<PAGE> 1
1933 ACT FILE NO. 333-68719
1940 ACT FILE NO. 811-09141
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 1 /X/
POST-EFFECTIVE AMENDMENT NO. / /
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 2 /X/
(CHECK APPROPRIATE BOX OR BOXES)
Eaton Vance Municipal Income Trust
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 Federal Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(617) 482-8260
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-------------
COPY TO:
MARK P. GOSHKO, ESQ. THOMAS A. HALE, ESQ.
KIRKPATRICK & LOCKHART LLP SKADDEN, ARPS, SLATE, MEAGHER
ONE INTERNATIONAL PLACE & FLOM LLP (ILLINOIS)
BOSTON, MASSACHUSETTS 02110 333 WACKER DRIVE
CHICAGO, ILLINOIS 60606
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. / /
<PAGE> 2
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE OFFERING REGISTRATION
BEING REGISTERED REGISTERED(2) PER UNIT(1) PRICE(1)(2) FEE(1)(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of Beneficial Interest 15,300,000 $15.00 $229,500,000 $63,801*
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*$11,120 has been previously paid.
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes 1,995,652 shares which may be offered by the Underwriters pursuant
to an option to cover over-allotments.
<PAGE> 3
EATON VANCE MUNICIPAL INCOME TRUST
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-2
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
<S> <C> <C>
1...................... Outside Front Cover Front Cover Page
2...................... Inside Front and Outside Back Cover Page Front and Back Cover Page
3...................... Fee Table and Synopsis Prospectus Summary; Trust Expenses
4...................... Financial Highlights Not Applicable
5...................... Plan of Distribution Front Cover Page; Prospectus Summary;
Underwriting; Dividend Reinvestment
Plan
6...................... Selling Shareholders Not Applicable
7...................... Use of Proceeds Use of Proceeds; Investment Objective,
Policies and Risks
8...................... General Description of the Registrant Management of the Trust; Investment
Objective, Policies and Risks; Description
of Capital Structure
9...................... Management Management of the Trust; Shareholder Servicing
Agent, Custodian and Transfer Agent
10...................... Capital Stock, Long-Term Debt, Distributions and Taxes; Dividend
and Other Securities Reinvestment Plan; Description of Capital
Structure
11...................... Defaults and Arrears on Senior Not Applicable
Securities
12...................... Legal Proceedings Not Applicable
13...................... Table of Contents of the Table of Contents of the
Statement of Additional Statement of Additional
Information Information
</TABLE>
<TABLE>
<CAPTION>
PART B STATEMENT OF
ITEM NO. ITEM CAPTION ADDITIONAL INFORMATION CAPTION
<S> <C> <C>
14...................... Cover Page Cover Page
15...................... Table of Contents Table of Contents
16...................... General Information and History Not Applicable
17...................... Investment Objective and Additional Investment Information and
Policies Restrictions
18...................... Management Trustees and Officers;
Investment Advisory and
Other Services
19...................... Control Persons and Principal Other Information
Holders of Securities
20...................... Investment Advisory and Other Investment Advisory and Other
Services Services
21...................... Brokerage Allocation and Other Portfolio Trading
Practices
22...................... Tax Status Taxes
23...................... Financial Statements Financial Statements
</TABLE>
<PAGE> 4
[EATON VANCE LOGO]
SHARES
EATON VANCE MUNICIPAL INCOME TRUST
------------------------
Eaton Vance Municipal Income Trust (the "Trust") is a newly organized
closed-end fund. The Trust's investment objective is to provide current income
exempt from regular federal income tax. This income will be earned by investing
primarily in investment grade municipal securities. The Trust may also invest a
portion of its assets in higher risk, higher yielding municipal securities of
lesser quality. The Trust's net asset value and distribution rate will vary, and
may be affected by several factors, including changes in interest rates and the
credit quality of municipal issuers. Fluctuations in net asset value may be
magnified as a result of the Trust's use of leverage, which may be a speculative
investment technique. An investment in the Trust may not be appropriate for all
investors, particularly those subject to the federal alternative minimum tax.
Closed-end fund shares often trade at a discount to their net asset value. There
is no assurance that the Trust will achieve its investment objective. See
"Investment Objective, Policies and Risks" beginning at page 9.
The Trust's investment adviser is Eaton Vance Management ("Eaton Vance" or
the "Adviser"). Eaton Vance manages 45 different municipal bond funds with
combined assets of about $7.5 billion.
(continued on the following page)
<TABLE>
<CAPTION>
Per Share Total
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<S> <C> <C>
Public Offering Price.............................. $15.00 $
Underwriting Discounts............................. None None
Proceeds, before expenses, to the Trust............ $15.00 $
</TABLE>
Eaton Vance or an affiliate will pay all Trust offering expenses that
exceed $0.03 per Share. It is expected that delivery of the Shares will be made
in New York City on or about January 29, 1999.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
PAINEWEBBER INCORPORATED
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER
INCORPORATED
EVEREN SECURITIES, INC.
------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY 26, 1999.
<PAGE> 5
(continued from cover page)
The Trust is offering shares of beneficial interest, par value $0.01 per
share ("Shares"). The Underwriters may also purchase up to an additional
Shares at the public offering price within 45 days from the date of
this Prospectus. Assuming these additional Shares are purchased, the total
proceeds to the Trust would be $ . Eaton Vance Management or an
affiliate (not the Trust) from its own assets will pay a commission to the
Underwriters in the amount of 4.50% of the Public Offering Price per Share for
the sale of the Shares. Offering expenses of $ ($ if the
Underwriters' over-allotment option is exercised in full) will be deducted from
net proceeds. Offering expenses include $ payment to the Underwriters
in partial reimbursement of their expenses. Eaton Vance or an affiliate will pay
all Trust offering expenses that exceed $0.03 per Share.
Prior to this offering, there has been no market for the Shares. The Shares
have been approved for listing, subject to notice of issuance, on the New York
Stock Exchange under the symbol "EVN." The shares of closed-end investment
companies, such as the Trust, have frequently traded at a discount to their net
asset values. Investors in this offering should note that the Shares may
likewise trade at a discount to net asset value. This risk may be greater for
investors who sell their Shares in a relatively short period after completion of
the public offering.
The Trust expects to use financial leverage through the issuance of
preferred shares, initially equal to approximately 35% of its total assets
(including the amount obtained through leverage). The Trust intends to use
leverage if it is expected to result in higher income to Shareholders over time.
Use of financial leverage creates an opportunity for increased income but, at
the same time, creates special risks. There can be no assurance that a
leveraging strategy will be successful. SEE "INVESTMENT OBJECTIVE, POLICIES AND
RISKS -- USE OF LEVERAGE AND RELATED RISKS" AT PAGE 12 AND "DESCRIPTION OF
CAPITAL STRUCTURE" AT PAGE 21.
This Prospectus sets forth concisely information you should know before
investing in the Shares of the Trust. Please read and retain this Prospectus for
future reference. A Statement of Additional Information dated January 26, 1999,
has been filed with the Securities and Exchange Commission ("SEC") and can be
obtained without charge by calling 1-800-225-6265 or by writing to the Trust. A
table of contents to the Statement of Additional Information is located at page
29 of this Prospectus. This Prospectus incorporates by reference the entire
Statement of Additional Information. The Statement of Additional Information is
available along with other Trust-related materials at the SEC's internet web
site (http://www.sec.gov).The Trust's address is 24 Federal Street, Boston,
Massachusetts 02110 and its telephone number is 1-800-225-6265.
The Trust's Shares do not represent a deposit or obligation of, and are not
guaranteed or endorsed by, any bank or other insured depository institution, and
are not federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency.
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Prospectus Summary.................... 1
Trust Expenses........................ 8
The Trust............................. 9
Use of Proceeds....................... 9
Investment Objective, Policies and
Risks............................... 9
Management of the Trust............... 17
Distributions and Taxes............... 18
Dividend Reinvestment Plan............ 19
Description of Capital Structure...... 21
</TABLE>
<TABLE>
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PAGE
----
<S> <C>
Underwriting.......................... 25
Shareholder Servicing Agent, Custodian
and Transfer Agent.................. 26
Legal Opinions........................ 27
Additional Information................ 27
Table of Contents for the Statement of
Additional Information.............. 28
Trustees of the Trust................. 28
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
NEITHER THE TRUST NOR THE UNDERWRITERS HAVE AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. NEITHER THE TRUST NOR THE
UNDERWRITERS ARE MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION
APPEARING IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER ONLY.
ii
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information included elsewhere in this Prospectus and the Statement of
Additional Information.
THE TRUST..................... Eaton Vance Municipal Income Trust (the
"Trust") is a newly organized closed-end fund.
The Trust offers investors the opportunity to
receive current income exempt from regular
federal income tax through a professionally
managed portfolio of municipal obligations.
Investments are based on Eaton Vance
Management's ("Eaton Vance" or the "Adviser")
research and ongoing credit analysis, the
underlying materials for which are generally
not available to individual investors. An
investment in the Trust may not be appropriate
for all investors, particularly those subject
to the federal alternative minimum tax. There
is no assurance that the Trust will achieve its
investment objective.
THE OFFERING.................. The Trust is offering shares of
beneficial interest, par value $0.01 per share
(the "Shares"), through a group of underwriters
(the "Underwriters") led by PaineWebber
Incorporated, A.G. Edwards & Sons, Inc.,
Prudential Securities Incorporated, Salomon
Smith Barney Inc., Dain Rauscher Wessels, a
division of Dain Rauscher Incorporated, and
EVEREN Securities, Inc. The Underwriters have
been granted an option to purchase up to
additional Shares solely to cover
over-allotments, if any. The initial public
offering price is $15.00 per share. The minimum
purchase in this offering is 100 Shares
($1,500).
NO SALES CHARGE............... The Shares will be sold in the initial public
offering without any sales load or underwriting
discounts payable by investors or the Trust.
Eaton Vance or an affiliate (not the Trust)
from its own assets will pay a commission to
the Underwriters in connection with sales of
the Shares in this offering. See
"Underwriting."
INVESTMENT OBJECTIVE AND
POLICIES.................... The Trust's investment objective is to provide
current income exempt from regular federal
income tax. Securities will be purchased and
sold in an effort to maintain a competitive
yield and to enhance return based upon the
relative value of the securities available in
the marketplace.
During normal market conditions substantially
all of the Trust's total assets (at least 80%)
will be invested in debt obligations issued by
or on behalf of states, territories and
possessions of the United States, and the
District of Columbia and their political
subdivisions, agencies or instrumentalities,
the interest on which is exempt from regular
federal income tax ("municipal obligations").
At least 65% of the Trust's total assets
normally will be invested in municipal
obligations rated at least investment grade at
the time of investment (which are those rated
Baa or higher by Moody's Investors Service,
Inc. ("Moody's") or BBB or higher by either
Standard & Poor's Ratings Group ("S&P") or by
Fitch IBCA ("Fitch")), or, if unrated,
determined by Eaton Vance to be of at least
investment grade quality. From time to time,
the Trust may hold a significant number of
municipal obligations not rated by a nationally
recognized statistical rating organization
("Rating
1
<PAGE> 7
Agency"). When the Trust invests in unrated
municipal obligations it may be more dependent
on Eaton Vance's research capabilities than
when it invests in rated municipal obligations.
The Trust may invest up to 35% of its total
assets in municipal obligations rated below
investment grade (but not, with respect to more
than 30% of total assets, lower than B by all
Rating Agencies rating the obligation) and
unrated municipal obligations considered to be
of comparable quality by Eaton Vance.
Investment in municipal obligations of below
investment grade quality involves special risks
as compared with investment in higher grade
municipal obligations. These risks include
greater sensitivity to a general economic
downturn, greater market price volatility and
less secondary market trading. Securities rated
below investment grade are commonly known as
"junk bonds." Such securities are regarded, on
balance, as predominantly speculative with
respect to the issuer's ability to pay interest
and repay principal owed.
The Trust may invest to a significant extent in
residual interest municipal bonds known as
inverse floaters. Compared to similar fixed
rate municipal bonds, the value of these bonds
will fluctuate to a greater extent in response
to changes in prevailing long-term interest
rates. Moreover, the income earned on residual
interest municipal bonds will fluctuate in
response to changes in prevailing short-term
interest rates. Thus, when such bonds are held
by the Trust, an increase in short- or
long-term market interest rates will adversely
affect the income received from such bonds or
the net asset value of Trust shares. To the
extent the Trust has preferred shares
outstanding, an increase in short-term rates
would also result in an increased cost of
leverage, which would adversely affect the
Trust income available for distribution.
Although the Trust is not limited with respect
to its investment in residual interest
municipal bonds, the Trust does not intend
initially to invest more than 10% of its total
assets in such bonds.
The Trust may purchase and sell various kinds
of financial futures contracts and related
options, including futures contracts and
related options based on various debt
securities and securities indices, to seek to
hedge against changes in interest rates, as a
substitute for the purchase of securities or
for other risk management purposes.
Interest income from certain types of municipal
obligations may be a tax preference item for
purposes of the federal alternative minimum tax
(the "AMT") for individual investors.
Distributions to corporate investors of certain
interest income may also be indirectly subject
to the AMT. The Trust may not be suitable for
investors subject to the AMT.
LISTING....................... The Shares have been approved for listing,
subject to notice of issuance, on the New York
Stock Exchange under the symbol "EVN."
LEVERAGE...................... The Trust expects to use financial leverage
through the issuance of preferred shares. The
Trust intends initially to use financial
leverage of approximately 35% of its total
assets (including the amount
2
<PAGE> 8
obtained through leverage). The Trust generally
will not use leverage if it anticipates that it
would result in a lower return to Shareholders
over time. Use of financial leverage creates an
opportunity for increased income for
Shareholders but, at the same time, creates
special risks (including the likelihood of
greater volatility of net asset value and
market price of the Shares), and there can be
no assurance that a leveraging strategy will be
successful during any period in which it is
employed. See "Investment Objective, Policies
and Risks -- Use of Leverage and Related
Risks."
INVESTMENT ADVISER AND
ADMINISTRATOR............... Eaton Vance, a wholly-owned subsidiary of Eaton
Vance Corp., is the Trust's investment adviser
and administrator. The Adviser manages 3
national municipal funds, 32 single state
municipal funds, 10 limited maturity municipal
funds and 1 money market municipal fund with
combined assets of about $7.5 billion. (All but
1 of these funds are open-end.) Among such
funds, Eaton Vance currently sponsors Eaton
Vance National Municipals Fund ("National
Municipals Fund") which is an open-end fund
that invests primarily in investment grade
municipal obligations. The National Municipals
Fund is managed by the same portfolio manager
employed by the Adviser who will manage the
Trust's assets. See "Management of the Trust."
SHAREHOLDER SERVICING AGENT... PaineWebber Incorporated has been retained by
the Administrator to act as the Shareholder
Servicing Agent of the Trust. See "Shareholder
Servicing Agent, Custodian and Transfer Agent."
DISTRIBUTIONS................. The Trust's policy will be to make monthly
distributions to Shareholders. Distributions to
Shareholders cannot be assured, and the amount
of each monthly distribution will vary. The
initial distribution to Shareholders is
expected to be paid approximately 60 days after
the completion of this offering. See
"Distributions and Taxes," "Dividend
Reinvestment Plan" and "Use of Proceeds."
DIVIDEND REINVESTMENT PLAN.... The Trust has established a Dividend
Reinvestment Plan (the "Plan"). Under the Plan,
all dividend and capital gain distributions
will be automatically reinvested in additional
Shares either purchased in the open market, or
newly issued by the Trust if the Shares are
trading at or above their net asset value, in
either case unless a Shareholder elects to
receive cash. Shareholders who intend to hold
their Shares through a broker or nominee should
contact such broker or nominee to determine
whether or how they may participate in the
Plan. See "Dividend Reinvestment Plan."
CLOSED-END STRUCTURE.......... Closed-end funds differ from open-end
management investment companies (commonly
referred to as mutual funds) in that closed-
end funds generally list their shares for
trading on a securities exchange and do not
redeem their shares at the option of the
shareholder. By comparison, mutual funds issue
securities redeemable at net asset value at the
option of the shareholder and typically engage
in a continuous offering of their shares.
Mutual funds are subject to continuous asset
in-flows and out-flows that can complicate
portfolio management, whereas closed-end funds
generally can stay more fully invested in
securities consistent with the
3
<PAGE> 9
closed-end fund's investment objective and
policies. In addition, in comparison to
open-end funds, closed-end funds have greater
flexibility in the employment of financial
leverage and in the ability to make certain
types of investments, including investments in
illiquid securities. However, shares of
closed-end funds frequently trade at a discount
from their net asset value. In recognition of
the possibility that the Shares might trade at
a discount to net asset value and that any such
discount may not be in the interest of
Shareholders, the Trust's Board of Trustees
(the "Board"), in consultation with Eaton
Vance, from time to time may review possible
actions to reduce any such discount. The Board
might consider open market repurchases or
tender offers for Shares at net asset value.
There can be no assurance that the Board will
decide to undertake any of these actions or
that, if undertaken, such actions would result
in the Shares trading at a price equal to or
close to net asset value per Share. The Board
might also consider the conversion of the Trust
to an open-end mutual fund. The Board of
Trustees believes, however, that the closed-end
structure is desirable, given the Trust's
investment objective and policies. Investors
should assume, therefore, that it is highly
unlikely that the Board would vote to convert
the Trust to an open-end investment company.
See "Description of Capital Structure."
SPECIAL RISK CONSIDERATIONS... No Operating History. The Trust is a
closed-end investment company with no history
of operations and is designed for long-term
investors and not as a trading vehicle.
Interest Rate and Market Risk. The prices of
municipal obligations tend to fall as interest
rates rise. Securities that have longer
maturities tend to fluctuate more in price in
response to changes in market interest rates. A
decline in the prices of the municipal
obligations owned by the Trust would cause a
decline in the net asset value of the Trust,
which could adversely affect the trading price
of the Trust's Shares. This risk is usually
greater among municipal obligations with longer
maturities or durations and when residual
interest municipal bonds are held by the Trust.
Although the Trust has no policy governing the
maturities or durations of its investments, the
Trust expects that it will invest in a
portfolio of longer-term securities. This means
that the Trust will be subject to greater
market risk (other things being equal) than a
fund investing solely in shorter-term
securities. Market risk is often greater among
certain types of debt securities, such as
zero-coupon bonds, which do not make regular
interest payments. As interest rates change,
these bonds often fluctuate in price more than
higher quality bonds that make regular interest
payments. Because the Trust may invest in these
types of debt securities, it may be subject to
greater market risk than a fund that invests
only in current interest paying securities.
Income Risk. The income investors receive from
the Trust is based primarily on the interest it
earns from its investments, which can vary
widely over the short and long-term. If
interest rates drop, investors' income from the
Trust over time could drop as well if the Trust
purchases securities with lower interest
coupons. This risk is
4
<PAGE> 10
magnified when prevailing short-term interest
rates increase and the Trust holds residual
interest municipal bonds.
Call Risk. If interest rates fall, it is
possible that issuers of callable bonds with
high interest coupons will "call" (or prepay)
their bonds before their maturity date. If a
call were exercised by the issuer during a
period of declining interest rates, the Trust
is likely to replace such called security with
a lower yielding security. If that were to
happen, it would decrease the Trust's
dividends.
Credit Risk. Credit risk refers to an issuer's
ability to make payments of principal and
interest when they are due. Because the Trust
may invest up to 35% of its total assets in
below investment grade securities, it will be
subject to a high level of credit risk. The
credit quality of such securities is considered
speculative by Rating Agencies with respect to
the issuer's ability to pay interest or
principal. The prices of lower grade securities
are more sensitive to negative developments,
such as a decline in the issuer's revenues, or
adverse economic conditions, such as a
recession, than are the prices of higher grade
securities. Securities that have longer
maturities also fluctuate more in price in
response to negative economic or other news.
Therefore, lower grade securities may
experience high default rates, which would mean
that the Trust may lose some of its investment
in such securities, which would adversely
affect the Trust's net asset value and ability
to make distributions.
Liquidity Risk. The Trust may invest in
securities for which there is no readily
available trading market or which are otherwise
illiquid, which includes residual interest
municipal bonds. The Trust may not be able to
readily dispose of such securities at prices
that approximate those at which the Trust could
sell such securities if they were more widely
traded and, as a result of such illiquidity,
the Trust may have to sell other investments or
engage in borrowing transactions if necessary
to raise cash to meet its obligations. In
addition, the limited liquidity could affect
the market price of the securities, thereby
adversely affecting the Trust's net asset value
and ability to make dividend distributions.
Municipal Bond Market. Many obligations in
which the Trust will invest may not be rated by
a Rating Agency, will not be registered with
the Securities and Exchange Commission or any
state securities commission, and will not be
listed on any national securities exchange.
Therefore, the amount of public information
available about portfolio securities will be
limited, and the performance of the Trust is
more dependent on the analytical abilities of
Eaton Vance than would be the case for an
investment company that invests primarily in
more widely rated, registered or exchange-
listed securities.
Concentration. The Trust may invest 25% or
more of its total assets in municipal
obligations of issuers located in the same
state (or U.S. territory) or in the same
economic sector, such as revenue obligations of
health care facilities or hospitals, airport
revenue obligations or industrial development
bonds. This may make the
5
<PAGE> 11
Trust more susceptible to adverse economic,
political or regulatory occurrences affecting a
particular state or economic sector.
Effects of Leverage. The use of leverage
through issuance of preferred shares by the
Trust creates an opportunity for increased net
income, but, at the same time, creates special
risks. There can be no assurance that a
leveraging strategy will be successful during
any period in which it is employed. The Trust
intends to use leverage to provide the holders
of Shares with a potentially higher return.
Leverage creates risks for holders of Shares,
including the likelihood of greater volatility
of net asset value and market price of the
Shares and the risk that fluctuations in
dividend rates on any preferred shares may
affect the return to Shareholders. It is
anticipated that preferred share dividends will
be based on the yields of short-term municipal
obligations, while the proceeds of any
preferred share offering will be invested in
longer-term municipal obligations, which
typically have higher yields. To the extent the
income derived from securities purchased with
funds received from leverage exceeds the cost
of leverage, the Trust's return will be greater
than if leverage had not been used. Conversely,
if the income from the securities purchased
with such funds is not sufficient to cover the
cost of leverage, the return to the Trust will
be less than if leverage had not been used, and
therefore the amount available for distribution
to Shareholders as dividends and other
distributions will be reduced. In the latter
case, Eaton Vance in its best judgment may
nevertheless determine to maintain the Trust's
leveraged position if it deems such action to
be appropriate in the circumstances. Investment
by the Trust in residual interest municipal
bonds may amplify the effects of leverage and,
during periods of rising short-term interest
rates, may adversely affect the Trust's income
and distributions to Shareholders. In addition,
under current federal income tax law, the Trust
is required to allocate a portion of any net
realized capital gains or other taxable income
to holders of preferred shares. The terms of
any preferred shares are expected to require
the Trust to pay to any preferred shareholders
additional dividends intended to compensate the
preferred shareholders for taxes payable on any
capital gains or other taxable income allocated
to the preferred shares. Any such additional
dividends will reduce the amount available for
distribution to the Shareholders. As discussed
under "Management of the Trust," the fee paid
to Eaton Vance will be calculated on the basis
of the Trust's gross assets, including proceeds
from the issuance of preferred shares, so the
fees will be higher when leverage is utilized.
See "Investment Objective, Policies and
Risks -- Use of Leverage and Related Risks."
The Trust currently intends to seek an
investment grade rating on any preferred shares
from a Rating Agency. The Trust may be subject
to investment restrictions of the Rating Agency
as a result. These restrictions may impose
asset coverage or portfolio composition
requirements that are more stringent than those
imposed on the Trust by the Investment Company
Act of 1940, as amended (the "Investment
Company Act" or "1940 Act"). It is not
anticipated that these covenants or guidelines
will impede Eaton Vance
6
<PAGE> 12
in managing the Trust's portfolio in accordance
with its investment objective and policies. See
"Description of Capital Structure -- Preferred
Shares."
Financial leverage may also be achieved through
the purchase of certain derivative instruments.
The Trust's use of residual interest municipal
bonds and futures contracts expose the Trust to
special risks. Such transactions may result in
the Trust earning taxable income or gains. See
"Investment Objective, Policies and Risks."
Market Price of Shares. The shares of
closed-end investment companies often trade at
a discount from their net asset value, and the
Trust's Shares may likewise trade at a discount
from net asset value. The trading price of the
Trust's Shares may be less than the public
offering price. This risk may be greater for
investors who sell their Shares in a relatively
short period after completion of the public
offering.
Non-Diversification. The Trust has registered
as a "non-diversified" investment company under
the 1940 Act. For federal income tax purposes
the Trust, with respect to up to 50% of its
total assets, will be able to invest more than
5% (but not more than 25%) of the value of its
total assets in the obligations of any single
issuer. To the extent the Trust invests a
relatively high percentage of its assets in
obligations of a limited number of issuers, the
Trust may be more susceptible than a more
widely diversified investment company to any
single economic, political or regulatory
occurrence.
