities Depository, and countersigned by the
Paying Agent.
4.2 Registration of Transfer or Exchange of Shares.
Except as provided in this Section 4.2, the Preferred Shares shall be
registered solely in the name of the Securities Depository or its nominee. If
the Securities Depository shall give notice of its intention to resign as such,
and if the Fund shall not have selected a substitute Securities Depository
acceptable to the Paying Agent prior to such resignation, then, upon such
resignation of the Securities Depository, the Preferred Shares, at the Fund's
request and expense, may be registered for transfer or exchange, and new
certificates thereupon shall be issued in the name of the designated transferee
or transferees, upon surrender of the old certificate in form deemed by the
Paying Agent to be properly endorsed for transfer with (a) all necessary
endorsers' signatures guaranteed in such manner and form and by such guarantor
as the Paying Agent may reasonably require, (b) such assurances as the Paying
Agent shall deem necessary or appropriate to evidence the genuineness and
effectiveness of each necessary endorsement and (c) satisfactory evidence of
compliance with all applicable laws relating to the collection of taxes in
connection with any registration of transfer or exchange or funds necessary for
the payment of such taxes. If there is no Securities Depository, at the Fund's
option and upon its receipt of such documents as it deems appropriate, any
Preferred Shares may be registered in the Stock Register in the name of the
Beneficial Owner thereof, and such Beneficial Owner thereupon will be entitled
to receive certificates therefor and required to deliver certificates thereof
upon transfer or exchange thereof at the Fund's expense.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing Preferred Shares shall be accompanied by
an opinion of counsel stating that such legend may be removed and such Preferred
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Shares may be transferred free of the restriction described in such legend, said
opinion to be delivered under cover of a letter from a Fund Officer authorizing
the Paying Agent to remove the legend on the basis of said opinion.
4.4 Lost, Stolen or Destroyed Share Certificates.
The Paying Agent shall, at the Holder's expense, issue and register
replacement certificates for certificates represented to have been lost, stolen
or destroyed, upon the fulfillment of such requirements as shall be deemed
appropriate by the Fund and by the Paying Agent, subject at all times to
provisions of law, the Statement governing such matters and resolutions adopted
by the Fund with respect to lost, stolen or destroyed securities. The Paying
Agent may issue new certificates in exchange for and upon the cancellation of
mutilated certificates. Any request by the Fund to the Paying Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall be deemed to
be a representation and warranty by the Fund to the Paying Agent that such
issuance will comply with provisions of applicable law and the Statement and
resolutions of the Fund.
4.5 Disposition of Canceled Certificates; Record Retention.
The Paying Agent shall retain share certificates which have been
canceled and any accompanying documentation thereto in accordance with
applicable rules and regulations of the Securities and Exchange Commission (the
"Commission") for at least six calendar years from the date of such
cancellation. The Paying Agent, upon written request by the Fund, shall afford
to the Fund, its agents and counsel access at reasonable times during normal
business hours to review and make extracts or copies (at the Fund's sole cost
and expense) of such certificates and accompanying documentation. Upon the
expiration of this six-year period, the Paying Agent, upon written request by
the Fund, shall deliver to the Fund the canceled certificates and any
accompanying documentation. In the event that the Commission requests that any
or all such records be furnished to it, the Paying Agent shall provide the Fund
with prompt written notice of such request so that the Fund may appeal such
request and the Paying Agent shall cooperate with the Fund in any such appeal.
In the event that such appeal is unsuccessful, the Paying Agent shall be
permitted to furnish to the Commission, either at its principal office or at any
regional office, complete, correct and current hard copies of any and all
records that were requested by the Commission provided that the Paying Agent
shall exercise reasonable efforts to obtain assurance that confidential
treatment will be accorded to such records. Thereafter, such records shall not
be destroyed by the Fund without the approval of the Paying Agent, which
approval shall not be withheld unreasonably, but will be safely stored for
possible future reference.