Alternative Minimum Tax and Other Tax
Considerations. Interest on certain "private
activity" municipal obligations is treated as a
tax preference item for purposes of the AMT. In
addition, for corporations income subject to
the AMT includes interest on all tax-exempt
obligations. There is no specific limitation on
the amount of the Trust's assets that may be
invested in municipal obligations that pay
interest that is treated as a tax preference
item. Accordingly, an investment in the Trust
may not be appropriate for investors who are
already subject to the AMT who would become
subject thereto as a result of owning Shares.
Moreover, distributions of any taxable net
investment income and net short-term capital
gain are taxable as ordinary income. See
"Distributions and Taxes."
Anti-Takeover Provisions. The Trust's
Agreement and Declaration of Trust includes
provisions that could have the effect of
limiting the ability of other persons or
entities to acquire control of the Trust or to
change the composition of its Board of
Trustees. See "Description of Capital
Structure -- Anti-Takeover Provisions in the
Declaration of Trust."
7
<PAGE> 13
TRUST EXPENSES
The following tables are intended to assist investors in understanding the
various costs and expenses that an investor in the Trust will bear, directly or
indirectly.
<TABLE>
<CAPTION>
NET ASSETS
WITH
LEVERAGE(1)
-----------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load................................................ None
Dividend Reinvestment Plan Fees........................... None
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS
ATTRIBUTABLE TO SHARES)(1)
Investment Advisory Fee................................... 1.07%
Dividend Payments on Preferred Shares..................... 1.71%
Other Expenses (including administration fee of
0.31%)(2).............................................. 0.61%
----
Total Annual Operating Expenses........................... 3.39%
====
</TABLE>
- ---------------
(1) The Trust intends to utilize leverage only if the Adviser believes that it
would result in higher income to Shareholders over time. See "Investment
Objective, Policies and Risks -- Use of Leverage and Related Risks." Assumes
preferred shares outstanding of approximately 35% of total assets (including
preferred shares) at a dividend rate of 3.20%, which is based upon the
Trust's estimation of current market conditions. At times when the Trust
does not utilize leverage, the estimated annual operating expenses would be:
<TABLE>
<S> <C>
Investment Advisory Fee................................... 0.70%
Dividend Payments on Preferred Shares..................... None
Other Expenses (including administration fee of
0.20%)(2).............................................. 0.36%
----
Total Annual Operating Expenses........................... 1.06%
====
</TABLE>
(2) Reflects estimated amounts for the Trust's first year of operations,
including organizational expenses. After the first year, total annual
operating expenses (assuming no leverage) are expected to be 1.04% per
annum.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the
Trust, assuming a 5% annual return:
<TABLE>
<CAPTION>
ONE YEAR(*) THREE YEARS FIVE YEARS TEN YEARS
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Assuming No Leverage.......................... $11 $ 34 $ 58 $129
Assuming 35% Leverage......................... $34 $104 $176 $368
</TABLE>
- ---------------
* This Example assumes that all dividends and other distributions are reinvested
at net asset value and that the percentage amounts listed under Total Annual
Operating Expenses remain the same in the years shown, except for amounts for
the Three Years, Five Years and Ten Years periods which are after the
deduction of organization expenses in the first year. The above tables and the
assumption in the Example of a 5% annual return and reinvestment at net asset
value are required by regulations of the SEC; the assumed 5% annual return is
not a prediction of, and does not represent, the projected or actual
performance of Trust Shares. THIS EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE EXPENSES, AS THE TRUST'S ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN.
8
<PAGE> 14
THE TRUST
Eaton Vance Municipal Income Trust (the "Trust") is a newly organized,
non-diversified, closed-end management investment company that was organized as
a Massachusetts business trust on December 10, 1998 and has no operating
history. The Trust's principal office is located at 24 Federal Street, Boston,
MA 02110 and its telephone number is 1-800-225-6265.
This Prospectus relates to the initial public offering of the Trust's
shares of beneficial interest, $.01 par value (the "Shares"). The Shares will be
sold during the initial public offering without any sales load or underwriting
discounts payable by investors or the Trust. Eaton Vance Management (the
"Adviser" or "Eaton Vance") or an affiliate (not the Trust) from its own assets
will pay a commission to the Underwriters in connection with sales of the Shares
in this offering. See "Underwriting."
USE OF PROCEEDS
The proceeds of this offering, before deduction of offering expenses,
estimated to be $ (or $ assuming exercise of the Underwriters'
over-allotment option in full), will be invested in accordance with the Trust's
investment objective and policies as soon as practicable, but in no event, under
normal market conditions, later than three months after the receipt thereof.
Pending such investment, the proceeds may be invested in high-quality,
short-term municipal debt securities. Eaton Vance has agreed to pay all offering
expenses of the Trust that exceed $0.03 per Share.
INVESTMENT OBJECTIVE, POLICIES AND RISKS
INVESTMENT OBJECTIVE
The Trust's investment objective is to provide current income exempt from
regular federal income tax. This income will be earned by investing primarily in
investment grade municipal obligations. Securities will be purchased and sold in
an effort to maintain a competitive yield and to enhance return based upon the
relative value of the securities available in the marketplace. Investments are
based on Eaton Vance's research and ongoing credit analysis, the underlying
materials for which are generally not available to individual investors.
Eaton Vance seeks to find municipal obligations of high quality that have
been undervalued in the marketplace. Eaton Vance's research specialists examine
credit histories, revenue sources, total debt histories, capital structures and
other data. This research capability is important because many obligations in
which the Trust will invest will not be rated or listed on a national securities
exchange, and the amount of public information available about such securities
will be limited. The Trust intends to emphasize the research that is critical to
discovering value while avoiding undue credit risk. The Trust will attempt to
enhance performance opportunities by seeking to remain fully invested.
INVESTMENT POLICIES -- GENERAL COMPOSITION OF THE TRUST
During normal market conditions, substantially all of the Trust's total
assets (at least 80%) will be invested in debt obligations issued by or on
behalf of states, territories and possessions of the United States, and the
District of Columbia and their political subdivisions, agencies or
instrumentalities, the interest on which is exempt from regular federal income
tax ("municipal obligations"). At least 65% of the Trust's total assets will
normally be invested in municipal obligations rated at least investment grade at
the time of investment (which are those rated Baa or higher by Moody's Investors
Service, Inc. ("Moody's") or BBB or higher by either Standard & Poor's Ratings
Group ("S&P") or by Fitch IBCA ("Fitch")), or, if unrated, determined by Eaton
Vance to be of at least investment grade quality. From time to time, the Trust
may hold a significant amount of municipal obligations not rated by a nationally
recognized statistical rating organization ("Rating Agency"). When the Trust
invests in unrated municipal obligations, it may be more dependent on Eaton
Vance's research capabilities than when it invests in rated municipal
obligations.
9
<PAGE> 15
The Trust may invest up to 35% of its total assets in municipal obligations
rated below investment grade (but not, with respect to more than 30% of total
assets, lower than B by all Rating Agencies rating the obligation) and unrated
municipal obligations considered to be of comparable quality by Eaton Vance. No
such securities will be in default at the time of purchase. Investment in
municipal obligations of below investment grade quality involves special risks
as compared with investment in higher grade municipal obligations. These risks
include greater sensitivity to a general economic downturn, greater market price
volatility and less secondary market trading. Securities rated below investment
grade are commonly known as "junk bonds". Such securities are regarded, on
balance, as predominantly speculative with respect to the issuer's ability to
pay interest and repay principal owed. See "-- Additional Risk Considerations."
For a description of municipal obligation ratings, see Appendix A to the
Statement of Additional Information.
The foregoing credit quality policies apply only at the time a security is
purchased, and the Trust is not required to dispose of a security in the event
that a Rating Agency downgrades its assessment of the credit characteristics of
a particular issue. In determining whether to retain or sell such a security,
Eaton Vance may consider such factors as Eaton Vance's assessment of the credit
quality of the issuer of such security, the price at which such security could
be sold and the rating, if any, assigned to such security by other Rating
Agencies.
Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes, the
interest on which is, in the opinion of issuer's counsel (or on the basis of
other reliable authority), exempt from regular federal income tax. Public
purpose municipal bonds include general obligation and revenue bonds. General
obligation bonds are backed by the taxing power of the issuing municipality.
Revenue bonds are backed by the revenues of a project or facility, or from the
proceeds of a specific revenue source. Some revenue bonds are payable solely or
partly from funds which are subject to annual appropriations by a state's
legislature. Municipal notes include bond anticipation, tax anticipation and
revenue anticipation notes. Bond, tax and revenue anticipation notes are
short-term obligations that will be retired with the proceeds of an anticipated
bond issue, tax revenue or facility revenue, respectively.
Some of the securities in which the Trust invests may include so-called
"zero-coupon" bonds, whose values are subject to greater fluctuation in response
to changes in market interest rates than bonds that pay interest currently.
Zero-coupon bonds are issued at a significant discount from face value and pay
interest only at maturity rather than at intervals during the life of the
security. The Trust is required to take into account income from zero-coupon
bonds on a current basis, even though it does not receive that income currently
in cash, and the Trust is required to distribute substantially all of its income
for each taxable year. Thus, the Trust may have to sell other investments to
obtain cash needed to make income distributions.
The Trust may invest in residual interest municipal bonds whose interest
rates bear an inverse relationship to the interest rate on another security or
the value of an index ("inverse floaters"). An investment in inverse floaters
may involve greater risk than an investment in a fixed rate bond. Because
changes in the interest rate on the other security or index inversely affect the
residual interest paid on the inverse floater, the value of an inverse floater
is generally more volatile than that of a fixed rate bond. Inverse floaters have
interest rate adjustment formulas which generally reduce or, in the extreme,
eliminate the interest paid to the Trust when short-term interest rates rise,
and increase the interest paid to the Trust when short-term interest rates fall.
Inverse floaters have varying degrees of liquidity, and the market for these
securities is relatively new and volatile. These securities tend to underperform
the market for fixed rate bonds in a rising interest rate environment, but tend
to outperform the market for fixed rate bonds when interest rates decline.
Shifts in long-term interest rates may, however, alter this tendency. Although
volatile, inverse floaters typically offer the potential for yields exceeding
the yields available on fixed rate bonds with comparable credit quality, coupon,
call provisions and maturity. These securities usually permit the investor to
convert the floating rate to a fixed rate (normally adjusted downward), and this
optional conversion feature may provide a partial hedge against rising rates if
exercised at an opportune time. Investment in inverse floaters may amplify the
effects of the Trust's use of leverage. Should short-term interest rates rise,
the combination of the Trust's investment in inverse floaters and the use of
leverage likely will adversely affect the Trust's income and distributions to
Shareholders. Although the Trust is not limited with respect to its investment
in residual interest municipal bonds, the Trust does not intend initially to
invest more than 10% of its assets in such bonds.
10
<PAGE> 16
The Trust may purchase municipal bonds that are additionally secured by
insurance, bank credit agreements, or escrow accounts. The credit quality of
companies which provide such credit enhancements will affect the value of those
securities. Although the insurance feature reduces certain financial risks, the
premiums for insurance and the higher market price paid for insured obligations
may reduce the Trust's current yield. Insurance generally will be obtained from
insurers with a claims-paying ability rated Aaa by Moody's or AAA by S&P or
Fitch. The insurance feature does not guarantee the market value of the insured
obligations or the net asset value of the Trust's shares.
Interest income from certain types of municipal obligations may be a tax
preference item for purposes of the federal alternative minimum tax (the "AMT")
for individual investors. Distributions to corporate investors of certain
interest income may also be indirectly subject to the AMT. The Trust may not be
suitable for investors subject to the AMT.
The Trust has adopted certain fundamental investment restrictions set forth
in the Statement of Additional Information which may not be changed without a
Shareholder vote. Except for such restrictions and the 80% requirement set forth
above, the investment objective and policies of the Trust may be changed by the
Board of Trustees without Shareholder action.
Based on available market data, the Adviser believes that the average yield
on 20-year tax-exempt municipal bonds that make up the General Obligation
Municipal Bond Buyer Index has historically represented approximately 85% of the
yields on 30-year U.S. Treasury bonds. As of November 30, 1998, such
representative municipal bonds had an average yield of 5.01%, or approximately
99% of the taxable yield of a 30-year U.S. Treasury bond, which had a yield of
5.07% (Source: FactSet). Based on a maximum federal income tax rate of 39.6%, a
tax-exempt municipal yield of 5.00% is equivalent to a yield of 8.28% from a
taxable investment. The General Obligation Municipal Bond Buyer Index is
unmanaged and contains 20 general obligation municipal bonds. Unlike the Trust,
this index carries no management fees, account charges or other expenses. U.S.
Treasury bonds offer a government guarantee as to the timely payment of interest
and repayment of principal at maturity. It is not possible to invest directly in
an index.
The Adviser also believes that the closed-end structure of the Trust
provides an effective way of investing in municipal obligations. The average
annual total return on 93 national leveraged and non-leveraged closed-end
municipal funds tracked by CDA Weisenberger as of November 27, 1998 was 10.57%,
10.34%, 7.18% and 7.89% for one, three, five and ten years, and on 82 national
open-end funds tracked by Lipper Analytical Services as of November 25, 1998 was
6.95%, 6.74%, 5.94% and 8.12% for one, three, five and ten years. In addition,
the average annualized yield on such closed-end municipal funds and its taxable
equivalent (assuming a maximum 39.6% federal income tax rate only) were 5.64%
and 9.34%, whereas for such open-end municipal funds the average annualized
yield and its taxable equivalent were 4.71% and 7.80%. The yield on a 30-year
U.S. Treasury bond as of November 30, 1998 was 5.07%. The Trust will not seek to
match the performance or composition of any index or average.
ADDITIONAL INVESTMENT PRACTICES
When-Issued Securities. The Trust may purchase securities on a
"when-issued" basis, which means that payment and delivery occur on a future
settlement date. The price and yield of such securities are generally fixed on
the date of commitment to purchase. However, the market value of the securities
may fluctuate prior to delivery and upon delivery the securities may be worth
more or less than the Trust agreed to pay for them. The Trust may be required to
maintain a segregated account of liquid assets equal to outstanding purchase
commitments. The Trust may also purchase instruments that give the Trust the
option to purchase a municipal obligation when and if issued.
Futures Transactions. The Trust may purchase and sell various kinds of
financial futures contracts and options thereon to seek to hedge against changes
in interest rates or as a substitute for the purchase of securities. For
example, futures contracts may sometimes be used to seek to reduce the
additional long-term interest rate risk the Trust bears by holding residual
interest municipal bonds. Futures contracts may be based on various debt
securities and securities indices (such as the Municipal Bond Index traded on
the Chicago Board of Trade). Such transactions involve a risk of loss or
depreciation due to unanticipated adverse changes
11
<PAGE> 17
in securities prices, which may exceed the Trust's initial investment in these
contracts. The Trust will only purchase or sell futures contracts or related
options in compliance with the rules of the Commodity Futures Trading
Commission. These transactions involve transaction costs. There can be no
assurance that Eaton Vance's use of futures will be advantageous to the Trust.
Distributions by the Trust of any gains realized on the Trust's transactions in
futures and options on futures will be taxable. Rating agency guidelines on any
preferred shares issued by the Trust may limit use of these transactions.
Investment Company Securities. The Trust may purchase common shares of
closed-end investment companies that have a similar investment objective and
policies to the Trust. In addition to providing tax-exempt income, such
securities may provide capital appreciation. Such investments, which may also be
leveraged and subject to the same risks as the Trust, will not exceed 10% of
total assets, and no such company will be affiliated with Eaton Vance. These
companies bear fees and expenses that the Trust will incur indirectly.
USE OF LEVERAGE AND RELATED RISKS
The Trust expects to use leverage through the issuance of preferred shares.
The Trust initially intends to use leverage of approximately 35% of its total
assets (including the amount obtained from leverage). The Trust generally will
not use leverage if the Adviser anticipates that it would result in a lower
return to Shareholders for any significant amount of time. The Trust also may
borrow money as a temporary measure for extraordinary or emergency purposes,
including the payment of dividends and the settlement of securities transactions
which otherwise might require untimely dispositions of Trust securities.
Leverage creates risks for holders of the Shares, including the likelihood
of greater volatility of net asset value and market price of the Shares. There
is a risk that fluctuations in the dividend rates on any preferred shares may
adversely affect the return to the holders of the Shares. If the income from the
securities purchased with such funds is not sufficient to cover the cost of
leverage, the return on the Trust will be less than if leverage had not been
used, and therefore the amount available for distribution to Shareholders as
dividends and other distributions will be reduced. The Adviser in its best
judgment nevertheless may determine to maintain the Trust's leveraged position
if it deems such action to be appropriate in the circumstances. Investment by
the Trust in residual interest municipal bonds may amplify the effects of
leverage and, during periods of rising short-term interest rates, may adversely
affect the Trust's income and distributions to Shareholders. As discussed under
"Management of the Trust," during periods in which the Trust is using leverage
the fees paid to Eaton Vance for investment advisory and administrative services
will be higher than if the Trust did not use leverage because the fees paid will
be calculated on the basis of the Trust's gross assets, including proceeds from
the issuance of preferred shares.
Capital raised through leverage will be subject to dividend payments which
may exceed the income and appreciation on the assets purchased. The issuance of
preferred shares involves offering expenses and other costs and may limit the
Trust's freedom to pay dividends on Shares or to engage in other activities. The
issuance of a class of preferred shares having priority over the Trust's Shares
creates an opportunity for greater return per Share, but at the same time such
leveraging is a speculative technique in that it will increase the Trust's
exposure to capital risk. Unless the income and appreciation, if any, on assets
acquired with offering proceeds exceed the cost of issuing additional classes of
securities (and other Trust expenses), the use of leverage will diminish the
investment performance of the Trust's Shares compared with what it would have
been without leverage.
The Trust may be subject to certain restrictions on investments imposed by
guidelines of one or more Rating Agencies which may issue ratings for any
preferred shares issued by the Trust. These guidelines may impose asset coverage
or Trust composition requirements that are more stringent than those imposed on
the Trust by the Investment Company Act of 1940 (the "Investment Company Act" or
"1940 Act"). It is not anticipated that these covenants or guidelines will
impede the Adviser from managing the Trust's portfolio in accordance with the
Trust's investment objective and policies.
Under the Investment Company Act, the Trust is not permitted to issue
preferred shares unless immediately after such issuance the net asset value of
the Trust's portfolio is at least 200% of the liquidation
12
<PAGE> 18
value of the outstanding preferred shares (i.e., such liquidation value may not
exceed 50% of the Trust's total assets). In addition, the Trust is not permitted
to declare any cash dividend or other distribution on its Shares unless, at the
time of such declaration, the net asset value of the Trust's portfolio
(determined after deducting the amount of such dividend or other distribution)
is at least 200% of such liquidation value. If preferred shares are issued, the
Trust intends, to the extent possible, to purchase or redeem preferred shares
from time to time to maintain coverage of any preferred shares of at least 200%.
In addition, under current federal income tax law, the Trust is required to
allocate a portion of any net realized capital gains or other taxable income to
holders of preferred shares. The terms of any preferred shares are expected to
require the Trust to pay to any preferred shareholders additional dividends
intended to compensate the preferred shareholders for taxes payable on any
capital gains or other taxable income allocated to the preferred shares. Any
such additional dividends will reduce the amount available for distribution to
the Shareholders. Normally, holders of the Shares will elect five of the
Trustees of the Trust and holders of any preferred shares will elect two. In the
event the Trust failed to pay dividends on its preferred shares for two years,
preferred shareholders would be entitled to elect a majority of the Trustees
until the dividends are paid.
To qualify for federal income taxation as a "regulated investment company",
the Trust must distribute in each taxable year at least 90% of its net
investment income (including tax-exempt interest and net short-term gain). The
Trust also will be required to distribute annually at least 98% of its taxable
income and capital gain net income, if any, to avoid imposition of a
nondeductible 4% federal excise tax. To the extent dividends on any preferred
shares constitute less than 90% of such income and gains, the remainder must be
distributed to the holders of the Shares. If the Trust is precluded from making
distributions on the Shares because of any applicable asset coverage
requirements, the terms of the preferred shares may provide that any amounts so
precluded from being distributed, but required to be distributed for the Fund to
meet the distribution requirements for federal tax purposes, will be paid to the
holders of the preferred shares as a special dividend. This dividend can be
expected to decrease the amount that holders of preferred shares would be
entitled to receive upon redemption or liquidation of the shares.
The Trust's willingness to issue new securities for investment purposes,
and the amount the Trust will issue, will depend on many factors, the most
important of which are market conditions and interest rates. Successful use of a
leveraging strategy may depend on the Adviser's ability to predict correctly
interest rates and market movements, and there is no assurance that a leveraging
strategy will be successful during any period in which it is employed.
Assuming the utilization of leverage in the amount of 35% of the Trust's
total assets and an annual dividend rate on preferred shares of 3.20% payable on
such leverage based on market rates as of the date of this Prospectus, the
additional income that the Trust must earn (net of expenses) in order to cover
such dividend payments would be 1.12%. The Trust's actual cost of leverage will
be based on market rates at the time the Trust undertakes a leveraging strategy,
and such actual cost of leverage may be higher or lower than that assumed in the
previous example.
The following table is designed to illustrate the effect on the return to a
holder of the Trust's Shares of leverage in the amount of approximately 35% of
the Trust's total assets, assuming hypothetical annual returns of the Trust's
portfolio of minus 10% to plus 10%. As the table shows, leverage generally
increases the return to Shareholders when portfolio return is positive and
greater than the cost of leverage and decreases the return when the portfolio
return is negative or less than the cost of leverage. The figures appearing in
the table are hypothetical and actual returns may be greater or less than those
appearing in the table.
<TABLE>
<S> <C> <C> <C> <C> <C>
Assuming Portfolio Return (net of expenses)...... (10)% (5)% 0% 5% 10%
Corresponding Share Return Assuming 35%
Leverage....................................... (17.11)% (9.42)% (1.72)% 5.97% 13.66%
</TABLE>
Until the Trust issues preferred shares, the Shares will not be leveraged,
and the risks and special considerations related to leverage described in this
Prospectus will not apply. Such leveraging of the Shares cannot be achieved
until the proceeds resulting from the use of leverage have been invested in
accordance with the Trust's investment objective and policies.
13
<PAGE> 19
ADDITIONAL RISK CONSIDERATIONS
Interest Rate and Market Risk. The prices of municipal obligations tend to
fall as interest rates rise. Securities that have longer maturities tend to
fluctuate more in price in response to changes in market interest rates. A
decline in the prices of the municipal obligations owned by the Trust would
cause a decline in the net asset value of the Trust, which could adversely
affect the trading price of the Trust's Shares. This risk is usually greater
among municipal obligations with longer maturities or durations and when
residual interest municipal bonds are held by the Trust. Although the Trust has
no policy governing the maturities or durations of its investments, the Trust
expects that it will invest in a portfolio of longer term securities. This means
that the Trust will be subject to greater market risk (other things being equal)
than a fund investing solely in shorter-term securities. Market risk is often
greater among certain types of income securities, such as zero-coupon bonds,
which do not make regular interest payments. As interest rates change, these
bonds often fluctuate in price more than higher quality bonds that make regular
interest payments. Because the Trust may invest in these types of income
securities, it may be subject to greater market risk than a fund that invests
only in current interest paying securities.
The Trust may invest to a significant extent in residual interest municipal
bonds known as inverse floaters. Compared to similar fixed rate municipal bonds,
the value of these bonds will fluctuate to a greater extent in response to
changes in prevailing long-term interest rates. Moreover, the income earned on
residual interest municipal bonds will fluctuate in response to changes in
prevailing short-term interest rates. Thus, when such bonds are held by the
Trust, an increase in short- or long-term market interest rates will adversely
affect the income received from such bonds or the net asset value of Trust
shares. To the extent that the Trust has preferred shares outstanding, an
increase in short-term rates would also result in an increase cost of leverage,
which would adversely affect the Trust's income available for distribution.
Income Risk. The income investors receive from the Trust is based
primarily on the interest it earns from its investments, which can vary widely
over the short and long-term. If interest rates drop, investors' income from the
Trust over time could drop as well if the Trust purchases securities with lower
interest coupons. This risk is magnified when prevailing short-term interest
rates increase and the Trust holds residual interest municipal bonds.
Call Risk. If interest rates fall, it is possible that issuers of callable
bonds with high interest coupons will "call" (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during a period of
declining interest rates, the Trust is likely to replace such called security
with a lower yielding security. If that were to happen, it would decrease the
Trust's dividends.
Credit Risk. Municipal debt obligations are subject to the risk of
non-payment of scheduled interest and/or principal. Such non-payment would
result in a reduction of income to the Trust, a reduction in the value of the
security experiencing non-payment and a potential decrease in the net asset
value of the Trust. Securities rated below investment grade or unrated
securities of comparable quality ("lower quality securities") are subject to the
risk of an issuer's inability to meet principal and interest payments on the
obligations ("credit risk") and may also be subject to price volatility due to
such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity ("market risk"). The
prices of lower quality securities are also more likely to react to real or
perceived developments affecting market and credit risk than are prices of
investment grade quality securities ("higher quality securities"), which react
primarily to movements in the general level of interest rates. The investments
in the Trust's portfolio will have speculative characteristics.
As indicated above, the Trust may invest up to 35% of its total assets in
municipal obligations rated below investment grade (but not, with respect to
more than 30% of its total assets, lower than B by all Rating Agencies rating
the obligation) and comparable unrated obligations. Such obligations are
commonly called "junk bonds" and will have speculative characteristics in
varying degrees. While such obligations may have some quality and protective
characteristics, these characteristics can be expected to be offset or
outweighed by uncertainties or major risk exposures to adverse conditions. Eaton
Vance seeks to minimize the risks of investing in below investment grade
securities through professional investment analysis, attention to current
developments in interest rates and economic conditions, and industry and
geographic diversification (if
14
<PAGE> 20
practicable). When the Trust invests in lower rated or unrated municipal
obligations, the achievement of the Trust's goals is more dependent on the Eaton
Vance's ability than would be the case if the Trust were investing in municipal
obligations in the higher rating categories. In evaluating the credit quality of
a particular issue, whether rated or unrated, Eaton Vance will normally take
into consideration, among other things, the financial resources of the issuer
(or, as appropriate, of the underlying source of funds for debt service), its
sensitivity to economic conditions and trends, any operating history of and the
community support for the facility financed by the issue, the ability of the
issuer's management and regulatory matters. Eaton Vance will attempt to reduce
the risks of investing in the lowest investment grade, below investment grade
and comparable unrated obligations through active portfolio management, credit
analysis and attention to current developments and trends in the economy and the
financial markets.
Increases in interest rates and changes in the economy may adversely affect
the ability of issuers of lower grade municipal securities to pay interest and
to repay principal, to meet projected financial goals and to obtain additional
financing. In the event that an issuer of securities held by the Trust
experiences difficulties in the timely payment of principal or interest and such
issuer seeks to restructure the terms of its borrowings, the Trust may incur
additional expenses and may determine to invest additional assets with respect
to such issuer or the project or projects to which the Trust's portfolio
securities relate. Further, the Trust may incur additional expenses to the
extent that it is required to seek recovery upon a default in the payment of
interest or the repayment of principal on its portfolio holdings, and the Trust
may be unable to obtain full recovery thereof.
To the extent that there is no established retail market for some of the
lower grade municipal securities in which the Trust may invest, trading in such
securities may be relatively inactive. The Adviser is responsible for
determining the net asset value of the Trust, subject to the supervision of the
Board of Trustees of the Trust. During periods of reduced market liquidity and
in the absence of readily available market quotations for lower grade municipal
securities held in the Trust's portfolio, the ability of the Adviser to value
the Trust's securities becomes more difficult and the Adviser's use of judgment
may play a greater role in the valuation of the Trust's securities due to the
reduced availability of reliable objective data. The effects of adverse
publicity and investor perceptions may be more pronounced for securities for
which no established retail market exists as compared with the effects on
securities for which such a market does exist. Further, the Trust may have more
difficulty selling such securities in a timely manner and at their stated value
than would be the case for securities for which an established retail market
does exist.
Municipal obligations held by the Trust that are of below investment grade
quality but which, subsequent to the assignment of such rating, are backed by
escrow accounts containing U.S. Government obligations may be determined by
Eaton Vance to be of investment grade quality for purposes of the Trust's
investment policies. The Trust may retain in its portfolio an obligation that
declines in quality, including defaulted obligations, if such retention is
considered desirable by Eaton Vance. In the case of a defaulted obligation, the
Trust may incur additional expense seeking recovery of its investment.
Changes in the credit quality of the issuers of municipal obligations held
by the Trust will affect the principal value of (and possibly the income earned
on) such obligations. In addition, the value of such securities are affected by
changes in general economic conditions and business conditions affecting the
relevant economic sectors. Changes by Rating Agencies in their ratings of a
security and in the ability of the issuer to make payments of principal and
interest may also affect the value of the Trust's investments. The amount of
information about the financial condition of an issuer of municipal obligations
may not be as extensive as that made available by corporations whose securities
are publicly traded.
The Trust may invest in municipal leases and participations in municipal
leases. The obligation of the issuer to meet its obligations under such leases
is often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Investments
in municipal leases are thus subject to the risk that the legislative body will
not make the necessary appropriation and the issuer will not otherwise be
willing or able to meet its obligation.
Concentration. The Trust may invest 25% or more of its total assets in
municipal obligations of issuers located in the same state (or U.S. territory)
or in municipal obligations in the same economic sector, including
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without limitation the following: lease rental obligations of state and local
authorities; obligations dependent on annual appropriations by a state's
legislature for payment; obligations of state and local housing finance
authorities, municipal utilities systems or public housing authorities;
obligations of hospitals or life care facilities; or industrial development or
pollution control bonds issued for electric utility systems, steel companies,
paper companies or other purposes. This may make the Trust more susceptible to
adverse economic, political, or regulatory occurrences affecting a particular
state or economic sector. For example, health care related issuers are
susceptible to Medicaid reimbursement policies, and national and state health
care legislation. As concentration increases, so does the potential for
fluctuation in the net asset value of Trust Shares.
Liquidity Risk. At times, a substantial portion of the Trust's assets may
be invested in securities as to which the Trust, by itself or together with
other accounts managed by Eaton Vance and its affiliates, holds a major portion
of all of such securities. Under adverse market or economic conditions or in the
event of adverse changes in the financial condition of the issuer, the Trust
could find it more difficult to sell such securities when Eaton Vance believes
it is advisable to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. Under such circumstances,
it may also be more difficult to determine the fair value of such securities for
purposes of computing the Trust's net asset value.
The secondary market for some municipal obligations is less liquid than
that for taxable debt obligations or other more widely traded municipal
obligations. These include residual interest municipal bonds. No established
resale market exists for certain of the municipal obligations in which the Trust
may invest. The market for obligations rated below investment grade is also
likely to be less liquid than the market for higher rated obligations. As a
result, the Trust may be unable to dispose of these municipal obligations at
times when it would otherwise wish to do so at the prices at which they are
valued.
A secondary market may be subject to irregular trading activity, wide
bid/ask spreads and extended trade settlement periods. The Trust has no
limitation on the amount of its assets which may be invested in securities which
are not readily marketable or are subject to restrictions on resale. The risks
associated with illiquidity are particularly acute in situations where the
Trust's operations require cash, such as if the Trust tenders for its Shares,
and may result in the Trust borrowing to meet short-term cash requirements.
Closed-End Funds. The Trust is a closed-end investment company with no
history of operations and is designed primarily for long-term investors and not
as a trading vehicle. The shares of closed-end investment companies often trade
at a discount from their net asset value, and the Shares may likewise trade at a
discount from net asset value. The trading price of the Trust's Shares may be
less than the initial public offering price, creating a risk of loss for
investors purchasing in the initial public offering of the Shares. This market
price risk may be greater for investors who sell their Shares within a
relatively short period after completion of this offering.
Non-Diversification. The Trust has registered as a "non-diversified"
investment company under the 1940 Act so that, subject to its investment
restrictions and applicable federal income tax diversification requirements,
with respect to 50% of its total assets, it will be able to invest more than 5%
(but not more than 25%) of the value of its total assets in the obligations of
any single issuer. To the extent the Trust invests a relatively high percentage
of its assets in obligations of a limited number of issuers, the Trust will be
more susceptible than a more widely diversified investment company to any single
corporate, economic, political or regulatory occurrence.
Year 2000 Compliance. The Trust could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." Eaton Vance is
taking steps that it believes are reasonably designed to address the Year 2000
Problem with respect to computer systems that it uses and to obtain reasonable
assurances that comparable steps are being taken by the Trust's other major
service providers. At this time, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.
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In addition, it is possible that the markets for municipal securities in
which the Trust invests may be detrimentally affected by computer failures
throughout the financial services industry beginning on or before January 1,
2000. Improperly functioning trading systems may result in settlement problems
and liquidity issues. In addition, corporate and governmental data processing
errors may result in production problems for individual issuers and overall
economic uncertainties. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in financial statements. Accordingly, the Trust's investments may be adversely
affected. The statements above are subject to the Year 2000 Information and
Readiness Disclosure Act, which may limit the legal rights regarding the use of
such statements in the case of a dispute.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The management of the Trust, including general supervision of the duties
performed by the Adviser under the Advisory Agreement (as defined below), is the
responsibility of the Trust's Board of Trustees under the laws of The
Commonwealth of Massachusetts and the Investment Company Act.
THE ADVISER
Eaton Vance Management acts as the Trust's investment adviser under an
Investment Advisory Agreement (the "Advisory Agreement"). The Adviser's
principal office is located at 24 Federal Street, Boston, MA 02110. Eaton Vance,
its affiliates and predecessor companies have been managing assets of
individuals and institutions since 1924 and of investment companies since 1931.
Eaton Vance (or its affiliates) currently serves as the investment adviser to
investment companies and various individual and institutional clients with
combined assets under management of over $31 billion, of which approximately $28
billion is in investment companies. Eaton Vance is a wholly-owned subsidiary of
Eaton Vance Corp., a publicly held holding company which through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities.
Eaton Vance employs 24 personnel in its municipal bond department,
including six portfolio managers, two traders and eleven credit analysts. Eaton
Vance was one of the first advisory firms to manage a registered municipal bond
investment company, and has done so continuously since 1978. Eaton Vance
currently manages 3 national municipal investment companies, 33 single state
municipal investment companies, 10 limited maturity municipal investment
companies and 1 money market municipal investment company, with assets of about
$7.5 billion. (All but 1 of which are open-end.) Among such funds, Eaton Vance
currently offers Eaton Vance National Municipals Fund -- Class A ("National
Municipals Fund"), which is an open-end fund that invests primarily in
investment grade municipal obligations. Morningstar, Inc. awarded National
Municipals Fund four stars for the three-year period ended December 31, 1998.
Morningstar is an independent evaluator of public investment companies and
publishes proprietary ratings reflecting historical risk-adjusted performance.
Morningstar ratings are calculated from a fund's annual returns in excess of the
90-day U.S. Treasury bill returns, with appropriate fee adjustments a risk
factor that reflects fund performance below 90-day Treasury bill returns.
National Municipals Fund is in the Morningstar Municipal Bond Fund category,
which includes 1,577 other investment companies (for such three year period). A
fund receives four stars if its risk-adjusted performance is in the top 32.5% of
its rating category. Ratings are subject to change every month. Although this
fund has substantially similar investment objectives and policies as the Trust,
certain investment policies and restrictions of National Municipals Fund differ
from those of the Trust. For example, such fund has not employed financial
leverage for investment purposes, can hold no more than 15% of its net assets in
illiquid securities and cannot invest in obligations of below B in credit
quality. Moreover, such fund is continuously offered and makes daily redemptions
so it has not been fully invested at all times. The portfolio holdings and
investment performance of such fund will differ from those of the Trust. Past
performance of such fund is not indicative of the Trust's performance.
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Under the general supervision of the Trust's Board of Trustees, the Adviser
will carry out the investment and reinvestment of the assets of the Trust, will
furnish continuously an investment program with respect to the Trust, will
determine which securities should be purchased, sold or exchanged, and will
implement such determinations. The Adviser will furnish to the Trust investment
advice and office facilities, equipment and personnel for servicing the
investments of the Trust. The Adviser will compensate all Trustees and officers
of the Trust who are members of the Adviser's organization and who render
investment services to the Trust, and will also compensate all other Adviser
personnel who provide research and investment services to the Trust. In return
for these services, facilities and payments, the Trust has agreed to pay the
Adviser as compensation under the Advisory Agreement a fee in the amount of .70%
of the average weekly gross assets of the Trust. Gross assets of the Trust shall
be calculated by deducting accrued liabilities of the Trust not including the
amount of any preferred shares outstanding.
Thomas M. Metzold is the portfolio manager of the Trust and is responsible
for day-to-day management of the Trust's investments. Mr. Metzold has been an
employee of Eaton Vance since 1987 and a Vice President of Eaton Vance since
1991. Mr. Metzold, a Chartered Financial Analyst, is a member of the Boston
Security Analysts Society, the Association for Investment Management & Research,
the Boston Municipal Analysts Forum, and the National Federation of Municipal
Analysts. He currently manages four municipal bond investment companies
(including National Municipals Fund) with combined assets of over $2.8 billion.
The Trust and the Adviser have adopted Codes of Ethics relating to personal
securities transactions. The Codes permit Adviser personnel to invest in
securities (including securities that may be purchased or held by the Trust) for
their own accounts, subject to certain pre-clearance, reporting and other
restrictions and procedures contained in such Codes.
The Trust has engaged Eaton Vance to act as its administrator under an
Administration Agreement (the "Administration Agreement"). Under the
Administration Agreement, Eaton Vance is responsible for managing the business
affairs of the Trust, subject to the supervision of the Trust's Board of
Trustees. Eaton Vance will furnish to the Trust all office facilities, equipment
and personnel for administering the affairs of the Trust. Eaton Vance's
administrative services include recordkeeping, preparation and filing of
documents required to comply with federal and state securities laws, supervising
the activities of the Trust's custodian and transfer agent, providing assistance
in connection with the Trustees' and shareholders' meetings, providing service
in connection with any repurchase offers and other administrative services
necessary to conduct the Trust's business. In return for these services,
facilities and payments, the Trust is authorized to pay Eaton Vance as
compensation under the Administration Agreement a fee in the amount of .20% of
the average weekly gross assets of the Trust.
Eaton Vance has agreed to bear all ordinary and organizational expenses of
the Trust that exceed 5% of average weekly net assets (taking into account the
deduction of any preferred shares and related expenses) for the Trust's first
fiscal year. In return for this arrangement, the Trust may reimburse Eaton Vance
over the first year of operations for organizational expenses of the Trust
initially borne by Eaton Vance.
DISTRIBUTIONS AND TAXES
The Trust intends to make monthly distributions of net investment income,
after payment of any dividends on any outstanding preferred shares. The Trust
will distribute annually any net short-term capital gain and any net capital
gain (which is the excess of net long-term capital gain over net short-term
capital loss). Distributions to Shareholders cannot be assured, and the amount
of each monthly distribution is likely to vary. Initial distributions to
Shareholders are expected to be paid approximately 60 days after the completion
of this offering. While there are any preferred shares outstanding, the Trust
might not be permitted to declare any cash dividend or other distribution on its
Shares in certain circumstances. See "Description of Capital Structure."
Each dividend distribution, whether paid in cash or reinvested in
additional Shares, ordinarily will constitute income exempt from regular federal
income tax. Distributions of interest on certain municipal obligations, however,
are a tax preference item under the AMT. Moreover, distributions of any taxable
net
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investment income and net short-term capital gain are taxable as ordinary
income. Finally, distributions of the Trust's net capital gain ("capital gain
dividends"), if any, are taxable to Shareholders as long-term capital gains,
regardless of the length of time Shares have been held by Shareholders.
Distributions, if any, in excess of the Trust's earnings and profits will first
reduce the adjusted tax basis of a holder's Shares and, after that basis has
been reduced to zero, will constitute capital gains to the Shareholder (assuming
the Shares are held as a capital asset). See below for a summary of the maximum
tax rates applicable to capital gains (including capital gain dividends).
The Trust will inform Shareholders of the source and tax status of all
distributions promptly after the close of each calendar year.
Selling Shareholders will generally recognize gain or loss in an amount
equal to the difference between the Shareholder's adjusted tax basis in the
Shares and the amount received. If the Shares are held as a capital asset, the
gain or loss will be a capital gain or loss. The maximum tax rate applicable to
net capital gains recognized by individuals and other non-corporate taxpayers is
(i) the same as the maximum ordinary income tax rate for gains recognized on the
sale of capital assets held for one year or less or (ii) 20% for gains
recognized on the sale of capital assets held for more than one year (as well as
capital gain dividends). Any loss recognized on a disposition of Shares held for
six months or less will be treated as a long-term capital loss to the extent of
any capital gain dividends received with respect to those Shares. For purposes
of determining whether Shares have been held for six months or less, the holding
period is suspended for any periods during which the Shareholder's risk of loss
is diminished as a result of holding one or more other positions in
substantially similar or related property, or through certain options or short
sales. Any loss realized on a sale or exchange of Shares will be disallowed to
the extent those Shares are replaced by other Shares within a period of 61 days
beginning 30 days before and ending 30 days after the date of disposition of the
Shares (which could occur, for example, if the Shareholder is a participant in
the Plan (as defined below)). In that event, the basis of the replacement Shares
will be adjusted to reflect the disallowed loss.
An investor should be aware that if Shares are purchased shortly before the
record date for any taxable dividend (including a capital gain dividend), the
purchase price likely will reflect the value of the dividend and the investor
then would receive a taxable distribution likely to reduce the trading value of
such Shares, in effect resulting in a taxable return of some of the purchase
price. Taxable distributions to individuals and certain other non-corporate
Shareholders, including those who have not provided their correct taxpayer
identification number and other required certifications, may be subject to
"backup" federal income tax withholding at the rate of 31%.
The foregoing briefly summarizes some of the important federal income tax
consequences to Shareholders of investing in Shares, reflects the federal tax
law, as of the date of this Prospectus, and does not address special tax rules
applicable to certain types of investors, such as corporate and foreign
investors. There may be other federal, state or local tax considerations
applicable to a particular investor, including state alternative minimum tax.
Investors should consult their tax advisers.
DIVIDEND REINVESTMENT PLAN
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), unless a
Shareholder otherwise elects, all distributions of dividends (including all
capital gain dividends) will be automatically reinvested in Shares.
First Data Investor Services Group (the "Plan Agent") serves as agent for
the Shareholders in administering the Plan. Shareholders who elect not to
participate in the Plan will receive all distributions of dividends in cash paid
by check mailed directly to the Shareholder of record (or if the Shares are held
in Street or other nominee name, then to the nominee) by First Data Investor
Services Group as disbursing agent. Participation in the Plan is completely
voluntary and may be terminated or resumed at any time without penalty by
written notice if received by the Plan Agent not less than ten days prior to any
dividend record date.
Shares will be acquired by the Plan Agent or an independent broker-dealer
for the participants' accounts, depending upon the circumstances described
below, either (i) through receipt of additional previously authorized but
unissued Shares from the Trust ("newly issued Shares") or (ii) by purchase of
outstanding
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Shares on the open market ("open-market purchases") on the New York Stock
Exchange or elsewhere. If on the payment date for the dividend, the net asset
value per Share is equal to or less than the market price per Share plus
estimated brokerage commissions (such condition being referred to herein as
"market premium"), the Plan Agent will invest the dividend amount in newly
issued Shares on behalf of the participants. The number of newly issued Shares
to be credited to each participant's account will be determined by dividing the
dollar amount of the dividend by the net asset value per Share on the date the
Shares are issued, provided that the maximum discount from the then current
market price per Share on the date of issuance may not exceed 5%. If on the
dividend payment date the net asset value per Share is greater than the market
value plus estimated brokerage commissions (such condition being referred to
herein as "market discount"), the Plan Agent will invest the dividend amount in
Shares acquired on behalf of the participants in open-market purchases.
In the event of a market discount on the dividend payment date, the Plan
Agent will have up to 30 days after the dividend payment date to invest the
dividend amount in Shares acquired in open-market purchases. If, before the Plan
Agent has completed its open-market purchases, the market price of a Share
exceeds the net asset value per Share, the average per Share purchase price paid
by the Plan Agent may exceed the net asset value of the Trust's Shares,
resulting in the acquisition of fewer Shares than if the dividend had been paid
in newly issued Shares on the dividend payment date. Therefore, the Plan
provides that if the Plan Agent is unable to invest the full dividend amount in
open-market purchases during the purchase period or if the market discount
shifts to a market premium during the purchase period, the Plan Agent will cease
making open-market purchases and will invest the uninvested portion of the
dividend amount in newly issued Shares.
The Plan Agent maintains all Shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts, including
information needed by Shareholders for tax records. Shares in the account of
each Plan participant will be held by the Plan Agent on behalf of the Plan
participant, and each Shareholder proxy will include those Shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for Shares held pursuant
to the Plan in accordance with the instructions of the participants.
In the case of Shareholders such as banks, brokers or nominees that hold
Shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of Shares certified from time to time by the
record Shareholder's name and held for the account of beneficial owners who
participate in the Plan.
There will be no brokerage charges with respect to Shares issued directly
by the Trust as a result of dividends payable either in Shares or in cash.
However, each participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open-market purchases in connection
with the reinvestment of dividends.
Shareholders participating in the Plan may receive benefits not available
to Shareholders not participating in the Plan. If the market price (plus
commissions) of the Trust's Shares is above their net asset value, participants
in the Plan will receive Shares of the Trust at less than they could otherwise
purchase them and will have Shares with a cash value greater than the value of
any cash distribution they would have received on their Shares. If the market
price plus commissions is below the net asset value, participants will receive
distributions in Shares with a net asset value greater than the per Share value
of any cash distribution they would have received on their Shares. However,
there may be insufficient Shares available in the market to make distributions
in Shares at prices below the net asset value. Also, since the Trust does not
redeem its Shares, the price on resale may be more or less than the net asset
value.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan. There
is no direct service charge to participants in the Plan; however, the Trust
reserves the right to amend the Plan to include a service charge payable by the
participants.
All correspondence concerning the Plan should be directed to the Plan Agent
at P. O. Box 8030, Boston, MA 02266-8030. Please call 1-800-331-1710 between the
hours of 9:00 a.m. and 5:00 p.m. Eastern Standard Time if you have questions
regarding the Plan.
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DESCRIPTION OF CAPITAL STRUCTURE
The Trust is an unincorporated business trust established under the laws of
the Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated
December 10, 1998 (the "Declaration of Trust"). The Declaration of Trust
provides that the Trustees of the Trust may authorize separate classes of shares
of beneficial interest. The Trustees have authorized an unlimited number of
Shares. The Trust intends to hold annual meetings of Shareholders in compliance
with the requirements of the New York Stock Exchange.
Shares. The Declaration of Trust permits the Trust to issue an unlimited
number of full and fractional Shares of beneficial interest, $0.01 par value per
Share. Each Share represents an equal proportionate interest in the assets of
the Trust with each other Share in the Trust. Holders of Shares will be entitled
to the payment of dividends when, as and if declared by the Board of Trustees.
The 1940 Act or the terms of any borrowings or preferred shares may limit the
payment of dividends to the holders of Shares. Each whole Share shall be
entitled to one vote as to matters on which it is entitled to vote pursuant to
the terms of the Declaration of Trust on file with the SEC. Upon liquidation of
the Trust, after paying or adequately providing for the payment of all
liabilities of the Trust and the liquidation preference with respect to any
outstanding preferred shares, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the Trustees
may distribute the remaining assets of the Trust among the holders of the
Shares. The Declaration of Trust provides that Shareholders are not liable for
any liabilities of the Trust, requires inclusion of a clause to that effect in
every agreement entered into by the Trust and indemnifies shareholders against
any such liability. Although shareholders of an unincorporated business trust
established under Massachusetts law, in certain limited circumstances, may be
held personally liable for the obligations of the Trust as though they were
general partners, the provisions of the Declaration of Trust described in the
foregoing sentence make the likelihood of such personal liability remote.
While there are any borrowings or preferred shares outstanding, the Trust
may not be permitted to declare any cash dividend or other distribution on its
Shares, unless at the time of such declaration, (i) all accrued dividends on
preferred shares or accrued interest on borrowings have been paid and (2) the
value of the Trust's total assets (determined after deducting the amount of such
dividend or other distribution), less all liabilities and indebtedness of the
Trust not represented by senior securities, is at least 300% of the aggregate
amount of such securities representing indebtedness and at least 200% of the
aggregate amount of securities representing indebtedness plus the aggregate
liquidation value of the outstanding preferred shares (expected to equal the
aggregate original purchase price of the outstanding preferred shares plus
redemption premium, if any, together with any accrued and unpaid dividends
thereon, whether or not earned or declared and on a cumulative basis). In
addition to the requirements of the 1940 Act, the Trust may be required to
comply with other asset coverage requirements as a condition of the Trust
obtaining a rating of the preferred shares from a Rating Agency. These
requirements may include an asset coverage test more stringent than under the
1940 Act. This limitation on the Trust's ability to make distributions on its
Shares could in certain circumstances impair the ability of the Trust to
maintain its qualification for taxation as a regulated investment company. The
Trust intends, however, to the extent possible to purchase or redeem preferred
shares from time to time to maintain compliance with such asset coverage
requirements and may pay special dividends to the holders of the preferred
shares in certain circumstances in connection with any such impairment of the
Trust's status as a regulated investment company. See "Investment Objective,
Policies and Risks" and "Distributions and Taxes." Depending on the timing of
any such redemption or repayment, the Trust may be required to pay a premium in
addition to the liquidation preference of the preferred shares to the holders
thereof.
The Trust has no present intention of offering additional Shares, except as
described herein. Other offerings of its Shares, if made, will require approval
of the Board of Trustees. Any additional offering will not be sold at a price
per Share below the then current net asset value (exclusive of underwriting
discounts and commissions) except in connection with an offering to existing
Shareholders or with the consent of a majority of the Trust's outstanding
Shares. The Shares have no preemptive rights.
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The Trust generally will not issue Share certificates. However, upon
written request to the Trust's transfer agent, a share certificate will be
issued for any or all of the full Shares credited to an investor's account.
Share certificates which have been issued to an investor may be returned at any
time.