4.6 Share Register.
The Paying Agent shall maintain the share register, which shall contain
a list of the Holders, the number of Preferred Shares held by each Holder and
the address of each Holder. The Paying Agent shall record in the share register
any change of address of a Holder upon notice by such Holder. In case of any
written request or demand for the inspection of the share register or any other
books of the Fund in the possession of the Paying Agent, the Paying Agent will
notify the Fund and secure instructions as to permitting or refusing such
inspection. The Paying Agent reserves the right, however, to exhibit the share
register or other records to any person in case it is (a) ordered to do so by a
Page 10
court of competent jurisdiction or a regulatory body, judicial or quasi-judicial
agency or authority having the authority to compel such disclosure or (b)
advised by its counsel that its failure to do so would be unlawful.
4.7 Return of Funds.
Any funds paid to the Paying Agent for the paying of dividends but not
applied to the payment of dividends, including interest earned on such moneys,
will, to the extent permitted by law, be repaid to the Fund at the end of 90
days from the date on which such moneys were to have been so applied. Upon
written request, the Fund shall be entitled to receive from the Paying Agent,
promptly after the date fixed for redemption, any cash deposited with the Paying
Agent in excess of (i) the aggregate redemption price of the Preferred Shares
called for redemption on such date and (ii) such other amounts, if any, to which
Holders of Preferred Shares called for redemption may be entitled. Any funds so
deposited that are unclaimed at the end of two years from such redemption date
shall, to the extent permitted by law, be paid to the Fund upon its written
request. Funds, while deposited with the Auction Agent, will be held in trust
for the payment of the applicable dividend, redemption price or, as may be
applicable under the Statement, other charges.
V. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Fund.
The Fund represents and warrants to the Auction Agent that:
(i) the Fund has been duly organized and is validly existing as a
business trust under the laws of the State of Massachusetts, and has full power
to execute and deliver this Agreement and to authorize, create and issue the
Preferred Shares;
(ii) the Fund is registered with the Commission under the 1940 Act
as a closed-end, diversified, management investment company;
(iii) this Agreement has been duly and validly authorized,
executed and delivered by the Fund and constitutes the legal, valid and binding
obligation of the Fund, enforceable against the Fund in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equitable principles;
(iv) the form of the certificate evidencing the Preferred Shares
complies with all applicable state and federal laws;
(v) the Preferred Shares have been duly and validly authorized by
the Fund and, upon completion of the initial sale of the Preferred Shares and
receipt of payment therefor, will be validly issued by the Fund, fully paid and
nonassessable;
(vi) at the time of the offering of the Preferred Shares, the
Preferred Shares offered will be registered under the Securities Act and no
further action by or before any governmental body or authority of the United
States or of any state thereof is required in connection with the execution and
delivery of this Agreement or will be required in connection with the issuance
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of the Preferred Shares, except such action as required by applicable state
securities laws;
(vii) the execution and delivery of this Agreement and the
issuance and delivery of the Preferred Shares do not and will not conflict with,
violate or result in a breach of the terms, conditions or provisions of, or
constitute a default under, the Declaration of Trust, any order or decree of any
court or public authority having jurisdiction over the Fund or any mortgage,
indenture, contract, agreement or undertaking to which the Fund is a party or by
which it is bound the effect of which conflict, violation, breach or default
would be material to the Fund; and
(viii) no taxes are payable upon or in respect of the execution of
this Agreement or will be payable upon or in respect of the issuance of the
Preferred Shares.
5.2 Representations and Warranties of the Auction Agent.
The Auction Agent represents and warrants to the Fund that:
(i) the Auction Agent is duly organized and is validly existing as
a banking corporation in good standing under the laws of the State of New York
and has the corporate power to enter into and perform its obligations under this
Agreement and
(ii) this Agreement has been duly and validly authorized, executed
and delivered by the Auction Agent and constitutes the legal, valid and binding
obligation of the Auction Agent, enforceable against the Auction Agent in
accordance with its terms, subject only to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equitable principles.