Repurchase of Shares and Other Discount Measures. Because shares of
closed-end management investment companies frequently trade at a discount to
their net asset values, the Board of Trustees has determined that from time to
time it may be in the interest of Shareholders for the Trust to take corrective
actions. The Board of Trustees, in consultation with Eaton Vance, will review at
least annually the possibility of open market repurchases and/or tender offers
for the Shares and will consider such factors as the market price of the Shares,
the net asset value of the Shares, the liquidity of the assets of the Trust,
effect on the Trust's expenses, whether such transactions would impair the
Trust's status as a regulated investment company or result in a failure to
comply with applicable asset coverage requirements, general economic conditions
and such other events or conditions which may have a material effect on the
Trust's ability to consummate such transactions. There are no assurances that
the Board of Trustees will, in fact, decide to undertake either of these actions
or if undertaken, that such actions will result in the Trust's Shares trading at
a price which is equal to or approximates their net asset value. In recognition
of the possibility that the Shares might trade at a discount to net asset value
and that any such discount may not be in the interest of Shareholders, the Board
of Trustees, in consultation with Eaton Vance, from time to time may review
possible actions to reduce any such discount.
Preferred Shares. The Declaration of Trust authorizes the issuance of an
unlimited number of shares of beneficial interest with preference rights,
including preferred shares (the "Preferred Shares"), having a par value of $0.01
per share, in one or more series, with rights as determined by the Board of
Trustees, by action of the Board of Trustees without the approval of the
Shareholders.
Under the requirements of the 1940 Act, the Trust must, immediately after
the issuance of any Preferred Shares, have an "asset coverage" of at least 200%.
Asset coverage means the ratio which the value of the total assets of the Trust,
less all liability and indebtedness not represented by senior securities (as
defined in the 1940 Act), bears to the aggregate amount of senior securities
representing indebtedness of the Trust, if any, plus the aggregate liquidation
preference of the Preferred Shares. If the Trust seeks a rating of the Preferred
Shares, asset coverage requirements, in addition to those set forth in the 1940
Act, may be imposed. The liquidation value of the Preferred Shares is expected
to equal their aggregate original purchase price plus redemption premium, if
any, together with any accrued and unpaid dividends thereon (on a cumulative
basis), whether or not earned or declared. The terms of the Preferred Shares,
including their dividend rate, voting rights, liquidation preference and
redemption provisions, will be determined by the Board of Trustees (subject to
applicable law and the Trust's Declaration of Trust) if and when it authorizes
the Preferred Shares. The Trust may issue Preferred Shares that provide for the
periodic redetermination of the dividend rate at relatively short intervals
through an auction or remarketing procedure, although the terms of the Preferred
Shares may also enable the Trust to lengthen such intervals. At times, the
dividend rate as redetermined on the Trust's Preferred Shares may approach or
exceed the Trust's return after expenses on the investment of proceeds from the
Preferred Shares and the Trust's leverage structure would result in a lower rate
of return to Shareholders than if the Trust were not so structured.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Trust, the terms of any Preferred Shares may entitle the
holders of Preferred Shares to receive a preferential liquidating distribution
(expected to equal the original purchase price per share plus redemption
premium, if any, together with accrued and unpaid dividends, whether or not
earned or declared and on a cumulative basis) before any distribution of assets
is made to holders of Shares. After payment of the full amount of the
liquidating distribution to which they are entitled, the Preferred Shareholders
would not be entitled to any further participation in any distribution of assets
by the Trust.
Holders of Preferred Shares, voting as a class, shall be entitled to elect
two of the Trust's Trustees. Under the 1940 Act, if at any time dividends on the
Preferred Shares are unpaid in an amount equal to two full years' dividends
thereon, the holders of all outstanding Preferred Shares, voting as a class,
will be allowed to elect a majority of the Trust's Trustees until all dividends
in default have been paid or declared and set apart for
22
<PAGE> 28
payment. In addition, if required by the Rating Agency rating the Preferred
Shares or if the Board of Trustees determines it to be in the best interests of
the common shareholders, issuance of the Preferred Shares may result in more
restrictive provisions than required by the 1940 Act being imposed. In this
regard, holders of the Preferred Shares may be entitled to elect a majority of
the Trust's Board of Trustees in other circumstances, for example, if one
payment on the Preferred Shares is in arrears.
The Trust currently intends to seek an investment grade rating for the
Preferred Shares from one Rating Agency. The Trust intends that, as long as
Preferred Shares are outstanding, the composition of its portfolio will reflect
guidelines established by such Rating Agency. Although, as of the date hereof,
no such Rating Agency has established guidelines relating to the Preferred
Shares, based on previous guidelines established by such Rating Agencies for the
securities of other issuers, the Trust anticipates that the guidelines with
respect to the Preferred Shares will establish a set of tests for portfolio
composition and asset coverage that supplement (and in some cases are more
restrictive than) the applicable requirements under the 1940 Act. Although, at
this time, no assurance can be given as to the nature or extent of the
guidelines which may be imposed in connection with obtaining a rating of the
Preferred Shares, the Trust currently anticipates that such guidelines will
include asset coverage requirements which are more restrictive than those under
the 1940 Act, restrictions on certain portfolio investments and investment
practices, requirements that the Trust maintain a portion of its assets in
short-term, high-quality, fixed-income securities and certain mandatory
redemption requirements relating to the Preferred Shares. No assurance can be
given that the guidelines actually imposed with respect to the Preferred Shares
by such Rating Agency will be more or less restrictive than as described in this
Prospectus.
Anti-Takeover Provisions in the Declaration of Trust. The Declaration of
Trust includes provisions that could have the effect of limiting the ability of
other entities or persons to acquire control of the Trust or to change the
composition of its Board of Trustees, and could have the effect of depriving
Shareholders of an opportunity to sell their Shares at a premium over prevailing
market prices by discouraging a third party from seeking to obtain control of
the Trust. These provisions may have the effect of discouraging attempts to
acquire control of the Trust, which attempts could have the effect of increasing
the expenses of the Trust and interfering with the normal operation of the
Trust. The Board of Trustees is divided into three classes, with the term of one
class expiring at each annual meeting of Shareholders. At each annual meeting,
one class of Trustees is elected to a three-year term. This provision could
delay for up to two years the replacement of a majority of the Board of
Trustees. A Trustee may be removed from office only for cause by a written
instrument signed by the remaining Trustees or by a vote of the holders of at
least two-thirds of the class of Shares of the Trust that elected such Trustee
and is entitled to vote on the matter.
In addition, the Declaration of Trust requires the favorable vote of the
holders of at least 75% of the outstanding shares of each class of the Trust,
voting as a class, then entitled to vote to approve, adopt or authorize certain
transactions with 5%-or-greater holders of a class of shares and their
associates, unless the Board of Trustees shall by resolution have approved a
memorandum of understanding with such holders, in which case normal voting
requirements would be in effect. For purposes of these provisions, a
5%-or-greater holder of a class of shares (a "Principal Shareholder") refers to
any person who, whether directly or indirectly and whether alone or together
with its affiliates and associates, beneficially owns 5% or more of the
outstanding shares of any class of beneficial interest of the Trust. The
transactions subject to these special approval requirements are: (i) the merger
or consolidation of the Trust or any subsidiary of the Trust with or into any
Principal Shareholder; (ii) the issuance of any securities of the Trust to any
Principal Shareholder for cash; (iii) the sale, lease or exchange of all or any
substantial part of the assets of the Trust to any Principal Shareholder (except
assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purpose of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period);
or (iv) the sale, lease or exchange to the Trust or any subsidiary thereof, in
exchange for securities of the Trust, of any assets of any Principal Shareholder
(except assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purposes of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period).
The Board of Trustees has determined that provisions with respect to the
Board and the 75% voting requirements described above, which voting requirements
are greater than the minimum requirements under
23
<PAGE> 29
Massachusetts law or the 1940 Act, are in the best interest of Shareholders
generally. Reference should be made to the Declaration of Trust on file with the
SEC for the full text of these provisions.
Conversion to Open-End Fund. The Trust may be converted to an open-end
investment company at any time if approved by the lesser of (i) 2/3 or more of
the Trust's then outstanding Shares and Preferred Shares (if any), each voting
separately as a class, or (ii) more than 50% of the then outstanding Shares and
Preferred Shares (if any), voting separately as a class if such conversion is
recommended by at least 75% of the Trustees then in office. If approved in the
foregoing manner, conversion of the Trust could not occur until 90 days after
the Shareholders' meeting at which such conversion was approved and would also
require at least 30 days' prior notice to all Shareholders. The composition of
the Trust's portfolio likely would prohibit the Trust from complying with
regulations of the SEC applicable to open-end investment companies. Accordingly,
conversion likely would require significant changes in the Trust's investment
policies and liquidation of a substantial portion of its relatively illiquid
portfolio. Conversion of the Trust to an open-end investment company also would
require the redemption of any outstanding Preferred Shares and could require the
repayment of borrowings, which would eliminate the leveraged capital structure
of the Trust with respect to the Shares. In the event of conversion, the Shares
would cease to be listed on the New York Stock Exchange or other national
securities exchange or market system. The Board of Trustees believes, however,
that the closed-end structure is desirable, given the Trust's investment
objective and policies. Investors should assume, therefore, that it is unlikely
that the Board of Trustees would vote to convert the Trust to an open-end
investment company. Shareholders of an open-end investment company may require
the company to redeem their shares at any time (except in certain circumstances
as authorized by or under the 1940 Act) at their net asset value, less such
redemption charge, if any, as might be in effect at the time of a redemption.
The Trust expects to pay all such redemption requests in cash, but intends to
reserve the right to pay redemption requests in a combination of cash or
securities. If such partial payment in securities were made, investors may incur
brokerage costs in converting such securities to cash. If the Trust were
converted to an open-end fund, it is likely that new Shares would be sold at net
asset value plus a sales load.
24
<PAGE> 30
UNDERWRITING
The underwriters named below (the "Underwriters"), acting through
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York, as
lead representative, and A.G. Edwards & Sons, Inc., Prudential Securities
Incorporated, Salomon Smith Barney Inc., Dain Rauscher Wessels, a division of
Dain Rauscher Incorporated and EVEREN Securities, Inc., as their representatives
(together with PaineWebber Incorporated, the "Representatives"), have severally
agreed, subject to the terms and conditions of the Underwriting Agreement with
the Trust and Eaton Vance (the "Underwriting Agreement"), to purchase from the
Trust the number of Shares set forth opposite their respective names. The
Underwriters are committed to purchase all of such Shares if any are purchased.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
PaineWebber Incorporated....................................
A.G. Edwards & Sons, Inc....................................
Prudential Securities Incorporated..........................
Salomon Smith Barney Inc....................................
Dain Rauscher Wessels.......................................
EVEREN Securities, Inc......................................
----------
Total.............................................
==========
</TABLE>
The Trust has granted to the Underwriters an option, exercisable for 45
days from the date of this Prospectus to purchase up to an additional
Shares to cover over-allotments, if any, at the initial offering price. The
Underwriters may exercise such option solely for the purpose of covering
over-allotments incurred in the sale of the Shares offered hereby. To the extent
that the Underwriters exercise this option, each of the Underwriters will have a
firm commitment, subject to certain conditions, to purchase an additional number
of Shares proportionate to such Underwriter's initial commitment.
The Shares are offered by the Underwriters, subject to prior sale, when, as
and if delivered to and accepted by the Underwriters and subject to their right
to reject orders in whole or in part. As set forth in the notes to the table on
the cover page of this Prospectus, Eaton Vance or an affiliate (not the Trust)
from its own assets has agreed to pay a commission to the Underwriters in the
amount of $0.45 per Share (4.50% of the public offering price per Share) or an
aggregate amount of $ ($ assuming full exercise of the
over-allotment option) for all Shares covered by this Prospectus. Such payment
will be the legal obligation of Eaton Vance or an affiliate and made out of its
own assets and will not in any way represent an obligation of the Trust or its
Shareholders. The Representatives have advised the Trust that the Underwriters
may pay up to $0.30 per Share from such payment received from Eaton Vance to
selected dealers who sell the Shares and that the Underwriters and such dealers
may reallow a concession of up to $ per Share to certain other dealers who sell
Shares. Eaton Vance (or an affiliate) has agreed to pay all offering expenses of
the Trust that exceed $0.03 per share. Offering expenses include $
payment to the Underwriters in partial reimbursement of their expenses.
Prior to this offering, there has been no public market for the Shares or
any other securities of the Trust. Shares have been approved for listing on the
New York Stock Exchange under the symbol "EVN." In order to meet the
requirements for listing the Shares on the New York Stock Exchange, the
Underwriters have undertaken to sell lots of 100 or more Shares to a minimum of
2,000 beneficial holders. The minimum investment requirement is 100 Shares
($1,500).
The Trust and Eaton Vance have each agreed to indemnify the several
Underwriters for or to contribute to the losses arising out of certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Trust has agreed not to offer or sell any additional Shares of the
Trust, other than as contemplated by this Prospectus, for a period of 180 days
after the date of the Underwriting Agreement without the prior written consent
of the Underwriters.
25
<PAGE> 31
The Representatives have informed the Trust that the Underwriters do not
intend to confirm sale to any accounts over which they exercise discretionary
authority.
In connection with this offering, the underwriters may purchase and sell
Shares in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover syndicate short positions
created in connection with this offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Shares and syndicate short positions involve the sale
by the underwriters of a greater number of Shares than they are required to
purchase from the Trust in this offering. The underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Shares sold in this offering for their account,
may be reclaimed by the syndicate if such Shares are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Shares, which
may be higher than the price that might otherwise prevail in the open market;
and these activities, if commenced, may be discontinued at any time without
notice. These transactions may be effected on the New York Stock Exchange or
otherwise.
Under the terms of and subject to the conditions of the Underwriting
Agreement, the Underwriters are committed to purchase and pay for all Shares
offered hereby if any are purchased. The Underwriting Agreement provides that it
may be terminated at or prior to the closing date for the purchase of the Shares
if, in the judgement of the Representatives, payment for the delivery of the
Shares is rendered impracticable or inadvisable because (1) trading in the
equity securities of the Trust is suspended by the SEC, by an exchange that
lists the Shares, or by the National Association of Securities Dealers Automated
Quotation National Market System ("NASDAQ"), (2) trading in securities generally
on the New York Stock Exchange or NASDAQ shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such exchange
or over-the-counter market, (3) additional material governmental restrictions,
not in force on the date of the Underwriting Agreement, have been imposed upon
trading in securities generally or trading in securities generally has been
suspended on any U.S. securities exchange, (4) a general banking moratorium has
been established by federal or New York authorities, or (5) any material adverse
change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or material escalation of hostilities or other calamity or crisis occurs, the
effect of which is such as to make it impracticable to market any or all of the
Shares. The Underwriting Agreement also may be terminated if any of the
conditions specified in the Underwriting Agreement have not been fulfilled when
and as required by such agreement.
The Trust anticipates that the Representatives and certain other
Underwriters may from time to time act as brokers or dealers in connection with
the execution of its Trust transactions after they have ceased to be
Underwriters and, subject to certain restrictions, may act as such brokers while
they are Underwriters.
As described below under "Shareholder Servicing Agent, Custodian and
Transfer Agent," PaineWebber Incorporated will provide shareholder services to
the Trust pursuant to a Shareholder Servicing Agreement with Eaton Vance. Eaton
Vance will pay a monthly fee for such services on an annual basis equal to .10%
of the average weekly gross assets of the Trust.
SHAREHOLDER SERVICING AGENT, CUSTODIAN AND TRANSFER AGENT
Pursuant to a Shareholder Servicing Agreement between PaineWebber
Incorporated (the "Shareholder Servicing Agent") and Eaton Vance, the
Shareholder Servicing Agent will (i) undertake to make public information
pertaining to the Trust on an ongoing basis and to communicate to investors and
prospective investors the Trust's features and benefits (including periodic
seminars or conference calls, responses to questions from current or prospective
shareholders and specific shareholder contact where appropriate); (ii) make
available to investors and prospective investors market price, net asset value,
yield and other information regarding the Trust, if reasonably obtainable, for
the purpose of maintaining the visibility of the Trust in the investor
community; (iii) at the request of Eaton Vance, provide certain economic
research and statistical information and reports, if reasonably obtainable, on
behalf of the Trust, and consult with representatives and Trustees of the Trust
in connection therewith, which information and reports shall include:
26
<PAGE> 32
(a) statistical and financial market information with respect to the Trust's
market performance and (b) comparative information regarding the Trust and other
closed-end management investment companies with respect to (1) the net asset
value of their respective shares, (2) the respective market performance of the
Trust and such other companies and (3) other relevant performance indicators;
and (iv) at the request of Eaton Vance, provide information to and consult with
the Board of Trustees with respect to applicable modifications to dividend
policies or capital structure, repositioning or restructuring of the Trust,
conversion of the Trust to an open-end investment company, liquidation or
merger; provided, however, that under the terms of the Shareholder Servicing
Agreement, the Shareholder Servicing Agent is not obligated to render any
opinions, valuations or recommendations of any kind or to perform any such
similar services. For these services, Eaton Vance will pay the Shareholder
Servicing Agent a fee equal on an annual basis to .10% of the Trust's average
weekly gross assets, payable in arrears at the end of each calendar month. Under
the terms of the Shareholder Servicing Agreement, the Shareholder Servicing
Agent is relieved from liability to Eaton Vance for any act or omission in the
course of its performances under the Shareholder Servicing Agreement in the
absence of gross negligence or willful misconduct by the Shareholder Servicing
Agent. The Shareholder Servicing Agreement will continue for an initial term of
two years and thereafter for successive one-year periods unless terminated by
either party upon 60 days written notice.
Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston, MA
02116 is the custodian of the Trust and will maintain custody of the securities
and cash of the Trust. IBT maintains the Trust's general ledger and computes net
asset value per share at least weekly. IBT also attends to details in connection
with the sale, exchange, substitution, transfer and other dealings with the
Trust's investments, and receives and disburses all funds. IBT also assists in
preparation of shareholder reports and the electronic filing of such reports
with the SEC.
First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 is the transfer agent and dividend disbursing agent of the Trust.
LEGAL OPINIONS
It is expected that certain legal matters in connection with the Shares
offered hereby will be passed upon for the Trust by Kirkpatrick & Lockhart LLP,
and for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP and its
affiliated entities.
ADDITIONAL INFORMATION
The Prospectus and the Statement of Additional Information do not contain
all of the information set forth in the Registration Statement that the Trust
has filed with the SEC. The complete Registration Statement may be obtained from
the SEC upon payment of the fee prescribed by its rules and regulations. The
Statement of Additional Information can be obtained without charge by calling
1-800-225-6265.
Statements contained in this Prospectus as to the contents of any contract
or other documents referred to are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified in all respects by such reference.
27
<PAGE> 33
TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Additional Investment Information and Restrictions.......... B-2
Trustees and Officers....................................... B-7
Investment Advisory and Other Services...................... B-10
Determination of Net Asset Value............................ B-11
Portfolio Trading........................................... B-11
Taxes....................................................... B-13
Other Information........................................... B-15
Auditors.................................................... B-16
Financial Statements........................................ B-17
Independent Auditors' Report................................ B-19
Appendix A: Ratings of Municipal Bonds...................... B-20
Appendix B: Tax Equivalent Yield Table...................... B-25
Appendix C: U.S. Territory Information...................... B-26
</TABLE>
TRUSTEES OF THE TRUST
JESSICA M. BIBLIOWICZ
President and Chief Operating Officer of John A. Levin & Co.
DONALD R. DWIGHT
President of Dwight Partners, Inc.
JAMES B. HAWKES
Chairman, President and Chief Executive Officer of Eaton Vance Corp.
SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard
University Graduate School of Business Administration
NORTON H. REAMER
Chairman and Chief Executive Officer of United Asset Management Corporation
LYNN A. STOUT
Professor of Law, Georgetown University Law Center
JACK L. TREYNOR
Investment Adviser and Consultant
28
<PAGE> 34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
EATON VANCE MUNICIPAL
INCOME TRUST
---------------------
---------------------
[EATON VANCE LOGO]
----------------------
PROSPECTUS
----------------------
PAINEWEBBER INCORPORATED
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED
EVEREN SECURITIES, INC.
------------------------
JANUARY 26, 1999
UNTIL , 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CE-MITP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 35
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 26, 1999
EATON VANCE MUNICIPAL INCOME TRUST
24 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(800) 225-6265
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Investment Information and Restrictions.......... B-2
Trustees and Officers....................................... B-7
Investment Advisory and Other Services...................... B-10
Determination of Net Asset Value............................ B-11
Portfolio Trading........................................... B-11
Taxes....................................................... B-13
Other Information........................................... B-15
Auditors.................................................... B-15
Financial Statements........................................ B-16
Independent Auditors' Report................................ B-18
Appendix A: Ratings of Municipal Bonds...................... B-19
Appendix B: Tax Equivalent Yield Table...................... B-24
Appendix C: U.S. Territory Information...................... B-25
</TABLE>
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE PROSPECTUS OF EATON VANCE MUNICIPAL INCOME TRUST (THE
"TRUST") DATED JANUARY 26, 1999, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS
INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION
SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE
OBTAINED WITHOUT CHARGE BY CONTACTING YOUR FINANCIAL INTERMEDIARY OR CALLING THE
TRUST AT 1-800-225-6265.
<PAGE> 36
Capitalized terms used in this Statement of Additional Information and not
otherwise defined have the meanings given them in the Trust's Prospectus.
ADDITIONAL INVESTMENT INFORMATION AND RESTRICTIONS
Municipal Obligations. Municipal obligations are issued to obtain funds
for various public and private purposes. Municipal obligations include long-term
obligations, which are often called municipal bonds, as well as tax-exempt
commercial paper, project notes and municipal notes such as tax, revenue and
bond anticipation notes of short maturity, generally less than three years.
Market rates of interest available with respect to municipal obligations may be
lower than those available with respect to taxable securities, although such
differences may be partially or wholly offset by the effects of federal income
tax on income derived from such taxable securities. While most municipal bonds
pay a fixed rate of interest semi-annually in cash, some bonds pay no periodic
cash interest but instead make a single payment at maturity representing both
principal and interest. Municipal obligations may be issued or subsequently
offered with interest coupons materially greater or less than those then
prevailing, with price adjustments reflecting such deviation.
In general, there are three categories of municipal obligations the
interest on which is exempt from federal income tax and is not a tax preference
item for purposes of the AMT: (i) certain "public purpose" obligations (whenever
issued), which include obligations issued directly by state and local
governments or their agencies to fulfill essential governmental functions; (ii)
certain obligations issued before August 8, 1986 for the benefit of
non-governmental persons or entities; and (iii) certain "private activity bonds"
issued after August 7, 1986 which include "qualified Section 501(c)(3) bonds" or
refundings of certain obligations included in the second category. Interest on
certain "private activity bonds" issued after August 7, 1986 is exempt from
regular federal income tax, but is treated as a tax preference item that could
subject the recipient to or increase the recipient's liability for the AMT. For
corporate shareholders, the Trust's distributions derived from interest on all
municipal obligations (whenever issued) is included in "adjusted current
earnings" for purposes of the AMT as applied to corporations (to the extent not
already included in alternative minimum taxable income as income attributable to
private activity bonds). In assessing the federal income tax treatment of
interest on any such obligation, the Trust will rely on an opinion of the
issuer's counsel (when available) obtained by the issuer or other reliable
authority and will not undertake any independent verification thereof.
The two principal classifications of municipal bonds are "general
obligation" and "revenue" bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects including the
construction or improvement of schools, highways and roads, water and sewer
systems and a variety of other public purposes. The basic security of general
obligation bonds is the issuer's pledge of its faith, credit, and taxing power
for the payment of principal and interest. The taxes that can be levied for the
payment of debt service may be limited or unlimited as to rate and amount.
Revenue bonds are generally secured by the net revenues derived from a
particular facility or group of facilities or, in some cases, from the proceeds
of a special excise or other specific revenue source. Revenue bonds have been
issued to fund a wide variety of capital projects including: electric, gas,
water, sewer and solid waste disposal systems; highways, bridges and tunnels;
port, airport and parking facilities; transportation systems; housing
facilities, colleges and universities and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully insured,
rent subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without legal obligation) to make up deficiencies in the debt service reserve
fund. Lease rental revenue bonds issued by a state or local authority for
capital projects are normally secured by annual lease rental payments from the
state or locality to the authority sufficient to cover debt service on the
authority's obligations. Such payments are usually subject to annual
appropriations by the state or locality. Industrial development and pollution
control
B-2
<PAGE> 37
bonds, although nominally issued by municipal authorities, are in most cases
revenue bonds and are generally not secured by the taxing power of the
municipality, but are usually secured by the revenues derived by the authority
from payments of the industrial user or users. The Trust may on occasion acquire
revenue bonds which carry warrants or similar rights covering equity securities.
Such warrants or rights may be held indefinitely, but if exercised, the Trust
anticipates that it would, under normal circumstances, dispose of any equity
securities so acquired within a reasonable period of time.
The obligations of any person or entity to pay the principal of and
interest on a municipal obligation are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Act, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations. There is also the possibility that as a result of litigation or
other conditions the power or ability of any person or entity to pay when due
principal of and interest on a municipal obligation may be materially affected.
There have been recent instances of defaults and bankruptcies involving
municipal obligations which were not foreseen by the financial and investment
communities. The Trust will take whatever action it considers appropriate in the
event of anticipated financial difficulties, default or bankruptcy of either the
issuer of any municipal obligation or of the underlying source of funds for debt
service. Such action may include retaining the services of various persons or
firms (including affiliates of the Adviser) to evaluate or protect any real
estate, facilities or other assets securing any such obligation or acquired by
the Trust as a result of any such event, and the Trust may also manage (or
engage other persons to manage) or otherwise deal with any real estate,
facilities or other assets so acquired. The Trust anticipates that real estate
consulting and management services may be required with respect to properties
securing various municipal obligations in its portfolio or subsequently acquired
by the Trust. The Trust will incur additional expenditures in taking protective
action with respect to portfolio obligations in default and assets securing such
obligations. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, the Trust may take possession of
and manage the assets or have a receiver appointed to collect and disburse
pledged revenues securing the issuer's obligations on such securities, which may
increase the operating expenses and adversely affect the net asset value of the
Trust. Any income derived from the ownership of operation of such assets may not
be tax-exempt. In addition, the Trust's intention to qualify as a "regulated
investment company" ("RIC") under the Code may limit the extent to which the
Trust may exercise its rights by taking possession of such assets, because as a
RIC, the Trust is subject to certain limitations on its investments and on the
nature of its income.
The yields on municipal obligations are dependent on a variety of factors,
including purposes of issue and source of funds for repayment, general money
market conditions, general conditions of the municipal bond market, size of a
particular offering, maturity of the obligation and rating of the issue. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality of
the municipal obligations which they undertake to rate. It should be emphasized,
however, that ratings are based on judgment and are not absolute standards of
quality. Consequently, municipal obligations with the same maturity, coupon and
rating may have different yields while obligations of the same maturity and
coupon with different ratings may have the same yield. In addition, the market
price of municipal obligations will normally fluctuate with changes in interest
rates, and therefore the net asset value of the Trust will be affected by such
changes.
State Concentration. The Trust may invest 25% or more of its total assets
in municipal obligations of issuers located in the same state. When the Trust
does so, it will be sensitive to factors affecting that state, such as changes
in the economy, decreases in tax collection or the tax base, legislation which
limits taxes and changes in issuer credit ratings.
Economic Sector Concentration. The Trust may invest 25% or more of its
total assets in municipal obligations of issuers in the same economic sector.
There could be economic, business or political developments which might affect
all municipal obligations in a particular economic sector. In particular,
investments in the industrial revenue bonds listed above might involve (without
limitation) the following risks.
Hospital bond ratings are often based on feasibility studies which contain
projections of expenses, revenues and occupancy levels. Among the influences
affecting a hospital's gross receipts and net income
B-3
<PAGE> 38
available to service its debt are demand for hospital services, the ability of
the hospital to provide the services required, management capabilities, economic
developments in the service area, efforts by insurers and government agencies to
limit rates and expenses, confidence in the hospital, service area economic
developments, competition, availability and expense of malpractice insurance,
Medicaid and Medicare funding and possible federal legislation limiting the
rates of increase of hospital charges.
Electric utilities face problems in financing large construction programs
in an inflationary period, cost increases and delay occasioned by safety and
environmental considerations (particularly with respect to nuclear facilities),
difficulty in obtaining fuel at reasonable prices and in achieving timely and
adequate rate relief from regulatory commissions, effects of energy conservation
and limitations on the capacity of the capital market to absorb utility debt.
Bonds to finance life care facilities are normally secured only by the
revenues of each facility and not by state or local government tax payments,
they are subject to a wide variety of risks. Primarily, the projects must
maintain adequate occupancy levels to be able to provide revenues sufficient to
meet debt service payments. Moreover, since a portion of housing, medical care
and other services may be financed by an initial deposit, it is important that
the facility maintain adequate financial reserves to secure estimated actuarial
liabilities. The ability of management to accurately forecast inflationary cost
pressures is an important factor in this process. The facilities may also be
affected adversely by regulatory cost restrictions applied to health care
delivery in general, particularly state regulations or changes in Medicare and
Medicaid payments or qualifications, or restrictions imposed by medical
insurance companies. They may also face competition from alternative health care
or conventional housing facilities in the private or public sector.
Municipal Leases. The Trust may invest in municipal leases and
participations therein, which arrangements frequently involve special risks.
Municipal leases are obligations in the form of a lease or installment purchase
arrangement which is issued by state or local governments to acquire equipment
and facilities. Interest income from such obligations is generally exempt from
local and state taxes in the state of issuance. "Participations" in such leases
are undivided interests in a portion of the total obligation. Participations
entitle their holders to receive a pro rata share of all payments under the
lease. The obligation of the issuer to meet its obligations under such leases is
often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Investments
in municipal leases are thus subject to the risk that the legislative body will
not make the necessary appropriation and the issuer will not otherwise be
willing or able to meet its obligation. Certain municipal lease obligations are
illiquid.
When-Issued Securities. New issues of municipal obligations are sometimes
offered on a "when-issued" basis, that is, delivery and payment for the
securities normally take place within a specified number of days after the date
of the Trust's commitment and are subject to certain conditions such as the
issuance of satisfactory legal opinions. The Trust may also purchase securities
on a when-issued basis pursuant to refunding contracts in connection with the
refinancing of an issuer's outstanding indebtedness. Refunding contracts
generally require the issuer to sell and the Trust to buy such securities on a
settlement date that could be several months or several years in the future. The
Trust may also purchase instruments that give the Trust the option to purchase a
municipal obligation when and if issued.
The Trust will make commitments to purchase when-issued securities only
with the intention of actually acquiring the securities, but may sell such
securities before the settlement date if it is deemed advisable as a matter of
investment strategy. The payment obligation and the interest rate that will be
received on the securities are fixed at the time the Trust enters into the
purchase commitment. When the Trust commits to purchase a security on a
when-issued basis it records the transaction and reflects the value of the
security in determining its net asset value. Securities purchased on a
when-issued basis and the securities held by the Trust are subject to changes in
value based upon the perception of the creditworthiness of the issuer and
changes in the level of interest rates (i.e. appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, to the extent
that the Trust remains substantially fully invested at the same time that it has
purchased securities on a when-issued basis, there will be greater fluctuations
in the Trust's net asset value than if it set aside cash to pay for when-issued
securities.
B-4
<PAGE> 39
Redemption, Demand and Put Features, and Put Options. Issuers of municipal
obligations reserve the right to call (redeem) the bond. If an issuer redeems
securities held by the Trust during a time of declining interest rates, the
Trust may not be able to reinvest the proceeds in securities providing the same
investment return as the securities redeemed. Also, some bonds may have "put" or
"demand" features that allow early redemption by the bondholder. Longer term
fixed-rate bonds may give the holder a right to request redemption at certain
times (often annually after the lapse of an intermediate term). These bonds are
more defensive than conventional long term bonds because they may protect to
some degree against a rise in interest rates.
Liquidity and Protective Put Options. The Trust may also enter into a
separate agreement with the seller of a security or some other person granting
the Trust the right to put the security to the seller thereof or the other
person at an agreed upon price. Such agreements are subject to the risk of
default by the other party, although the Trust intends to limit this type of
transaction to institutions (such as banks or securities dealers) which the
Adviser believes present minimal credit risks. The Trust would engage in this
type of transaction to facilitate portfolio liquidity or (if the seller so
agrees) to hedge against rising interest rates. There is no assurance that this
kind of put option will be available to the Trust or that selling institutions
will be willing to permit the Trust to exercise a put to hedge against rising
interest rates. The Trust does not expect to assign any value to any separate
put option which may be acquired to facilitate portfolio liquidity, inasmuch as
the value (if any) of the put will be reflected in the value assigned to the
associated security; any put acquired for hedging purposes would be valued in
good faith under methods or procedures established by the Trustees of the Trust
after consideration of all relevant factors, including its expiration date, the
price volatility of the associated security, the difference between the market
price of the associated security and the exercise price of the put, the
creditworthiness of the issuer of the put and the market prices of comparable
put options. Interest income generated by certain bonds having put or demand
features may be taxable.
Illiquid Obligations. At times, a substantial portion of the Trust's
assets may be invested in securities as to which the Trust, by itself or
together with other accounts managed by the Adviser and its affiliates, holds a
major portion or all of such securities. Under adverse market or economic
conditions or in the event of adverse changes in the financial condition of the
issuer, the Trust could find it more difficult to sell such securities when the
Adviser believes it advisable to do so or may be able to sell such securities
only at prices lower than if such securities were more widely held. Under such
circumstances, it may also be more difficult to determine the fair value of such
securities for purposes of computing the Trust's net asset value.
The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with the Trust) is less liquid than
that for taxable debt obligations or other more widely traded municipal
obligations. No established resale market exists for certain of the municipal
obligations in which the Trust may invest. The market for obligations rated
below investment grade is also likely to be less liquid than the market for
higher rated obligations. As a result, the Trust may be unable to dispose of
these municipal obligations at times when it would otherwise wish to do so at
the prices at which they are valued.
Futures Contracts and Options on Futures Contracts. A change in the level
of interest rates may affect the value of the securities held by the Trust (or
of securities that the Trust expects to purchase). To hedge against changes in
rates or as a substitute for the purchase of securities, the Trust may enter
into (i) futures contracts for the purchase or sale of debt securities and (ii)
futures contracts on securities indices. All futures contracts entered into by
the Trust are traded on exchanges or boards of trade that are licensed and
regulated by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant exchange. The Trust may purchase and write call and put
options on futures contracts which are traded on a United States or foreign
exchange or board of trade. The Trust will be required, in connection with
transactions in futures contracts and the writing of options on futures, to make
margin deposits, which will be held by the Trust's custodian for the benefit of
the futures commission merchant through whom the Trust engages in such futures
and options transactions.
Some futures contracts and options thereon may become illiquid under
adverse market conditions. In addition, during periods of market volatility, a
commodity exchange may suspend or limit transactions in an exchange-traded
instrument, which may make the instrument temporarily illiquid and difficult to
price.
B-5
<PAGE> 40
Commodity exchanges may also establish daily limits on the amount that the price
of a futures contract or futures option can vary from the previous day's
settlement price. Once the daily limit is reached, no trades may be made that
day at a price beyond the limit. This may prevent the Trust from closing out
positions and limiting its losses.
The Trust will engage in futures and related options transactions for bona
fide hedging purposes or non-hedging purposes as defined in or permitted by CFTC
regulations. The Trust will determine that the price fluctuations in the futures
contracts and options on futures used for hedging purposes are substantially
related to price fluctuations in securities held by the Trust or which it
expects to purchase. The Trust will engage in transactions in futures and
related options contracts only to the extent such transactions are consistent
with the requirements of the Code for maintaining its qualification as a RIC for
federal income tax purposes.
Investment Restrictions. The following investment restrictions of the
Trust are designated as fundamental policies and as such cannot be changed
without the approval of the holders of a majority of the Trust's outstanding
voting securities, which as used in this Statement of Additional Information
means the lesser of (a) 67% of the shares of the Trust present or represented by
proxy at a meeting if the holders of more than 50% of the outstanding shares are
present or represented at the meeting or (b) more than 50% of the outstanding
shares of the Trust. As a matter of fundamental policy the Trust may not:
(1) Borrow money, except as permitted by the 1940 Act;
(2) Issue senior securities, as defined in the 1940 Act, other than
(i) preferred shares which immediately after issuance will have asset
coverage of at least 200%, (ii) indebtedness which immediately after
issuance will have asset coverage of at least 300%, or (iii) the borrowings
permitted by investment restriction (1) above;
(3) Purchase securities on margin (but the Trust may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities). The purchase of investment assets with the proceeds
of a permitted borrowing or securities offering will not be deemed to be
the purchase of securities on margin;
(4) Underwrite securities issued by other persons, except insofar as
it may technically be deemed to be an underwriter under the Securities Act
of 1933 in selling or disposing of a portfolio investment;
(5) Make loans to other persons, except by (a) the acquisition of loan
interests, debt securities and other obligations in which the Trust is
authorized to invest in accordance with its investment objective and
policies, (b) entering into repurchase agreements, and (c) lending its
portfolio securities;
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by interests in real estate and securities of
issuers which invest or deal in real estate. The Trust reserves the freedom
of action to hold and to sell real estate acquired as a result of the
ownership of securities;
(7) Purchase or sell physical commodities or contracts for the
purchase or sale of physical commodities. Physical commodities do not
include futures contracts with respect to securities, securities indices or
other financial instruments; or
(8) Invest more than 25% of its total assets in securities of issuers
in any one industry.
For purposes of the Trust's investment restrictions, the determination of
the "issuer" of a municipal obligation which is not a general obligation bond
will be made by the Adviser on the basis of the characteristics of the
obligation and other relevant factors, the most significant of which is the
source of funds committed to meeting interest and principal payments of such
obligation.
For purposes of construing restriction(8), securities of the U.S.
Government, its agencies, or instrumentalities, and securities, including
municipal obligations, backed by the credit of a governmental entity are not
considered to represent industries. However, municipal obligations backed only
by the assets and revenues on non-governmental users may for this purpose be
deemed to be issued by such non-governmental users. Thus, the 25% limitation
would apply to such obligations. As discussed previously in this section and in
the Prospectus, it is nonetheless possible that the Trust may invest more than
25% of its total assets in a broader
B-6
<PAGE> 41
economic sector of the market for municipal obligations, such as revenue
obligations of hospitals and other health care facilities or electrical utility
revenue obligations. The Trust reserves the right to invest more than 25% of its
assets in industrial development bonds and private activity securities.
The Trust has adopted the following nonfundamental investment policy which
may be changed by the Trustees without approval of the Trust's shareholders. As
a matter of nonfundamental policy, the Trust may not make short sales of
securities or maintain a short position, unless at all times when a short
position is open it either owns an equal amount of such securities or owns
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short.
Upon Board of Trustee approval the Trust may invest more than 10% of its
total assets in one or more other management investment companies (or may invest
in affiliated investment companies) to the extent permitted by the 1940 Act and
rules thereunder.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this Statement of Additional Information states a maximum
percentage of assets that may be invested in any security or other asset or
describes a policy regarding quality standards, such percentage limitation or
standard shall be determined immediately after and as a result of the Trust's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances will
not compel the Trust to dispose of such security or other asset. Notwithstanding
the foregoing, the Trust must always be in compliance with the borrowing
policies set forth above.
TRUSTEES AND OFFICERS
The Trust's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110. Those
Trustees who are "interested persons" of the Trust as defined in the 1940 Act by
virtue of their affiliation with Eaton Vance, BMR, EVC or EV, are indicated by
an asterisk(*).
JESSICA M. BIBLIOWICZ (38), TRUSTEE (1)
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July 1997). Formerly Executive
Vice President of Smith Barney Mutual Funds (from July 1994 to June 1997).
Trustee of various investment companies managed by Eaton Vance or BMR since
October 30, 1998.
Address: One Rockefeller Plaza, New York, New York 10020
DONALD R. DWIGHT (67), TRUSTEE (1)
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee of various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
JAMES B. HAWKES (57), VICE PRESIDENT AND TRUSTEE* (2)
Chairman, President and Chief Executive Officer of Eaton Vance, BMR and their
corporate parent and trustee (EVC and EV). Director of EVC and EV. Trustee and
officer of various investment companies managed by Eaton Vance or BMR.
SAMUEL L. HAYES, III (63), TRUSTEE (2)
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies managed
by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090
B-7
<PAGE> 42
NORTON H. REAMER (63), TRUSTEE (3)
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director of UAM Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
LYNN A. STOUT (41), TRUSTEE (3)
Professor of Law, Georgetown University Law Center. Trustee of various
investment companies managed by Eaton Vance or BMR since October 30, 1998.
Address: 600 New Jersey, NW, Washington, DC 20001.
JACK L. TREYNOR (68), TRUSTEE (3)
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
THOMAS J. FETTER (55), PRESIDENT
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ROBERT B. MACINTOSH (41), VICE PRESIDENT
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
THOMAS M. METZOLD (39), VICE PRESIDENT
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (53), TREASURER
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ALAN R. DYNNER (58), SECRETARY
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick &
Lockhart LLP, New York and Washington, D.C., and was Executive Vice President of
Neuberger & Berman Management, Inc., a mutual fund management company. Officer
of various investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (62), ASSISTANT TREASURER AND ASSISTANT SECRETARY
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (35), ASSISTANT SECRETARY
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ERIC G. WOODBURY (41), ASSISTANT SECRETARY
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
- ---------------
(1) Class I Trustee whose term expires after 1999.
(2) Class II Trustee whose term expires after 2000.
(3) Class III Trustee whose term expires after 2001.
B-8
<PAGE> 43
Messrs. Hayes (Chairman) and Reamer and Ms. Stout are members of the
Special Committee of the Board of Trustees of the Trust. The purpose of the
Special Committee is to consider, evaluate and make recommendations to the full
Board of Trustees concerning (i) all contractual arrangements with service
providers to the Trust, including investment advisory, administrative, transfer
agency, custodial and fund accounting and distribution services, and (ii) all
other matters in which Eaton Vance or its affiliates has any actual or potential
conflict of interest with the Trust or its shareholders.
The Nominating Committee of the Board of Trustees of the Trust is comprised
of four Trustees who are not "interested persons" as that term is defined under
the 1940 Act ("noninterested Trustees"). The Committee has four-year staggered
terms, with one member rotating off the Committee to be replaced by another
noninterested Trustee. The purpose of the Committee is to recommend to the Board
nominees for the position of noninterested Trustee and to assure that at least a
majority of the Board of Trustees is independent of Eaton Vance and its
affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust. The Audit Committee's functions include
making recommendations to the Trustees regarding the selection of the
independent certified public accountants, and reviewing matters relative to
trading and brokerage policies and practices, accounting and auditing practices
and procedures, accounting records, internal accounting controls, and the
functions performed by the custodian, transfer agent and dividend disbursing
agent of the Trust.
Trustees of the Trust who are not affiliated with the Adviser may elect to
defer receipt of all or a percentage of their annual fees in accordance with the
terms of a Trustees Deferred Compensation Plan (the "Trustees' Plan"). Under the
Trustees' Plan, an eligible Trustee may elect to have his deferred fees invested
by the Trust in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the Trustees' Plan will be
determined based upon the performance of such investments. Deferral of Trustees'
fees in accordance with the Trustees' Plan will have a negligible effect on the
Trust's assets, liabilities, and net income per share, and will not obligate the
Trust to retain the services of any Trustee or obligate the Trust to pay any
particular level of compensation to the Trustee. The Trust does not have a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust are paid
by the Trust. (The Trustees of the Trust who are members of the Eaton Vance
organization receive no compensation from the Trust.) During the year ended
December 31, 1998, the noninterested Trustees of the Trust earned the
compensation set forth below in their capacities as Trustees from the funds in
the Eaton Vance fund complex(1). It is estimated that the noninterested Trustees
will receive from the Trust the amounts set forth below for the fiscal year
ending November 30, 1999.
<TABLE>
<CAPTION>
ESTIMATED TOTAL COMPENSATION
COMPENSATION FROM
NAME FROM TRUST FUND COMPLEX
---- ------------- ------------------
<S> <C> <C>
Jessica M. Bibliowicz.................................. $385 N/A
Donald R. Dwight....................................... 385 $156,250(2)
Samuel L. Hayes, III................................... 381 166,250(3)
Norton H. Reamer....................................... 374 156,250
Lynn A. Stout.......................................... 385 N/A
Jack L. Treynor........................................ 422 165,000
</TABLE>
- ---------------
(1) As of January 1, 1999 the Eaton Vance fund complex consisted of 143
registered investment companies or series thereof.
(2) Includes $56,250 of deferred compensation.
(3) Includes $41,563 of deferred compensation.
B-9
<PAGE> 44
INVESTMENT ADVISORY AND OTHER SERVICES
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and of investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment-grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division covers stocks ranging from
blue chip to emerging growth companies. Eaton Vance and its affiliates act as
adviser to a family of mutual funds, and individual and various institutional
accounts, including corporations, hospitals, retirement plans, universities,
foundations and trusts.
The Trust will be responsible for all of its costs and expenses not
expressly stated to be payable by Eaton Vance under the Advisory Agreement or
Administration Agreement. Such costs and expenses to be borne by the Trust
include, without limitation: custody and transfer agency fees and expenses,
including those incurred for determining net asset value and keeping accounting
books and records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; expenses of
acquiring, holding and disposing of securities and other investments; fees and
expenses of registering under the securities laws, stock exchange listing fees
and governmental fees; rating agency fees and preferred share remarketing
expenses; expenses of reports to shareholders, proxy statements and other
expenses of shareholders' meetings; insurance premiums; printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance; expenses
of conducting repurchase offers for the purpose of repurchasing Trust shares;
and investment advisory and administration fees. The Trust will also bear
expenses incurred in connection with any litigation in which the Trust is a
party and any legal obligation to indemnify its officers and Trustees with
respect thereto, to the extent not covered by insurance.
The Advisory Agreement with the Adviser continues in effect to February 28,
2000 and from year to year so long as such continuance is approved at least
annually (i) by the vote of a majority of the noninterested Trustees of the
Trust or of the Adviser cast in person at a meeting specifically called for the
purpose of voting on such approval and (ii) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding interests of the Trust. The
Trust's Administration Agreement continues in effect from year to year so long
as such continuance is approved at least annually by the vote of a majority of
the Trust's Trustees. Each agreement may be terminated at any time without
penalty on sixty (60) days' written notice by the Trustees of the Trust or Eaton
Vance, as applicable, or by vote of the majority of the outstanding shares of
the Trust. Each agreement will terminate automatically in the event of its
assignment. Each agreement provides that, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or duties
to the Trust under such agreements on the part of Eaton Vance, Eaton Vance shall
not be liable to the Trust for any loss incurred, to the extent not covered by
insurance.
BMR and Eaton Vance are business trusts organized under Massachusetts law.
Eaton Vance, Inc. ("EV") serves as trustee of BMR and Eaton Vance. BMR, Eaton
Vance and EV are wholly-owned subsidiaries of Eaton Vance Corporation ("EVC"), a
Maryland corporation and publicly-held holding company. EVC through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Directors of EVC are James B.
Hawkes, Benjamin A. Rowland, Jr., John G.L. Cabot, John M. Nelson, Vincent M.
O'Reilly and Ralph Z. Sorenson. All of the issued and outstanding shares of
Eaton Vance are owned by EVC. All of the issued and outstanding shares of BMR
are owned by Eaton Vance. All shares of the outstanding Voting Common Stock of
EVC are deposited in a Voting Trust, the Voting Trustees of which are Messrs.
Hawkes, Rowland, and Alan R. Dynner, Thomas E. Faust, Jr., Thomas J. Fetter,
Duncan Richardson, William M. Steul and Wharton P. Whitaker. The Voting Trustees
have unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of BMR and Eaton Vance who are also officers, or
officers and Directors of EVC and EV. As indicated under "Trustees and
Officers", all of the officers of the Trust (as well as Mr. Hawkes who is also a
Trustee) hold positions in the Eaton Vance organization.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Trust, IBT.
It is Eaton Vance's opinion that the terms and conditions of such transactions
were not and will not be influenced by existing or potential custodial or other
relationships between the Trust and such banks.
B-10
<PAGE> 45
DETERMINATION OF NET ASSET VALUE
The net asset value per Share of the Trust is determined no less frequently
than weekly, generally on the last day of the week that the New York Stock
Exchange (the "Exchange") is open for trading, as of the close of regular
trading on the Exchange (normally 4:00 p.m. New York time). The Trust's net
asset value per Share is determined by IBT, in the manner authorized by the
Trustees of the Trust. Net asset value is computed by dividing the value of the
Trust's total assets, less its liabilities by the number of shares outstanding.
Inasmuch as the market for municipal obligations is a dealer market with no
central trading location or continuous quotation system, it is not feasible to
obtain last transaction prices for most municipal obligations held by the Trust,
and such obligations, including those purchased on a when-issued basis, will
normally be valued on the basis of valuations furnished by a pricing service.
The pricing service uses information with respect to transactions in bonds,
quotations from bond dealers, market transactions in comparable securities,
various relationships between securities, and yield to maturity in determining
value. Taxable obligations for which price quotations are readily available
normally will be valued at the mean between the latest available bid and asked
prices. Open futures positions on debt securities are valued at the most recent
settlement prices, unless such price does not reflect the fair value of the
contract, in which case the positions will be valued by or at the direction of
the Trustees. Other assets are valued at fair value using methods determined in
good faith by the Trustees.