VI. THE AUCTION AGENT.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the Fund
hereunder and owes no fiduciary duties to any Person.
(b) The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.
(c) In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.
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6.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be
fully protected in acting or refraining from acting in accordance with, any
communication authorized by this Agreement and any proper written instruction,
notice, request, direction, consent, report, certificate, share certificate or
other instrument, paper or document reasonably believed by it to be genuine and
appropriately authorized. The Auction Agent shall not be liable for acting upon
any telephone communication authorized by this Agreement which the Auction Agent
reasonably believes in good faith, after reasonable inquiry, to have been given
by the Fund or by a Broker-Dealer. The Auction Agent may record telephone
communications with the Fund or with the Broker-Dealers or with both.
(b) The Auction Agent may consult with counsel of its choice, and
the advice of such counsel, shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the Auction
Agent hereunder in good faith and in reasonable reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder. Unless otherwise instructed by the
Fund in writing, the Auction Agent (i) shall not be obligated to invest any
money received by it hereunder and (ii) shall be under no liability for interest
on any money received by it hereunder.
(d) The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys and shall
not be responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder.
(e) The Auction Agent shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots;
acts of terrorism; interruptions, loss or malfunctions of utilities, computer
(hardware or software) or communications services; accidents; labor disputes;
acts of civil or military authority or governmental actions; it being understood
that the Auction Agent shall use reasonable efforts which are consistent with
accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.
(f) The Auction Agent shall not be required to, and does not, make
any representations as to the validity, accuracy, value or genuineness of any
signatures or endorsements, other than its own and those of its authorized
officers.
(g) Any corporation into which the Auction Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Auction Agent shall be
a party, or any corporation succeeding to [the Dealing and Trading] business of
the Auction Agent shall be the successor of the Auction Agent hereunder, with
the consent of the Fund but without the execution or filing of any paper with
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any party hereto or any further act on the part of any of the parties hereto,
except where any instrument of transfer or assignment may be required by law to
effect such succession, anything herein to the contrary notwithstanding.
(h) All the rights, privileges, immunities and protections granted
to the Auction Agent herein are deemed granted to the Paying Agent and Deutsche
Bank Trust Company Americas in any of the capacities it undertakes in connection
with this Agreement.
(i) Whenever in the administration of the provisions of this
Agreement, the Auction Agent shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering any action to be taken
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Auction Agent, be deemed to be conclusively proved and established
by a certificate describing such action as requested by the Fund or the Broker
Dealer, signed by the Fund or the Broker Dealer, respectively, and delivered to
the Auction Agent and such certificate, in the absence of negligence or bad
faith on the part of the Auction Agent, shall be full warrant to the Auction
Agent for any action taken or omitted by it under the provisions of this
Agreement upon the faith thereof. Upon receipt of any such certificate signed by
the Fund or the Broker-Dealer, the Auction Agent shall promptly provide a copy
of said certificate to the Broker-Dealer or the Fund, respectively. The Auction
Agent shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, entitlement, order, approval or other paper or
document furnished by the Fund or the Broker-Dealer, except to the extent that
such failure to investigate would be deemed negligent.
6.3 Compensation, Expenses and Indemnification.
(a) The Fund shall pay to the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate writing
signed by the Fund and the Auction Agent, subject to adjustments if the
Preferred Shares no longer are held of record by the Securities Depository or
its nominee or if there shall be such other change as shall increase or decrease
materially the Auction Agent's obligations hereunder or under the Broker-Dealer
Agreements.
(b) The Fund shall reimburse the Auction Agent upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Auction Agent in accordance with any provision of this Agreement and of the
Broker-Dealer Agreements (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any expense, disbursement or
advance attributable to the Auction Agent's negligence or bad faith, upon
submission to the Fund of reasonable documentation thereof. In no event shall
the Auction Agent be responsible or liable for special, indirect or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit), even if the Auction Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
(c) The Fund shall indemnify the Auction Agent and its officers,
directors, employees and agents for, and hold them harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of the
Auction Agent arising out of or in connection with its agency under this
Page 14
Agreement and under the Broker-Dealer Agreements, including the costs and
expenses of defending themselves against any claim of liability in connection
with their exercise or performance of any of their duties hereunder and
thereunder, except such as may result from its negligence or bad faith.