PORTFOLIO TRADING
Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by the
Adviser. The Adviser is also responsible for the execution of transactions for
all other accounts managed by it. The Adviser places the portfolio security
transactions of the Trust and of all other accounts managed by it for execution
with many firms. The Adviser uses its best efforts to obtain execution of
portfolio security transactions at prices which are advantageous to the Trust
and at reasonably competitive spreads or (when a disclosed commission is being
charged) at reasonably competitive commission rates. In seeking such execution,
the Adviser will use its best judgment in evaluating the terms of a transaction,
and will give consideration to various relevant factors, including without
limitation the full range and quality of the executing firm's services, the
value of the brokerage and research services provided, the responsiveness of the
firm to the Adviser, the size and type of the transaction, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the general
execution and operational capabilities of the executing firm, the reputation,
reliability, experience and financial condition of the firm, the value and
quality of the services rendered by the firm in this and other transactions, and
the reasonableness of the spread or commission, if any. Municipal obligations,
including state obligations, purchased and sold by the Trust are generally
traded in the over-the-counter market on a net basis (i.e., without commission)
through broker-dealers and banks acting for their own account rather than as
brokers, or otherwise involve transactions directly with the issuer of such
obligations. Such firms attempt to profit from such transactions by buying at
the bid price and selling at the higher asked price of the market for such
obligations, and the difference between the bid and asked price is customarily
referred to as the spread. The Trust may also purchase municipal obligations
from underwriters, and dealers in fixed price offerings, the cost of which may
include undisclosed fees and concessions to the underwriters. On occasion it may
be necessary or appropriate to purchase or sell a security through a broker on
an agency basis, in which case the Trust will incur a brokerage commission.
Although spreads or commissions on portfolio security transactions will, in the
judgment of the Adviser, be reasonable in relation to the value of the services
provided, spreads or commissions exceeding those which another firm might charge
may be paid to firms who were selected to execute transactions on behalf of the
Trust and the Adviser's other clients for providing brokerage and research
services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Trust may
receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser
B-11
<PAGE> 46
determines in good faith that such compensation was reasonable in relation to
the value of the brokerage and research services provided. This determination
may be made on the basis of that particular transaction or on the basis of
overall responsibilities which the Adviser and its affiliates have for accounts
over which they exercise investment discretion. In making any such
determination, the Adviser will not attempt to place a specific dollar value on
the brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice of the investment advisory industry and of the
Advisers of investment companies, institutions and other investors to receive
research, analytical, statistical and quotation services, data, information and
other services, products and materials which assist such advisers in the
performance of their investment responsibilities ("Research Services") from
broker-dealer firms which execute portfolio transactions for the clients of such
advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, the Adviser receives Research
Services from many broker-dealer firms with which the Adviser places the Trust's
transactions and from third parties with which these broker-dealers have
arrangements. These Research Services include such matters as general economic,
political, business and market information, industry and company reviews,
evaluations of securities and portfolio strategies and transactions, proxy
voting data and analysis services, technical analysis of various aspects of the
securities market, recommendations as to the purchase and sale of securities and
other portfolio transactions, financial, industry and trade publications, news
and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by the
Adviser in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to the Adviser in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by the Trust is not reduced because the Adviser receives such Research
Services. The Adviser evaluates the nature and quality of the various Research
Services obtained through broker-dealer firms and attempts to allocate
sufficient portfolio security transactions to such firms to ensure the continued
receipt of Research Services which the Adviser believes are useful or of value
to it in rendering investment advisory services to its clients.
The Trust and the Adviser may also receive Research Services from
underwriters and dealers in fixed-price offerings, which Research Services are
reviewed and evaluated by the Adviser in connection with its investment
responsibilities. The investment companies sponsored by the Adviser or BMR may
allocate trades in such offerings to acquire information relating to the
performance, fees and expenses of such companies and other mutual funds, which
information is used by the Trustees of such companies to fulfill their
responsibility to oversee the quality of the services provided by various
entities, including the Adviser, to such companies. Such companies may also pay
cash for such information.
Subject to the requirement that the Adviser shall use its best efforts to
seek and execute portfolio security transactions at advantageous prices and at
reasonably competitive spreads or commission rates, the Adviser is authorized to
consider as a factor in the selection of any broker-dealer firm with whom
portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Trust or of other investment companies sponsored by the Adviser.
This policy is not inconsistent with a rule of the National Association of
Securities Dealers, Inc. ("NASD"), which rule provides that no firm which is a
member of the NASD shall favor or disfavor the distribution of shares of any
particular investment company or group of investment companies on the basis of
brokerage commissions received or expected by such firm from any source.
Municipal obligations considered as investments for the Trust may also be
appropriate for other investment accounts managed by the Adviser or its
affiliates. Whenever decisions are made to buy or sell
B-12
<PAGE> 47
securities by the Trust and one or more of such other accounts simultaneously,
the Adviser will allocate the security transactions (including "hot" issues) in
a manner which it believes to be equitable under the circumstances. As a result
of such allocations, there may be instances where the Trust will not participate
in a transaction that is allocated among other accounts. If an aggregated order
cannot be filled completely, allocations will generally be made on a pro rata
basis. An order may not be allocated on a pro rata basis where, for example: (i)
consideration is given to portfolio managers who have been instrumental in
developing or negotiating a particular investment; (ii) consideration is given
to an account with specialized investment policies that coincide with the
particulars of a specific investment; (iii) pro rata allocation would result in
odd-lot or de minimis amounts being allocated to a portfolio or other client; or
(iv) where the Adviser reasonably determines that departure from a pro rata
allocation is advisable. While these aggregation and allocation policies could
have a detrimental effect on the price or amount of the securities available to
the Trust from time to time, it is the opinion of the Trustees of the Trust that
the benefits from the Adviser's organization outweigh any disadvantage that may
arise from exposure to simultaneous transactions.
TAXES
The Trust has elected to be, and intends to qualify for treatment each
year, as a RIC under the Code. Accordingly, the Trust intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute substantially all of its net investment income (including tax-
exempt income) and net capital gains in accordance with the timing requirements
imposed by the Code, so as to maintain its RIC status. By doing so, the Trust
will avoid any federal income tax on any income and gains it distributes to its
shareholders. If the Trust failed to qualify as a RIC for any taxable year, it
would be taxed on the full amount of its taxable income for that year without
being able to deduct the distributions it makes to its shareholders and the
shareholders would treat all distributions, including those that otherwise would
qualify as "exempt-interest dividends" (described below), as dividends (that is,
ordinary income) to the extent of the Trusts' earnings and profits.
To avoid incurring a federal excise tax obligation, the Trust must
distribute (or be deemed to have distributed) each calendar year (i) at least
98% of its ordinary income (not including tax-exempt income) for that year, (ii)
at least 98% of its capital gain net income (which is the excess of its realized
capital gains over its realized capital losses), generally computed on the basis
of the one-year period ending on October 31 of that year, after reduction by any
available capital loss carryforwards and (iii) 100% of certain other amounts.
Under current law, provided that the Trust qualifies as a RIC, it should not be
liable for any income, corporate excise or franchise tax in the Commonwealth of
Massachusetts.
The Trust's investment in zero coupon and certain other securities will
cause it to realize income prior to the receipt of cash payments with respect to
these securities. The Trust may be required to liquidate securities that it
might otherwise have continued to hold in order to generate cash to enable it to
distribute that income to Trust shareholders and thereby remain qualified for
treatment as a RIC and avoid imposition of the excise tax described above.
Investments in lower-rated or unrated securities may present special tax
issues for the Trust to the extent that the issuers of these securities default
on their obligations pertaining thereto. The federal tax law is not entirely
clear regarding the consequences of the Trust's taking certain positions in
connection with ownership of distressed securities. For example, there is
uncertainty regarding: (i) when the Trust may or must cease to accrue interest,
original issue discount, or market discount on these securities; (ii) when and
to what extent deductions may be taken for bad debts or worthless securities;
(iii) how payments received on obligations in default should be allocated
between principal and income; and (iv) whether exchanges of debt obligations in
a workout context are taxable.
Distributions by the Trust of net tax-exempt interest income that are
properly designated as "exempt-interest dividends" may be treated by
shareholders as interest excludable from gross income under Section 103(a) of
the Code. For the Trust to be able to pay exempt-interest dividends, the Trust
must, and intends to, satisfy the requirement that, at the close of each quarter
of its taxable year, at least 50% of the value of its total assets consists of
obligations the interest on which is exempt from regular federal income tax
under
B-13
<PAGE> 48
Code Section 103(a). The portion of exempt-interest dividends attributable to
interest on certain municipal obligations is treated as a tax preference item
for purposes of the AMT. Shareholders are required to report tax-exempt interest
dividends on their federal income tax returns.
If the Trust issues preferred shares, the Trust will designate
distributions made to holders of Shares and to holders of those preferred shares
in accordance with each class's proportionate share of each item of Trust income
(such as tax-exempt interest, net capital gains and other taxable income).
A portion of exempt-interest dividends paid by the Trust will not be
tax-exempt to any shareholder who is a "substantial user" of the facilities
financed by tax-exempt obligations held by the Trust or "related persons" of
such substantial users.
Any recognized gain or other income attributable to market discount on
long-term tax-exempt municipal obligations (i.e., obligations with a term of
more than one year) other than, in general, at their original issue, is taxable
as ordinary income. Such an obligation is generally treated as acquired at a
market discount if purchased after its original issue at a price less than (i)
the stated principal amount payable at maturity, in the case of an obligation
that does not have original issue discount, or (ii) in the case of an obligation
that does have original issue discount, the sum of the issue price and any
original issue discount that accrued before the obligation was purchased,
subject to a de minimis exclusion.
From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on certain types of municipal obligations, and it can be expected that
similar proposals may be introduced in the future. If any such proposals were
enacted, the availability of municipal obligations for investment by the Trust
and the value of the securities it held may be affected.
The Trust may realize some capital gains (and/or losses) as a result of
market transactions, including sales of portfolio securities and rights to
when-issued securities and options and futures transactions. The Trust may also
realize taxable income from certain short-term taxable obligations, securities
loans, a portion of discount with respect to certain stripped municipal
obligations or their stripped coupons, and certain realized gains or income
attributable to accrued market discount. Any distributions by the Trust of those
capital gains or taxable income would be taxable to its shareholders. However,
it is expected that such amounts, if any, would normally be insubstantial in
relation to the tax-exempt interest earned by the Trust. Certain distributions
declared in October, November or December and paid the following January may be
taxed to shareholders as if received on December 31 of the year in which they
are declared.
The Trust's transactions in options and futures contracts will be subject
to special tax rules that may affect the amount, timing and character of Trust
distributions to shareholders. For example, certain positions held by the Trust
on the last business day of each taxable year will be "marked to market" (i.e.,
treated as if closed out on that day), and any resulting gain or loss (in
addition to gain or loss from actual dispositions of such positions) will
generally be treated as 60% long-term and 40% short-term capital gain or loss.
Certain positions held by the Trust that substantially diminish the Trust's risk
of loss with respect to other positions in its portfolio may constitute
"straddles," which are subject to tax rules that may cause deferral of Trust
losses, adjustments in the holding period of portfolio securities, and
conversion of short-term capital losses into long-term capital losses. The Trust
may have to limit its activities in options and futures contracts in order to
enable it to maintain its RIC status.
Any loss realized upon the sale or exchange of Shares held by a Shareholder
for six months or less will be disallowed to the extent the shareholder has
received exempt-interest dividends with respect to those shares, and any such
loss that exceeds the disallowed amount will be treated as a long-term capital
loss to the extent of any distribution of net capital gain with respect to those
shares. In addition, a loss realized on a sale of Shares will be disallowed to
the extent the shareholder acquires other Shares (whether through the
reinvestment of distributions or otherwise) within the period beginning 30 days
before the sale and ending 30 days after the sale.
Taxable dividends (including capital gain dividends) payable by the Trust
to individuals and certain other non-corporate shareholders who have not
provided the Trust with their correct taxpayer identification number
B-14
<PAGE> 49
("TIN") and certain certifications required by the Internal Revenue Service
("IRS"), as well as shareholders with respect to whom the Trust has received
certain notifications from the IRS are subject to "backup" withholding of
federal income tax at a rate of 31%. An individual's TIN is generally his or her
social security number.
The Trust is not appropriate for non-U.S. investors or as a retirement plan
investment.
State and Local Taxes. The exemption of interest income for federal income
tax purposes does not necessarily result in exemption under the income or other
tax laws of any state or local taxing authority. Shareholders of the Trust may
be exempt from state and local taxes on distributions of tax-exempt interest
income derived from obligations of the state and/or municipalities of the state
in which they are resident, but taxable generally on income derived from
obligations of other jurisdictions. The Trust will report annually to
shareholders the percentages representing the proportionate ratio of its net
tax-exempt income earned in each state.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as insurance companies and financial
institutions. Shareholders should consult their own tax advisers with respect to
special tax rules that may apply in their particular situations, as well as the
state or local tax consequences of investing in the Trust.
OTHER INFORMATION
The Trust is an organization of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, Shareholders of such a trust may, in
certain circumstances, be held personally liable as partners for the obligations
of the trust. The Declaration of Trust contains an express disclaimer of
Shareholder liability in connection with the Trust property or the acts,
obligations or affairs of the Trust. The Declaration of Trust also provides for
indemnification out of the Trust property of any Shareholder held personally
liable for the claims and liabilities to which a Shareholder may become subject
by reason of being or having been a Shareholder. Thus, the risk of a Shareholder
incurring financial loss on account of Shareholder liability is limited to
circumstances in which the Trust itself is unable to meet its obligations. The
Trust believes the risk of any Shareholder incurring any liability for the
obligations of the Trust is remote.
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law; but nothing in the Declaration of
Trust protects a Trustee against any liability to the Trust or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office. Voting rights are not cumulative, which means that the
holders of more than 50% of the shares voting for the election of Trustees can
elect 100% of the Trustees and, in such event, the holders of the remaining less
than 50% of the shares voting on the matter will not be able to elect any
Trustees.
The Declaration of Trust provides that no person shall serve as a Trustee
if shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The Declaration
of Trust further provides that the Trustees of the Trust shall promptly call a
meeting of the shareholders for the purpose of voting upon a question of removal
of any such Trustee or Trustees when requested in writing so to do by the record
holders of not less than 10 per centum of the outstanding shares.
The Trust's Prospectus and this Statement of Additional Information do not
contain all of the information set forth in the Registration Statement that the
Fund has filed with the SEC. The complete Registration Statement may be obtained
from the SEC upon payment of the fee prescribed by its Rules and Regulations.
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent accountants for the Trust, providing audit services, tax return
preparation, and assistance and consultation with respect to the preparation of
filings with the SEC.
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<PAGE> 50
EATON VANCE MUNICIPAL INCOME TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 21, 1999
<TABLE>
<S> <C>
ASSETS:
Cash................................................... $100,000
Deferred initial offering expenses..................... 400,000
Receivable from Investment Adviser for expenses subject
to expense reimbursement plan......................... 49,411
Receivable from Investment Adviser for expenses assumed
by Investment Adviser................................. 589
--------
Total Assets...................................... $550,000
LIABILITIES:
Initial offering expenses accrued...................... $400,000
Accrued expenses....................................... 50,000
--------
Total liabilities................................. $450,000
--------
Net assets applicable to 6,666.67 common shares of
beneficial interest issued and outstanding................ $100,000
--------
NET ASSET VALUE AND OFFERING PRICE PER SHARE................ $ 15.00
--------
</TABLE>
NOTE TO FINANCIAL STATEMENT
Eaton Vance Municipal Income Trust was formed under an Agreement and
Declaration of Trust dated December 10, 1998 and has been inactive since that
date except for matters relating to its organization and registration as an
investment company under the Investment Company Act of 1940 and the sale of
6,666.67 shares of its beneficial interest to Eaton Vance Management, the Fund's
administrator. The initial offering expenses, including federal and state
registration and qualification fees, will be deducted from net proceeds, and
will not exceed $0.03 per share, as Eaton Vance Management or an affiliate will
pay any such expenses in excess of $0.03 per share. The initial offering
expenses reflected above assume the initial sale of 13,333,333.33 shares.
B-16
<PAGE> 51
EATON VANCE MUNICIPAL INCOME TRUST
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM THE DATE OF ORGANIZATION
DECEMBER 10, 1998 TO JANUARY 21, 1999
<TABLE>
<S> <C>
INCOME:..................................................... $ 0
--------
EXPENSES:
Organization expenses..................................... $ 50,000
--------
Total Expenses.................................... $ 50,000
--------
Less:
Preliminary reduction of expenses subject to expense
reimbursement plan..................................... $(49,411)
Assumption of expenses by Investment Adviser.............. $ (589)
--------
Net Expenses................................................ $ 0
--------
Net Income.................................................. $ 0
--------
</TABLE>
NOTE OF FINANCIAL STATEMENT
Eaton Vance Management, the Trust's administrator, has agreed to bear all
ordinary and organizational expenses of the Trust that exceed 5% of average
weekly net assets (taking into account the deduction of any preferred shares and
related expenses) for the Trust's first fiscal year. In return for this
arrangement, the Trust may reimburse Eaton Vance over the first year of
operations for organizational expenses of the Trust initially borne by the
administrator. In addition, for the period from the date of organization,
December 10, 1998, to January 21, 1999, Eaton Vance has agreed to voluntarily
assume any expenses not covered by the expense reimbursement plan.
B-17
<PAGE> 52
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholder of
Eaton Vance Municipal Income Trust:
We have audited the accompanying statement of assets and liabilities of
Eaton Vance Municipal Income Trust (the "Fund") as of January 21, 1999 and the
related statement of operations for the period from the date of organization
December 10, 1998, to January 21, 1999. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements referred to above presents
fairly, in all material respects, the financial position of Eaton Vance
Municipal Income Trust as of January 21, 1999, and the results of its operations
for the stated period, in conformity with generally accepted accounting
principles.
Boston, Massachusetts
January 22, 1999
B-18
<PAGE> 53
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS*
MOODY'S INVESTORS SERVICE, INC.
MUNICIPAL BONDS
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than the Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
- ---------------
* The ratings indicated herein are believed to be the most recent ratings
available at the date of this SAI for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating
agencies may from time to time revise such ratings, they undertake no
obligation to do so, and the ratings indicated do not necessarily represent
ratings which would be given to these securities on the date of the Trust's
fiscal year end.
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<PAGE> 54
Absence of Rating -- Where no rating has been assigned or where a rating
has been suspended or withdrawn, it may be for reasons unrelated to the quality
of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
NOTE: Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in its municipal bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
MUNICIPAL SHORT-TERM OBLIGATIONS
Ratings -- Moody's ratings for state and municipal short-term obligations
will be designated Moody's Investment Grade or (MIG). Such rating recognizes the
differences between short term credit risk and long term risk. Factors effecting
the liquidity of the borrower and short term cyclical elements are critical in
short term ratings, while other factors of major importance in bond risk, long
term secular trends for example, may be less important over the short run.
A short term rating may also be assigned on an issue having a demand
feature, variable rate demand obligation (VRDO). Such ratings will be designated
as VMIG1, SG or if the demand feature is not rated, NR. A short term rating on
issues with demand features are differentiated by the use of the VMIG1 symbol to
reflect such characteristics as payment upon periodic demand rather than fixed
maturity dates and payment relying on external liquidity. Additionally,
investors should be alert to the fact that the source of payment may be limited
to the external liquidity with no or limited legal recourse to the issuer in the
event the demand is not met.
STANDARD & POOR'S RATINGS GROUP
INVESTMENT GRADE
AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
B-20
<PAGE> 55
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.
BB -- Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B -- Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB-rating.
CCC -- Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied B or B- rating.
CC -- The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C -- The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- The Rating C1 is reserved for income bonds on which no interest is
being paid.
D -- Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-) -- The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
p -- The letter "p" indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project being financed by the
debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of, or the risk of
default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.
L -- The letter "L" indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit collateral is
insured by the Federal Deposit Insurance Corp. and interest is adequately
collateralized. In the case of certificates of deposit, the letter "L" indicates
that the deposit, combined with other deposits being held in the same right and
capacity, will be honored for principal and accrued pre-default interest up to
the federal insurance limits within 30 days after closing of the insured
institution or, in the event that the deposit is assumed by a successor insured
institution, upon maturity.
NR -- NR indicates no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
B-21
<PAGE> 56
MUNICIPAL NOTES
S&P note ratings reflect the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment:
-- Amortization schedule (the larger the final maturity relative to
other maturities the more likely it will be treated as a note).
-- Sources of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 -- Strong capacity to pay principal and interest. Those issues
determined to possess very strong characteristics will be given a
plus(+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of
the notes.
SP-3 -- Speculative capacity to pay principal and interest.
FITCH IBCA
INVESTMENT GRADE BOND RATINGS
AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+".
A -- Bonds considered to be investment grade and of high credit quality.
The obligors ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
HIGH YIELD BOND RATINGS
BB -- Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified that
could assist the obligor in satisfying its debt service requirements.
B -- Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC -- Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC -- Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
B-22
<PAGE> 57
C -- Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D -- Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or reorganization of the
obligor. "DDD" represents the highest potential for recovery on these bonds, and
"D" represents the lowest potential for recovery.
Plus (+) or Minus (-) -- The ratings from AA to C may be modified by the
addition of a plus or minus sign to indicate the relative position of a credit
within the rating category.
NR -- Indicates that Fitch does not rate the specific issue.
Conditional -- A conditional rating is premised on the successful
completion of a project or the occurrence of a specific event.
INVESTMENT GRADE SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
F-1+ -- Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.
F-1 -- Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".
F-2 -- Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as the "F-1+" and "F-1" categories.
F-3 -- Fair Credit Quality. Issues carrying this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate, however, near-term adverse change could cause these securities to be
rated below investment grade.
* * * * * * * *
Notes -- Bonds which are unrated expose the investor to risks with respect
to capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative bonds. The Trust is dependent on the Investment
Adviser's judgment, analysis and experience in the evaluation of such bonds.
Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.
B-23
<PAGE> 58
APPENDIX B
TAX EQUIVALENT YIELD TABLE
The table below gives the approximate yield a taxable security must earn at
various income brackets to produce after-tax yields equivalent to those of
tax-exempt bonds yielding from 4% to 6% under the regular federal income tax law
and tax rates applicable to individuals for 1999.
<TABLE>
<CAPTION>
(TAXABLE INCOME*) MARGINAL
--------------------------------- INCOME A FEDERAL TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN TAX BRACKET 4% 4.5% 5% 5.5% 6%
------------- ------------ ----------- ---------------------------------------------
IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,750 Up to $ 43,050 15.00% 4.71% 5.29% 5.88% 6.47% 7.06%
$ 25,751 - $62,450 $ 43,051 - $104,050 28.00 5.56 6.25 6.94 7.64 8.33
$ 62,451 - $130,250 $104,051 - $158,550 31.00 5.80 6.52 7.25 7.97 8.70
$130,251 - $283,150 $158,551 - $283,150 36.00 6.25 7.03 7.81 8.59 9.38
Over $283,150 Over $283,150 39.60 6.62 7.45 8.28 9.11 9.93
</TABLE>
- ---------------
* Net amount subject to federal personal income tax after deductions and
exemptions.
The above indicated federal income tax brackets do not take into account
the effect of a reduction in the deductibility of itemized deductions for
individual taxpayers with adjusted gross income in excess of $126,600. The tax
brackets also do not show the effects of phaseout of personal exemptions for
single filers with adjusted gross income in excess of $126,600 and joint filers
with adjusted gross income in excess of $189,950. The effective tax brackets and
equivalent taxable yields of those taxpayers will be higher than those indicated
above.
Yields shown are for illustration purposes only and are not meant to
represent the Trust's actual yield. No assurance can be given that the Trust
will achieve any specific tax-exempt yield. While it is expected that the Trust
will invest principally in obligations the interest from which is exempt from
the regular federal income tax, other income received by the Trust may be
taxable. The table does not take into account state or local taxes, if any,
payable on Trust distributions. It should also be noted that the interest earned
on certain "private activity bonds", while exempt from the regular federal
income tax, is treated as a tax preference item which could subject the
recipient to the AMT. The illustrations assume that the AMT is not applicable
and do not take into account any tax credits that may be available.
The information set forth above is as of the date of this Statement of
Additional Information. Subsequent tax law changes could result in prospective
or retroactive changes in the tax brackets, tax rates, and tax-equivalent yields
set forth above. Investors should consult their tax adviser for additional
information.
B-24
<PAGE> 59
APPENDIX C
U.S. TERRITORY INFORMATION
PUERTO RICO, THE U.S. VIRGIN ISLANDS AND GUAM
Puerto Rico. Puerto Rico has a diversified economy dominated by the
manufacturing and service sectors. The North American Free Trade Agreement
("NAFTA"), which became effective January 1, 1994, has led to loss of lower wage
jobs such as textiles, but economic growth in other areas, particularly the high
technology area has compensated for that loss.
The Commonwealth of Puerto Rico differs from the states in its relationship
with the federal government. Most federal taxes, except those such as social
security taxes that are imposed by mutual consent, are not levied in Puerto
Rico. However, in conjunction with the 1993 U.S. budget plan, Section 936 of the
Code was amended and provided for two alternative limitations to the Section 936
credit. The first option limited the credit against such income to 40% of the
credit allowable under then current law, with a five year phase-in period
starting at 60% of the allowable credit. The second option was a wage and
depreciation based credit. Additional amendments to Section 936 in 1996 imposed
caps on these credits, beginning in 1998 for the first option and beginning in
2002 for the second option. More importantly, the 1996 amendments eliminated
both options for taxable years beginning in 2006. The eventual elimination of
tax benefits to those U.S. companies with operations in Puerto Rico may lead to
slower growth in the future. There can be no assurance that this will not lead
to a weakened economy, a lower rating on Puerto Rico's debt or lower prices for
Puerto Rican bonds that may be held by the Portfolio in the long-term.
Puerto Ricans have periodically considered conversion to statehood and such
a vote is likely again in the future. The statehood proposal was again defeated
in December, 1998.
The U.S. Virgin Islands. The United States Virgin Islands (USVI) is
heavily reliant on the tourism industry, with roughly 43% of non-agricultural
employment in tourist-related trade and services. The tourism industry is
economically sensitive and would likely be adversely affected by a recession in
either the United States or Europe.
An important component of the USVI revenue base is the federal excise tax
on rum exports. Tax revenues rebated by the federal government to the USVI
provide the primary security of many outstanding USVI bonds. Since more than 90%
of the rum distilled in the USVI is distilled at one plant, any interruption in
its operations (as occurred after Hurricane Hugo in 1989) would adversely affect
these revenues. Consequently, there can be no assurance that rum exports to the
United States and the rebate of tax revenues to the USVI will continue at their
present levels. The preferential tariff treatment the USVI rum industry
currently enjoys could be reduced under NAFTA. Increased competition from
Mexican rum producers could reduce USVI rum imported to the U.S., decreasing
excise tax revenues generated. The USVI is periodically hit by hurricanes.
Several hurricanes have caused extensive damage, which has had a negative impact
on revenue collections. There is currently no rated, unenhanced Virgin Islands
debt outstanding (although there is unrated debt outstanding).
Guam. The U.S. military is a key component of Guam's economy. The federal
government directly comprises more than 10% of the employment base, with a
substantial component of the service sector to support these personnel. The
Naval Air Station, one of several U.S. military facilities on the island, has
been slated for closure by the Defense Base Closure and Realignment Committee;
however, the administration plans to use these facilities to expand the Island's
commercial airport. Guam is also heavily reliant on tourists, particularly the
Japanese. Guam's general obligation debt is rated BBB by S&P with a negative
outlook.
B-25
<PAGE> 60
EATON VANCE MUNICIPAL INCOME TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 26, 1999
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
Eaton Vance Management
24 Federal Street
Boston, MA 02110
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
CE-MITSAI
<PAGE> 61
EATON VANCE MUNICIPAL INCOME TRUST
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) FINANCIAL STATEMENTS:
INCLUDED IN PART A: Not Applicable
INCLUDED IN PART B:
Statement of Assets and Liabilities as of January 21, 1999
Statement of Operations for the period from the date of
organization, December 10, 1998, to January 21, 1999
Independent Auditors' Report
(2) EXHIBITS:
(a) Agreement and Declaration of Trust dated December 10, 1998 is
incorporated herein by reference to the Registrant's initial
Registration Statement on Form N-2 (File Nos. 333-68719 and 811-09141)
as to the Registrant's common shares of beneficial interest ("Common
Shares") filed with the Securities and Exchange Commission (the
"Commission") on December 11, 1998 ("Initial Common Shares Registration
Statement").
(b)(1) By-Laws are incorporated herein by reference to the Trust's
Initial Common Shares Registration Statement.
(2)Form of Amendment No. 1 to the By-Laws is incorporated herein by
reference to the Registrant's initial Registration Statement on Form
N-2 (File Nos. 333-70725 and 811-09141) as to the Registrant's
auction preferred shares of beneficial interest ("Auction Preferred
Shares") filed with the Commission on January 15, 1999.
(c) Not applicable.
(d)(1) Specimen Certificate representing the Registrant's Common Shares
filed herewith.
(2)Form of Specimen Certificate representing the Registrant's Auction
Preferred Shares to be filed by amendment.
(e) Dividend Reinvestment Plan filed herewith.
(f) Not applicable.
(g) Investment Advisory Agreement dated December 21, 1998 filed herewith.
(h) (1) Form of Underwriting Agreement as to the offering of the
Registrant's Common Shares dated as of January __, 1999 filed
herewith.
<PAGE> 62
(2)Master Agreement Among Underwriters as to the offering of the
Registrant's Common Shares filed herewith.
(3)Master Selected Dealers as to the offering of the Registrant's
Common Shares filed herewith.
(4)Form of Purchase Agreement as to the offering of the Registrant's
Auction Preferred Shares to be filed by amendment.
(i) The Commission has granted the Registrant an exemptive order that
permits the Registrant to enter into deferred compensation
arrangements with its independent Trustees. See In the Matter of
Capital Exchange Fund, Inc., Release No. IC-20671 (November 1,
1994).
(j) Custodian Agreement dated December 21, 1998 filed herewith.
(k)(1) Transfer Agency and Services Agreement dated as of December 21,
1998 filed herewith.
(2) Administration Agreement dated December 21, 1998 filed herewith.
(3) Form of Shareholder Servicing Agreement dated as of January 29,
1999 filed herewith.
(4) Form of Auction Agent Agreement between the Registrant and
Bankers Trust Co. as to the Registrant's Auction Preferred Shares
to be filed by amendment.
(5) Form of Broker-Dealer Agreement as to the Registrant's Auction
Preferred Shares to be filed by amendment.
(6) Form of Letter of Representations as to the Registrant's Auction
Preferred Shares to be filed by amendment.
(l)(1) Opinion and consent of Kirkpatrick & Lockhart LLP as to
Registrant's Common Shares filed herewith.
(2) Opinion and consent of Counsel as to Registrant's Auction Preferred
Shares to be filed by amendment.
(m) Not applicable.
(n)(1) Consent of Independent Auditors' dated January 22, 1999 filed
herewith.
(2) Consent of Standard & Poor's as to Registrant's Auction
Preferred Shares to be filed by amendment.
(o) Not applicable.
(p) Letter Agreement with Eaton Vance Management dated January 21, 1999
filed herewith.
(q) Not applicable.
(r) Financial Data Schedule filed herewith.
(s)(1) Power of Attorney dated December 21, 1998 filed herewith.
(2) Power of Attorney dated January 15, 1999 filed herewith.
ITEM 25. MARKETING ARRANGEMENTS
See the Underwriting Agreement filed as Exhibit (h)(1).
2
<PAGE> 63
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the approximate expenses incurred in
connection with the offerings of Registrant (some of which will be borne by the
Investment Adviser):
<TABLE>
<S> <C>
Registration fees.................................... $ 63,801
American Stock Exchange Listing Fee.................. $123,100
National Association of Securities Dealers, Inc. Fees $ 23,450
Printing (other than stock certificates)............. $265,000
Engraving and printing stock certificates............ $ 19,000
Accounting fees and expenses......................... $ 5,000
Legal fees and expenses.............................. $ 50,000
--------
Total.............................................. $549,351
========
</TABLE>
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
<S> <C>
Auction Preferred Shares of beneficial interest, 0
par value $.01 per share as of
January 25, 1999
Common Shares of beneficial interest, 1
par value $.01 per share as of
January 25, 1999
</TABLE>
ITEM 29. INDEMNIFICATION
The Registrant's By-Laws and Form of Amendment No. 1 incorporated herein,
the Underwriting Agreement filed herewith and the Purchase Agreement to be filed
contain provisions limiting the liability, and providing for indemnification, of
the Trustees and officers under certain circumstances.
Registrant's Trustees and officers are insured under a standard investment
company errors and omissions insurance policy covering loss incurred by reason
of negligent errors and omissions committed in their capacities as such.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant and the Adviser and any underwriter to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer, or
controlling person or the Registrant and the Underwriters in connection with the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such trustee, officer or controlling person or the Underwriter in
connection with the Common Shares being registered, the Registrant will, unless
in the
3
<PAGE> 64
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Reference is made to: (i) the information set forth under the caption
"Investment Advisory and Other Services" in the Statement of Additional
Information; (ii) the Eaton Vance Corp. 10-K filed under the Securities
Exchange Act of 1934 (File No. 1-8100); and (iii) the Form ADV of Eaton Vance
Management (File No. 801-15930) filed with the Commission, all of which are
incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
Boston, MA 02116, and its transfer agent, First Data Investor Services Group,
4400 Computer Drive, Westborough, MA 01581-5120, with the exception of certain
corporate documents and portfolio trading documents which are in the possession
and custody of Eaton Vance Management, 24 Federal Street, Boston, MA 02110.
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the custody
and possession of Eaton Vance Management.
ITEM 32. MANAGEMENT SERVICES
None.
ITEM 33. UNDERTAKINGS
(1) Registrant undertakes to suspend offering of its Common Shares until it
amends its prospectus if (a) subsequent to the effective date of its
Registration Statement, the net asset value declines more than 10
percent from its net asset value as of the effective date of the
Registration Statement, or (b) the net asset value increases to an
amount greater than its net proceeds as stated in the prospectus.
(2) Not applicable
(3) Not applicable
(4) Not applicable
(5) (a) For purpose of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 497(h)
under the Securities Act of 1933, shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-
4
<PAGE> 65
effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be initial bona fide offering thereof.
(6) The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business days of
receipt of a written or oral request, its Statement of Additional
Information.
5
<PAGE> 66
NOTICE
A copy of the Agreement and Declaration of Trust of Eaton Vance Municipal Income
Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts and notice is hereby given that this instrument is executed on
behalf of the Registrant by an officer of the Registrant as an officer and not
individually and that the obligations of or arising out of this instrument are
not binding upon any of the Trustees, officers or shareholders individually, but
are binding only upon the assets and property of the Registrant.
6
<PAGE> 67
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and Commonwealth of
Massachusetts, on the 25th day of January, 1999.
EATON VANCE MUNICIPAL INCOME TRUST
By: Thomas J. Fetter*
--------------------------------
Thomas J. Fetter, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President (Chief Executive
Thomas J. Fetter* Officer) January 25, 1999
- ------------------------
Thomas J. Fetter
Treasurer (Principal
James L. O'Connor* Financial and Accounting January 25, 1999
- ------------------------
James L. O'Connor Officer)
Jessica M. Bibliowicz* Trustee January 25, 1999
- ------------------------
Jessica M. Bibliowicz
Donald R. Dwight* Trustee January 25, 1999
- ------------------------
Donald R. Dwight
James B. Hawkes* Trustee January 25, 1999
- ------------------------
James B. Hawkes
Samuel L. Hayes, III* Trustee January 25, 1999
- ------------------------
Samuel L. Hayes, III
Norton H. Reamer* Trustee January 25, 1999
- ------------------------
Norton H. Reamer
Lynn A. Stout* Trustee January 25, 1999
- ------------------------
Lynn A. Stout
Jack L. Treynor* Trustee January 25, 1999
- ------------------------
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner (As attorney-in-fact)
</TABLE>
7
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- -------- -----------
<S> <C>
(d)(1) Specimen Certificate representing Registrant's Common Shares
filed herewith.
(e) Dividend Reinvestment Plan filed herewith.
(g) Investment Advisory Agreement dated December 21, 1998 filed
herewith.
(h)(1) Form of Underwriting Agreement as to the offering of the
Registrant's Common Shares dated as of January __, 1999 filed
herewith.
(h)(2) Master Agreement Among Underwriters as to the offering of the
Registrant's Common Shares filed herewith.
(h)(3) Master Selected Dealers as to the offering of the
Registrant's Common Shares filed herewith.
(j) Custodian Agreement dated December 21, 1998 filed herewith.
(k)(1) Transfer Agency and Services Agreement dated as of December
21, 1998 filed herewith.
(k)(2) Administration Agreement dated December 21, 1998 filed
herewith.
(k)(3) Form of Shareholder Servicing Agreement dated as of January 29,
1999 filed herewith.
(l)(1) Opinion and consent of Kirkpatrick & Lockhart LLP as to the
Registrant's Common Shares filed herewith.
(n)(1) Consent of Independent Auditors dated January 22, 1999 filed
herewith.
(p) Letter Agreement with Eaton Vance Management dated January 21,
1999 filed herewith.
(r) Financial Data Schedule filed herewith.
(s)(1) Power of Attorney dated December 21, 1998 filed herewith.
(s)(2) Power of Attorney dated January 15, 1999 filed herewith.
</TABLE>
8
<PAGE> 1
EXHIBIT 99.(d)(1)
$.01 PAR VALUE COMMON SHARES OF
BENEFICIAL INTEREST
EATON VANCE MUNICIPAL INCOME TRUST
ORGANIZED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
NUMBER SHARES
CUSIP 27826U 10 8
SEE REVERSE FOR
THIS CERTIFICATE IS TRANSFERABLE IN CERTAIN DEFINITIONS
BOSTON, MA OR IN NEW YORK, NY
THIS IS TO CERTIFY THAT
IS THE OWNER OF
COMMON SHARES OF BENEFICIAL INTEREST OF
Eaton Vance Municipal Income Trust, a business trust established in accordance
with the laws of the Commonwealth of Massachusetts under and subject to the
provisions of an Agreement and Declaration of Trust executed as of the 10th day
of December, 1998, as the same may be amended, and restated from time to time,
and filed with the Secretary of the Commonwealth of Massachusetts. The common
shares of said Trust evidenced by this certificate are issued under and subject
to, and the rights and preferences of the holders hereof are subject to, said
Declaration of Trust, and each common share of said Trust represents an equal
proportionate interest in said Trust with each other outstanding common share of
said Trust. The interest represented hereby is transferable only on the books of
said Trust by the holder hereof in person or by duly authorized attorney upon
surrender of this certificate, properly endorsed. This certificate is not valid
until countersigned by the Transfer Agent and Registrar. WITNESS the facsimile
signatures of the President and the Secretary of said Trust.
ALAN R. DYNNER, SECRETARY THOMAS J. FETTER, PRESIDENT
COUNTERSIGNED AND REGISTERED:
FIRST DATA INVESTOR SERVICES GROUP, INC.
BY TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
<PAGE> 2
EXPLANATION OF ABBREVIATIONS
The following abbreviations, when used in the form of ownership of the face
of this certificate shall be construed as though they were written out in full
according to applicable laws or regulations. Abbreviations in addition to those
appearing below may be used.
ABBREVIATION EQUIVALENT ABBREVIATION EQUIVALENT
- ------------ ---------- ------------ ----------
JTTEN As joint tenants, TEN IN COM As tenants in common
with right of TEN BY ENT As tenants by the
survivorship and UNIF GIFT MIN ACT entireties Uniform Gift
not as tenants to Minors
in common
ABBREVIATION EQUIVALENT ABBREVIATION EQUIVALENT
- ------------ ---------- ------------ ----------
ADM Administrator(s) FDN Foundation
Administratix PL Public Law
AGMT Agreement TR (As) trustee(s), for, of
CUST Custodian for UA Under Agreement
EST Estate, Of estate of UW Under Will of, Of will of,
EX Executor(s), Executrix Under last will & testament
FBO For the benefit of
Additional abbreviations may also be used though not in the above list.
================================================================================
TRANSFER FORM
PLEASE INSERT SOCIAL SECURITY FOR VALUE RECEIVED______________ hereby sell,
OR OTHER IDENTIFYING NUMBER (I/we)
OF ASSIGNEE assign and transfer unto
.......................... ................................................
Please print or typewrite name and address
including postal zip code of assignee
................................................................................
................................................................................
..........................................................................Shares
of the Common Shares of Beneficial interest represented by this Certificate and
do hereby irrevocably constitute and appoint
.......................................................................Attorney,
to transfer said shares on the books of the Trust with full power of
substitution in the premises.
Dated:
............................................................
SIGNATURE
GUARANTEED BY Signature(s)................................................
(The signature to this assignment must correspond with the
name as written upon the face of this Certificate in every
particular, without alteration or enlargement or any change
whatsoever. If more than one owner, all must sign.)
....................................
(Signature(s) must be guaranteed by a member of either the Securities
Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan
institutions, credit unions, securities dealers, securities exchanges,
clearing agencies and registered securities associations as required
by an SEC regulation and acceptable to the Transfer Agent).
<PAGE> 3
IMPORTANT NOTICE:
When you sign your name to the Transfer Form without filling in the name of
your "Assignee" this stock certificate becomes fully negotiable, similar to a
check endorsed in blank. Therefore, to safeguard a signed certificate, it is
recommended that you fill in the name of the new owner in the "Assignee" space.
Alternatively, instead of using this Transfer Form, you may sign a separate
"stock power" form and then mail the unsigned stock certificate and the signed
"stock power" in separate envelopes. For added protection, use registered mail
for a stock certificate.
================================================================================
REDEMPTION FORM
The undersigned hereby tenders to the Trust the within Certificate properly
endorsed with any requisite guarantee of signature and supporting papers and
requests the redemption of
..........................................................................Shares
(Indicate the number of shares to be redeemed. A new certificate will be issued
for any unredeemed balance.)
of the Common Shares of Beneficial Interest represented by the within
Certificate in accordance with the terms of the Declaration of Trust of the
Trust.
<PAGE> 4
================================================================================
Dated: .................
............................................................
SIGNATURE Signature(s)................................................
GUARANTEED BY (The signature to this request for redemption must
correspond with the name as written upon the face of this
Certificate in every particular, without alteration or
enlargement or any change whatsoever. If more than one
owner, all must sign.)
.................................
(Signature(s) must be guaranteed by a member of either the Securities
Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan
institutions, credit unions, securities dealers, securities exchanges,
clearing agencies and registered securities associations as required
by an SEC regulation and acceptable to the Transfer Agent).
.................................
Address
.................................
<PAGE> 1
EXHIBIT 99.(e)
EATON VANCE MUNICIPAL INCOME TRUSTS
TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT PLAN
Holders of common shares (the "Shares") of an Eaton Vance Municipal Income
Trust (a "Trust") participating (the "Participants") in its Dividend
Reinvestment Plan (the "Plan") are advised as follows:
1. THE PLAN AGENT. First Data Investor Services Group (the "Agent") will
act as Agent for each Participant. The Agent will open an account for each
Participant under the Plan in the same name as his or her outstanding Shares are
registered.
2. CASH OPTION. Each Trust will declare its income dividends and capital
gains distributions ("Distributions") payable in Shares, or, at the option of
Shareholders, in cash. Therefore, each Participant not choosing cash
distributions will receive Shares.
3. MARKET PREMIUM ISSUANCES. If on the payment date for a Distribution, the
net asset value per Share is equal to or less than the market price per Share
plus estimated brokerage commissions, the Agent shall receive newly issued
Shares, including fractions, from a Trust for each Participant's account. The
number of additional shares to be credited shall be determined by dividing the
dollar amount of the Distribution by the greater of the net asset value per
Share on the payment date, or 95% of the then current market price per Share on
the payment date.
4. MARKET DISCOUNT PURCHASES. If the net asset value per Share exceeds the
market price plus estimated brokerage commissions on the payment date for a
Distribution, the Agent (or a broker-dealer selected by the Agent) shall
endeavor, for a purchase period of 30 days, to apply the amount of such
Distribution on each Participant's Shares (less their PRO RATA share of
brokerage commissions incurred) to purchase Shares on the open market. The
average price (including brokerage commissions) of all Shares purchased by the
Agent as Agent shall be the price per Share allocable to each Participant. If,
at the close of business on any day during the purchase period on which net
asset value per Share is calculated such net asset value equals or is less than
the market price per Share plus estimated brokerage commissions, the Agent will
cease open-market purchases, and the uninvested portion of such Distribution
shall be filled through the issuance of new Shares from a Trust at the price set
forth in paragraph 3 above. Open-market purchases may be made on any securities
exchange where Shares are traded, in the over-the-counter market or in
negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Agent shall determine.
<PAGE> 2
5. VALUATION. The market price of Shares on a particular date shall be the
last sales price on the Exchange where the Shares are listed on that date, or,
if there is no sale on such Exchange on that date, then the mean between the
closing bid and asked quotations on such Exchange on such date. The net asset
value per Share on a particular date shall be the amount most recently
calculated by or on behalf of a Trust as required by law.
6. LIABILITY OF AGENT. The Agent shall at all times act in good faith and
agree to use its best efforts within reasonable limits to ensure the accuracy of
all services performed under this Agreement and to comply with applicable law,
but assumes no responsibility and shall not be liable for loss or damage due to
errors unless such error is caused by the Agent's negligence, bad faith, or
willful misconduct or that of its employees. Each Participant's uninvested funds
held by the Agent will not bear interest. The Agent shall have no liability in
connection with any inability to purchase Shares within the time provided, or
with the timing of any purchases effected. The Agent shall have no
responsibility for the value of Shares acquired. For the purpose of cash
investments, the Agent may commingle Participants' funds (of the same Trust).
7. RECORDKEEPING. The Agent may hold each Participant's Shares acquired
pursuant to the Plan together with the Shares of other shareholders of a Trust
acquired pursuant to the Plan in noncertificated form in the Agent's name or
that of the Agent's nominee. Upon a Participant's written request, the Agent
will deliver to the Participant, without charge, a certificate or certificates
for the full shares. Each Participant will be sent a confirmation by the Agent
of each acquisition made for their account as soon as practicable but not later
than 60 days after the date thereof. Although each Participant may from time to
time have an undivided fractional interest (computed to three decimal places) in
a share of a Trust, no certificates for a fractional share will be issued.
Distributions on fractional shares will be credited to each Participant's
account. In the event of termination of a Participant's account under the Plan,
the Agent will adjust for any such undivided fractional interest in cash at the
market value of Shares at the time of termination.
Any share dividends or split shares distributed by a Trust on Shares held
by the Agent for Participants will be credited to their accounts. In the event
that a Trust makes available to its shareholders rights to purchase additional
shares of other securities, the Shares held for each Participant under the Plan
will be added to other shares held by the Participant in calculating the number
of rights to be issued to each Participant.
8. PROXY MATERIALS. The Agent will forward to each Participant any proxy
solicitation material; and will vote any shares so held for each Participant
first in accordance with the instructions set forth on proxies returned by the
Participant to a Trust, and then with respect to any proxies not returned by the
Participant to a Trust in the same portion as the Agent votes proxies returned
by the Participants to a Trust.
2
<PAGE> 3
9. FEES. The Agent's service fee for handling Distributions will be paid by
a Trust. Each Participant will be charged their PRO RATA share of brokerage
commissions on all open-market purchases. If a Participant elects by written
notice to the Agent to have the Agent sell part or all of his or her Shares and
remit the proceeds, the Agent is authorized to deduct a $5.00 fee plus brokerage
commissions from the proceeds.
10. TERMINATION IN THE PLAN. Each registered Participant may terminate his
or her account under the Plan by notifying the Agent in writing at P.O. Box
8030, Boston, MA 02266-8030, or by telephone at 800-331-1710. Such termination
will be effective with respect to a Distribution if the Participant's notice is
received by the Agent at least ten days prior to the Distribution record date.
The Plan may be terminated by the Agent or a Trust upon notice in writing mailed
to each Participant at least 90 days prior to any record date for the payment of
any Distribution. Upon any termination, the Agent will cause a certificate or
certificates to be issued for the full shares held for each Participant under
the Plan and cash adjustment for any fraction to be delivered to them without
charge.
11. AMENDMENT OF THE PLAN. These terms and conditions may be amended by the
Agent or a Trust at any time or times but, except when necessary or appropriate
to comply with applicable law or the rules or policies of the Securities and
Exchange Commission or any other regulatory authority, only by mailing to each
Participant appropriate written notice at least 30 days prior to the effective
date thereof. The amendment shall be deemed to be accepted by each Participant
unless, prior to the effective date thereof, the Agent receives written notice
of the termination of the Participant's account under the Plan. Any such
amendment may include an appointment by the Agent of a successor Agent.
12. APPLICABLE LAW. These terms and conditions shall be governed by the
laws of the Commonwealth of Massachusetts.
3
<PAGE> 1
EXHIBIT 99.(g)
EATON VANCE MUNICIPAL INCOME TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 21st day of December, 1998, between Eaton Vance
Municipal Income Trust, a Massachusetts business trust (the "Trust"), and Eaton
Vance Management, a Massachusetts business trust (the "Adviser").
1. DUTIES OF THE ADVISER. The Trust hereby employs the Adviser to act as
investment adviser for and to manage the investment and reinvestment of the
assets of the Trust and to administer its affairs, subject to the supervision of
the Trustees of the Trust, for the period and on the terms set forth in this
Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to the
Trust the advice and assistance of the Adviser's organization in the choice of
investments and in the purchase and sale of securities for the Trust and to
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Trust
and to pay the salaries and fees of all officers and Trustees of the Trust who
are members of the Adviser's organization and all personnel of the Adviser
performing services relating to research and investment activities. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be deemed an agent of
the Trust.
The Adviser shall provide the Trust with such investment management and
supervision as the Trust may from time to time consider necessary for the proper
supervision of the Trust. As investment adviser to the Trust, the Adviser shall
furnish continuously an investment program and shall determine from time to time
what securities and other investments shall be acquired, disposed of or
exchanged and what portion of the Trust's assets shall be held uninvested,
subject always to the applicable restrictions of the Declaration of Trust,
By-Laws and registration statement of the Trust. Should the Trustees of the
Trust at any time, however, make any specific determination as to investment
policy for the Trust and notify the Adviser thereof in writing, the Adviser
shall be bound by such determination for the period, if any, specified in such
notice or until similarly notified that such determination has been revoked. The
Adviser shall take, on behalf of the Trust, all actions which it deems necessary
or desirable to implement the investment policies of the Trust.