6.4 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity
or adequacy of the Agreement, the Broker Dealer Agreements or the Preferred
Shares except to the extent otherwise set forth in Section 5.2 and except that
the Auction Agent hereby represents that the Agreement has been duly authorized,
executed and delivered by the Auction Agent and constitutes a legal and binding
obligation of the Auction Agent.
VII. MISCELLANEOUS.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Fund may terminate this
Agreement at any time by so notifying the Auction Agent, provided that, if any
Preferred Shares remain outstanding, the Fund shall have entered into an
agreement with a successor auction agent. The Auction Agent may terminate this
Agreement (i) upon prior notice to the Fund on the date specified in such
notice, which date shall be no earlier than 60 days after delivery of such
notice or (ii) upon prior notice to the Fund on the date specified in such
notice if the Fund shall have failed to pay the amounts due the Auction Agent in
connection with its agency under this Agreement and under the Broker-Dealer
Agreements within 30 days of invoice. If the Auction Agent terminates this
Agreement while any Preferred Shares remain outstanding, the Fund shall use its
best efforts to enter into an agreement with a successor auction agent
containing substantially the same terms and conditions as this Agreement.
(b) Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Fund and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Fund's
representations, warranties, covenants and obligations to the Auction Agent
under Sections 5.1 and 6.3 hereof shall survive the termination hereof. The
Auction Agent's representations, warranties, covenants and obligations under
Section 5.2 hereof shall survive the termination hereof. Upon termination of
this Agreement, the Auction Agent shall (i) resign as Auction Agent under the
Broker-Dealer Agreements, (ii) at the Fund's written request, deliver promptly
to the Fund or to another authorized party copies of all books and records
maintained by it in connection with its duties hereunder, and (iii) at the
written request of the Fund, transfer promptly to the Fund or to any successor
auction agent any funds deposited by the Fund with the Auction Agent (whether in
its capacity as Auction Agent or as Paying Agent) pursuant to this Agreement
which have not been distributed previously by the Auction Agent in accordance
with this Agreement.
Page 15
7.2 Communications.
Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party at its address or telecopier number set forth below:
If to the Fund,
addressed to:
Attn: Xxxxx Xxxxxxx
First Trust Portfolios, L.P.
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Auction Agent,
addressed to:
Deutsche Bank Trust Company Americas
Corporate Trust & Agency Services
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Mail Stop NYC60 2715
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Fund by a Fund Officer and on
behalf of the Auction Agent by an Authorized Officer.
7.3 Entire Agreement.
This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof, except for written
agreements relating to the compensation of the Auction Agent.
Page 16
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person, other
than the Fund, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
7.6 Successors and Assigns.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by, the respective successors and permitted assigns of each of the
Fund and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party, which consent shall
not be withheld unreasonably.
7.7 Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
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, Jurisdiction, Waiver of Trial By Jury.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW, OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF NEW YORK). THE PARTIES AGREE HERETO THAT ALL ACTIONS AND
PROCEEDINGS ARISING OUT OF THIS AUCTION AGENCY AGREEMENT OR ANY TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK, STATE OF NEW YORK.
EACH PARTY WAIVES ANY OBJECTION THAT IT MAY HAVE THAT SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN THE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF
NEW YORK AND STATE OF NEW YORK WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES
Page 17
NOT TO PLEAD OR CLAIM THE SAME. [EACH OF THE PARTIES HERETO ALSO IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.]
[Signature page follows]
Page 18
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.
FIRST TRUST/FOUR CORNERS SENIOR
FLOATING RATE INCOME FUND
By:
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Name:
Title:
--------------------------
By:
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Name:
Title:
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