The Adviser shall place all orders for the purchase or sale of portfolio
securities for the account of the Trust either directly with the issuer or with
brokers or dealers selected by the Adviser, and to that end the Adviser is
authorized as the agent of the Trust to give instructions to the custodian of
the Trust as to deliveries of securities and payments of cash for the account of
the Trust. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser shall use its best efforts to seek to
execute portfolio security transactions at prices which are advantageous to the
Trust and (when a disclosed commission is being charged) at reasonably
competitive commission rates. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who also
<PAGE> 2
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Adviser and the Adviser is
expressly authorized to cause the Trust to pay any broker or dealer who provides
such brokerage and research services a commission for executing a security
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities which the Adviser and its affiliates have with respect
to accounts over which they exercise investment discretion. Subject to the
requirement set forth in the second sentence of this paragraph, the Adviser is
authorized to consider, as a factor in the selection of any broker or dealer
with whom purchase or sale orders may be placed, the fact that such broker or
dealer has sold or is selling shares of any one or more investment companies
sponsored by the Adviser or its affiliates.
The Adviser shall not be responsible for providing certain special
administrative services to the Trust under this Agreement. Eaton Vance
Management, in its capacity as Administrator of the Trust, shall be responsible
for providing such services to the Trust under the Trust's separate
Administration Agreement.
2. COMPENSATION OF THE ADVISER. For the services, payments and facilities
to be furnished hereunder by the Adviser, the Adviser shall be entitled to
receive from the Trust compensation in an amount equal to .70% annually of the
average weekly gross assets of the Trust. (Gross assets shall be calculated by
deducting accrued liabilities of the Trust except the principal amount of any
indebtedness for money borrowed, including debt securities issued by the Trust,
and the amount of any outstanding preferred shares issued by the Trust. Accrued
liabilities are expenses incurred in the normal course of operations.)
Such compensation shall be paid monthly in arrears on the last business day
of each month. The Trust's net assets shall be computed in accordance with the
Declaration of Trust of the Trust and any applicable votes and determinations of
the Trustees of the Trust.
In case of initiation or termination of the Agreement during any month, the
fee for that month shall be reduced proportionately on the basis of the number
of calendar days during which the Agreement is in effect and the fee shall be
computed upon the basis of the average gross assets for the business days the
Agreement is so in effect for that month.
The Adviser may, from time to time, waive all or a part of the above
compensation.
3. ALLOCATION OF CHARGES AND EXPENSES. It is understood that the Trust will
pay all expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Trust shall include, without implied
limitation, (i) expenses of maintaining the Trust and continuing its existence,
(ii) registration of the Trust under the Investment Company Act of 1940, (iii)
commissions, spreads, fees and other expenses connected with the acquisition,
holding and disposition of securities and other investments, (iv) auditing,
accounting and legal expenses, (v) taxes and interest, (vi) governmental fees,
(vii) expenses of listing shares of the Trust with a stock exchange, and
expenses of issue, sale, repurchase and redemption (if any) of interests in the
Trust, including expenses of conducting tender offers for the purpose of
repurchasing Trust interests, (viii) expenses of registering and qualifying the
Trust and its shares under federal and state securities laws and of preparing
and filing registration statements and amendments for such purposes (ix)
expenses of reports and notices to shareholders and of meetings of shareholders
and proxy solicitations therefor, (x) expenses of reports to governmental
-2-
<PAGE> 3
officers and commissions, (xi) insurance expenses, (xii) association membership
dues, (xiii) fees, expenses and disbursements of custodians and subcustodians
for all services to the Trust (including without limitation safekeeping of
funds, securities and other investments, keeping of books, accounts and records,
and determination of net asset values), (xiv) fees, expenses and disbursements
of transfer agents, dividend disbursing agents, shareholder servicing agents and
registrars for all services to the Trust, (xv) expenses for servicing
shareholder accounts, (xvi) any direct charges to shareholders approved by the
Trustees of the Trust, (xvii) compensation and expenses of Trustees of the Trust
who are not members of the Adviser's organization, (xviii) pricing and valuation
services employed by the Trust, (xix) all expenses incurred in connection with
leveraging of Trust's assets through a line of credit, or issuing and
maintaining preferred shares, and (xx) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and the obligation of the Trust to indemnify its Trustees, officers and
shareholders with respect thereto.
4. OTHER INTERESTS. It is understood that Trustees and officers of the
Trust and shareholders of the Trust are or may be or become interested in the
Adviser as trustees, officers, employees, shareholders or otherwise and that
trustees, officers and shareholders of the Adviser are or may be or become
similarly interested in the Trust, and that the Adviser may be or become
interested in the Trust as shareholders or otherwise. It is also understood that
trustees, officers, employees and shareholders of the Adviser may be or become
interested (as directors, trustees, officers, employees, shareholders or
otherwise) in other companies or entities (including, without limitation, other
investment companies) which the Adviser may organize, sponsor or acquire, or
with which it may merge or consolidate, and which may include the words "Eaton
Vance" or any combination thereof as part of their name, and that the Adviser or
its subsidiaries or affiliates may enter into advisory or management agreements
or other contracts or relationships with such other companies or entities.
5. LIMITATION OF LIABILITY OF THE ADVISER. The services of the Adviser to
the Trust are not to be deemed to be exclusive, the Adviser being free to render
services to others and engage in other business activities. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser shall
not be subject to liability to the Trust or to any shareholder the Trust for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses which may be sustained in the acquisition, holding
or disposition of any interest in a Loan or of any security, investment or other
asset.
6. SUB-INVESTMENT ADVISERS. The Adviser may employ one or more
sub-investment advisers from time to time to perform such of the acts and
services of the Adviser, including the selection of brokers or dealers to
execute the Trust's portfolio security transactions, and upon such terms and
conditions as may be agreed upon between the Adviser and such sub-investment
adviser and approved by the Trustees of the Trust, all as permitted by the
Investment Company Act of 1940.
7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective upon the date of its execution, and, unless terminated as herein
provided, shall remain in full force and effect through and including February
28, 2000 and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance after February 28, 2000 is specifically
approved at least annually (i) by the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Trust and (ii) by the
vote of a majority of those Trustees of the Trust who are not interested persons
of the Adviser or the Trust cast in person at a meeting called for the purpose
of voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement without the payment of any
penalty, by action of Trustees of the Trust or the trustees of the Adviser, as
the case may be, and the Trust may, at any time upon such written notice to the
Adviser, terminate this Agreement by vote of a majority of the outstanding
voting securities of the Trust. This Agreement shall terminate automatically in
the event of its assignment.
-3-
<PAGE> 4
8. AMENDMENTS OF THE AGREEMENT. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (i) by the vote of a majority of those
Trustees of the Trust who are not interested persons of the Adviser or the Trust
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by vote of a majority of the outstanding voting securities of the
Trust.
9. LIMITATION OF LIABILITY. The Adviser expressly acknowledges the
provision in the Declaration of Trust of the Trust limiting the personal
liability of the Trustees, officers and shareholders of the Trust, and the
Adviser hereby agrees that it shall have recourse to the Trust for payment of
claims or obligations as between the Trust and the Adviser arising out of this
Agreement and shall not seek satisfaction from any Trustee, officer or
shareholders of the Trust.
10. USE OF THE NAME "EATON VANCE". The Adviser hereby consents to the use
by the Trust of the name "Eaton Vance" as part of the Trust's name; provided,
however, that such consent shall be conditioned upon the employment of the
Adviser or one of its affiliates as the investment adviser of the Trust. The
name "Eaton Vance" or any variation thereof may be used from time to time in
other connections and for other purposes by the Adviser and its affiliates and
other investment companies that have obtained consent to the use of the name
"Eaton Vance". The Adviser shall have the right to require the Trust to cease
using the name "Eaton Vance" as part of the Trust's name if the Trust ceases,
for any reason, to employ the Adviser or one of its affiliates as the Trust's
investment adviser. Future names adopted by the Trust for itself, insofar as
such names include identifying words requiring the consent of the Adviser, shall
be the property of the Adviser and shall be subject to the same terms and
conditions.
11. CERTAIN DEFINITIONS. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of
shareholders, of the lesser of (a) 67 per centum or more of the shares of the
Trust present or represented by proxy at the meeting if the shareholders of more
than 50 per centum of the shares of the Trust are present or represented by
proxy at the meeting, or (b) more than 50 per centum of the shares of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST
By:/s/ Thomas J. Fetter
----------------------------------
President, and not Individually
EATON VANCE MANAGEMENT
By:/s/ Alan R. Dynner
----------------------------------
Vice President, and not Individually
-4-
<PAGE> 1
EXHIBIT 99(h)(1)
Form of Underwriting Agreement
2,666,667 SHARES*
OF BENEFICIAL INTEREST
EATON VANCE MUNICIPAL INCOME TRUST
UNDERWRITING AGREEMENT
January 26, 1999
PAINEWEBBER INCORPORATED
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY INC.
DAIN RAUSCHER WESSELS
EVEREN SECURITIES, INC.
as Representatives of the Several Underwriters
named in Schedule 1 hereto
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Eaton Vance Municipal Income Trust, a Massachusetts business trust (the
"Trust"), proposes to issue and sell to you and the other underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), up to 2,666,667 shares of beneficial
interest (the "Firm Shares"), par value $.01 per share (the "Shares of
Beneficial Interest"). In addition, the Trust hereby grants to the Underwriters
an option (the "Option") to purchase up to an additional 400,000 of its Shares
(the "Option Shares") solely for the purpose of covering over-allotments. The
Firm Shares and the Option Shares are referred to collectively herein as the
"Shares."
Eaton Vance Management, a Massachusetts business trust ("Eaton Vance"
or the "Investment Adviser"), will act as the Trust's investment adviser
pursuant to an Investment Advisory Agreement by and between the Trust and the
Invest-
- --------
* Plus an option to purchase, in the aggregate, up to 400,000 additional
Shares to cover over-allotments.
<PAGE> 2
ment Adviser, dated as of January 29, 1999 (the "Investment Advisory
Agreement"). The Trust has engaged Eaton Vance to act as its administrator
pursuant to an Administration Agreement, dated as of January 29, 1999. Investors
Bank & Trust Company ("IBT") will act as the custodian (the "Custodian") of the
Trust's cash and portfolio assets pursuant to a Custody Agreement, effective as
of January 29, 1999 (the "Custody Agreement"). First Data Investor Services
Group will act as the Trust's transfer agent and dividend disbursing agent (the
"Transfer Agent") pursuant to a transfer agency agreement, dated as of January
29, 1999 (the "Transfer Agency Agreement"). In addition, Eaton Vance has
retained PaineWebber Incorporated, which is also one of the Underwriters, to
serve as the Trust's Shareholder Servicing Agent pursuant to a shareholder
servicing agreement (the "Shareholder Servicing Agreement"), dated as of January
29, 1999.
The Trust and the Investment Adviser each hereby confirms as follows
their agreements with the Representatives and the several other Underwriters.
1. Sale and Purchase; Compensation
(a) The Trust will issue and sell to each Underwriter, and
each Underwriter will purchase from the Trust, the number of Firm Shares set
forth opposite such Underwriter's name in Schedule 1 hereto, at the purchase
price of $15.00 per Firm Share.
(b) The Trust grants to the Underwriters the Option to
purchase all or any part of the Option Shares for the same consideration per
share as for the Firm Shares. The Option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters. The number
of Option Shares (adjusted by the Representatives to eliminate fractions) to be
purchased by each Underwriter will be the same percentage of the aggregate
number of Option Shares being sold as such Underwriter is obligated to purchase
of the Firm Shares. Such Option may be exercised in whole or in part, only to
cover over-allotments, at any time or from time to time on or before the 45th
day after the date of this Underwriting Agreement, upon written or telefacsimile
notice (the "Option Shares Notice") from the Representatives to the Trust no
later than 12:00 noon, New York City time, at least two and not more than five
business days before the date specified for closing in the Option Shares Notice
(the "Option Shares Closing Date"), setting forth the number of Option Shares to
be purchased and the time and date of such purchase. Upon delivery and receipt
of the Option Shares Notice, the Trust will issue and sell to each Underwriter,
and each
<PAGE> 3
Underwriter will purchase from the Trust, on the Option Shares Closing Date, its
portion of the number of Option Shares set forth in the Option Shares Notice.
(c) The obligations of the Underwriters under this
Underwriting Agreement are several and not joint and are undertaken on the basis
of the representations and are subject to the conditions set forth in this
Underwriting Agreement.
(d) The Investment Adviser agrees to make the payments to the
Underwriters when and as required by Section 2 hereof.
2. Payment and Delivery. Delivery by the Trust of the Firm Shares (the
"Firm Shares Closing") to the Representatives for the accounts of the
Underwriters against payment of the purchase price by wire transfer of Federal
Funds or similar same day funds to the Trust for the Firm Shares, will take
place at the offices of PaineWebber Incorporated (the "Managing
Representative"), 1285 Avenue of the Americas, New York, New York or such other
location as is agreed upon by the parties hereto, or through the facilities of
the Depository Trust Company or another mutually agreeable facility, at 9:00
a.m., New York City time, on the third business day following the date of this
Underwriting Agreement, or at such time on such other date, not later than ten
business days after the date of this Underwriting Agreement, as may be agreed
upon by the Trust and the Managing Representative (the "Firm Shares Closing
Date").
If and to the extent that the Option is exercised, delivery of the
Option Shares and payment by the Underwriters (in the manner specified above)
will take place at the offices or through the facilities specified above for the
Firm Shares Closing at the time and date (which may be the Firm Shares Closing
Date) specified in the Option Shares Notice. Any Option Shares Closing Date may
not be later than three business days following the exercise of the related
Option. The Firm Shares Closing Date and any Option Shares Closing Date are
called the "Closing Dates."
Certificates evidencing Shares of Beneficial Interest will be in
definitive form (or temporary form acceptable to the New York Stock Exchange),
registered in such names and in such denominations as the Managing
Representative requests at least three full business days before the Firm Shares
Closing Date or, in the case of Option Shares, on the day of notice of exercise
of the Option as described in Section 1(b), and will be made available to the
Managing Representative for checking and packaging, at a place in New York City
designated by the Managing Representative, at least one full business day before
the relevant Closing Date.
<PAGE> 4
Simultaneous with delivery to the Underwriters of and payment by the
Underwriters for (i) Firm Shares on the Firm Shares Closing Date and (ii) Option
Shares on the Option Shares Closing Date, Eaton Vance (or an affiliate as
determined by Eaton Vance) will pay to the Underwriters an amount equal to 4.50%
of the purchase price per Share for each Share to be purchased by the
Underwriters on such date by wire transfer of Federal Funds or similar same-day
funds on such Firm Shares Closing Date or Option Shares Closing Date, as the
case may be, to the order of the Managing Representative, on behalf of itself
and the Underwriters.
3. Registration Statement and Prospectus; Public Offering. The Trust
has filed with the Securities and Exchange Commission (the "Commission"),
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the published rules and regulations adopted by the Commission under the
Securities Act (the "Securities Act Rules") and the Investment Company Act (the
"Investment Company Act Rules"), a Notification of Registration on Form N-8A
(the "Notification") pursuant to Section 8 of the Investment Company Act and a
registration statement on Form N-2 (File Nos. 333-68719 and 811-09141) relating
to the Shares (the "registration statement"), including a preliminary prospectus
(including any preliminary statement of additional information), and such
amendments to such registration statement as may have been required to the date
of this Underwriting Agreement. The preliminary prospectus (including any
preliminary statement of additional information) is to be used in connection
with the offering and sale of the Shares. The term "Preliminary Prospectus" as
used herein means any preliminary prospectus (including any preliminary
statement of additional information) included at any time as a part of the
registration statement and any preliminary prospectus (including any preliminary
statement of additional information) omitted therefrom pursuant to the
Securities Act Rules.
The Trust has furnished the Representatives copies of such registration
statement, each amendment to such registration statement filed by the Trust with
the Commission and the Preliminary Prospectus filed by the Trust with the
Commission or used by the Trust. If the registration statement has not become
effective, a further amendment (the "Final Amendment") to such registration
statement, including the forms of final prospectus (including any final
statement of additional information), necessary to permit such registration
statement to become effective will promptly be filed by the Trust with the
Commission. If such registration statement has become effective and any
prospectus (including any statement of additional information) contained therein
omits certain information at the time of effectiveness pursuant to Rule
<PAGE> 5
430A of the Securities Act Rules, a final prospectus (the "Rule 430A
Prospectus") containing such omitted information will be filed by the Trust with
the Commission in accordance with Rule 497(h) of the Securities Act Rules. The
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits, and any
information deemed to be included by Rule 430A, is called the "Registration
Statement." The term "Prospectus" means the prospectus (including any statement
of additional information) in the form in which it is first filed with the
Commission pursuant to Rule 497(b), (h) or (j) of the Securities Act Rules, as
the case may be.
The Trust and the Investment Adviser understand that the Underwriters
propose to make a public offering of the Firm Shares, as described in the
Prospectus, as soon after the Effective Date (or, if later, after the date this
Underwriting Agreement is signed) as the Managing Representative deems
advisable. The Trust confirms that the Underwriters and dealers have been
authorized to distribute the Preliminary Prospectus relating to the Shares
included in the initial filing of the registration statement and are authorized
to distribute the Prospectus and any amendments or supplements thereto.
4. Representations.
(a) Each of the Trust and the Investment Adviser jointly and
severally represents to each Underwriter as follows:
(i) On (A) the Effective Date and the date on which the
Prospectus is first filed with the Commission pursuant to Rule 497(b),
(h) or (j) of the Securities Act Rules, as the case may be, (B) the
date on which any post-effective amendment to the Registration
Statement (except any post-effective amendment which is filed with the
Commission after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the distribution of the
Shares is completed) became or becomes effective or any amendment or
supplement to the Prospectus was or is filed with the Commission and
(C) the Closing Dates, the Registration Statement, the Prospectus and
any such amendment or supplement thereto and the Notification complied
or will comply in all material respects with the requirements of the
Securities Act, the Investment Company Act, the Securities Act Rules
and the Investment Company Act Rules, as the case may be. On the
Effective Date and on the date that any post-
<PAGE> 6
effective amendment to the Registration Statement (except any
post-effective amendment which is filed with the Commission after the
later of (x) one year from the date of this Underwriting Agreement or
(y) the date on which the distribution of the Shares is completed)
became or becomes effective, neither the Registration Statement nor any
such amendment did or will contain any untrue statement of a material
fact or omit to state a material fact required to be stated in it or
necessary to make the statements in it not misleading. At the Effective
Date and, if applicable, the date the Prospectus or any amendment or
supplement to the Prospectus was or is filed with the Commission and at
the Closing Dates, the Prospectus did not or will not, as the case may
be, contain any untrue statement of a material fact or omit to state a
material fact required to be stated in it or necessary to make the
statements in it, in light of the circumstances under which they were
made, not misleading. The foregoing representations in this Section
4(a)(i) do not apply to statements or omissions relating to the
Underwriters made in reliance on and in conformity with information
furnished in writing to the Trust by the Representatives expressly for
use in the Registration Statement, the Prospectus, or any amendments or
supplements thereto, as described in Section 7(f) hereof.
(ii) The Trust has been duly formed, is validly existing as a
business trust under the laws of the Commonwealth of Massachusetts,
with full power and authority to conduct all the activities conducted
by it, to own or lease all assets owned or leased by it and to conduct
its business as described in the Registration Statement and Prospectus,
and the Trust is duly licensed and qualified to do business and in good
standing in each jurisdiction in which its ownership or leasing of
property or its conducting of business requires such qualification,
except where the failure to be so qualified or be in good standing
would not have a material adverse effect on the Trust, and the Trust
owns, possesses or has obtained and currently maintains all
governmental licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to carry on its
business as contemplated in the Prospectus. The Trust has no
subsidiaries.
(iii) The capitalization of the Trust is as set forth in the
Registration Statement and the Prospectus. The Shares of Benefi-
<PAGE> 7
cial Interest of the Trust conform in all material respects to the
description of them in the Prospectus. All the outstanding Shares of
Beneficial Interest have been duly authorized and are validly issued,
fully paid and nonassessable (except as described in the Registration
Statement). The Shares to be issued and delivered to and paid for by
the Underwriters in accordance with this Underwriting Agreement against
payment therefor as provided by this Underwriting Agreement have been
duly authorized and when issued and delivered to the Underwriters will
have been validly issued and will be fully paid and nonassessable
(except as described in the Registration Statement). No person is
entitled to any preemptive or other similar rights with respect to the
Shares.
(iv) The Trust is duly registered with the Commission under
the Investment Company Act as a non-diversified, closed-end management
investment company, and, subject to the filing of the Final Amendment,
if not already filed, all action under the Securities Act, the
Investment Company Act, the Securities Act Rules and the Investment
Company Act Rules, as the case may be, necessary to make the public
offering and consummate the sale of the Shares as provided in this
Underwriting Agreement has or will have been taken by the Trust.
(v) The Trust has full power and authority to enter into each
of this Underwriting Agreement, the Investment Advisory Agreement, the
Custody Agreement and the Transfer Agency Agreement (collectively, the
"Trust Agreements") and to perform all of the terms and provisions
hereof and thereof to be carried out by it and (A) each Trust Agreement
has been duly and validly authorized, executed and delivered by or on
behalf of the Trust, (B) each Trust Agreement does not violate in any
material respect any of the applicable provisions of the Investment
Company Act, the Investment Advisers Act of 1940 (the "Advisers Act"),
the Investment Company Act Rules and the rules and regulations adopted
by the Commission under the Advisers Act (the "Advisers Act Rules"), as
the case may be, and (C) assuming due authorization, execution and
delivery by the other parties thereto, each Trust Agreement constitutes
the legal, valid and binding obligation of the Trust enforceable in
accordance with its terms, (1) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar
<PAGE> 8
laws affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a proceeding
in equity or at law) and (2) except as rights to indemnity thereunder
may be limited by federal or state securities laws.
(vi) None of (A) the execution and delivery by the Trust of
the Trust Agreements, (B) the issue and sale by the Trust of the Shares
as contemplated by this Underwriting Agreement and (C) the performance
by the Trust of its obligations under any of the Trust Agreements or
consummation by the Trust of the other transactions contemplated by the
Trust Agreements conflicts with or will conflict with, or results or
will result in a breach of, the Declaration of Trust or the By-laws of
the Trust or any agreement or instrument to which the Trust is a party
or by which the Trust is bound, or any law, rule or regulation, or
order of any court, governmental instrumentality, securities exchange
or association or arbitrator, whether foreign or domestic, applicable
to the Trust, other than state securities or "blue sky" laws applicable
in connection with the purchase and distribution of the Shares by the
Underwriters pursuant to this Underwriting Agreement.
(vii) The Trust is not currently in breach of, or in default
under, any written agreement or instrument to which it is a party or by
which it or its property is bound or affected.
(viii) No person has any right to the registration of any
securities of the Trust because of the filing of the registration
statement.
(ix) No consent, approval, authorization or order of any
court or governmental agency or body or securities exchange or
association, whether foreign or domestic, is required by the Trust for
the consummation by the Trust of the transactions to be performed by
the Trust or the performance by the Trust of all the terms and
provisions to be performed by or on behalf of it in each case as
contemplated in the Trust Agreements, except such as (A) have been
obtained under the Securities Act, the Investment Company Act, the
Advisers Act, the Securities Act Rules, the Investment Company Act
Rules, and the Advisers Act Rules, and (B) may be required by the New
York Stock Exchange or under state securities or "blue sky" laws, in
con-
<PAGE> 9
nection with the purchase and distribution of the Shares by the
Underwriters pursuant to this Underwriting Agreement.
(x) The Shares are duly authorized for listing, subject to
official notice of issuance, on the American Stock Exchange and the
Trust's Registration Statement on Form 8-A, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), has become
effective.
(xi) Deloitte & Touche LLP, whose report appears in the
Prospectus, are independent public accountants with respect to the
Trust as required by the Securities Act, the Investment Company Act,
the Securities Act Rules and the Investment Company Act Rules.
(xii) The statement of assets and liabilities included in the
Registration Statement and the Prospectus presents fairly in all
material respects, in accordance with generally accepted accounting
principles in the United States applied on a consistent basis, the
financial position of the Trust as of the date indicated.
(xiii) The Trust will maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets through an
asset reconciliation procedure or otherwise at reasonable intervals and
appropriate action is taken with respect to any differences.
(xiv) Since the date as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the
condition, financial or otherwise, business affairs or business of the
Trust, whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Trust other than
those in the ordinary course of its business and (C) there has been no
<PAGE> 10
dividend or distribution of any kind declared, paid or made on any
class of its capital shares.
(xv) There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or, to
the knowledge of the Trust, threatened against or affecting the Trust,
which (A) might result in any material adverse change in the condition,
financial or otherwise, business affairs or business prospects of the
Trust or might materially adversely affect the properties or assets of
the Trust or (B) is of a character required to be described in the
Registration Statement or the Prospectus; and there are no contracts,
franchises or other documents that are of a character required to be
described in, or that are required to be filed as exhibits to, the
Registration Statement that have not been described or filed as
required.
(xvi) Except for stabilization transactions conducted by the
Underwriters, and except for tender offers, Share repurchases and the
issuance or purchase of Shares pursuant to the Trust's dividend
reinvestment plan ("DRP") effected following the date on which the
distribution of the Shares is completed in accordance with the policies
of the Trust as set forth in the Prospectus, the Trust has not taken
and will not take, directly or indirectly, any action designed or which
might be reasonably expected to cause or result in, or which will
constitute, stabilization or manipulation of the price of the Shares of
Beneficial Interest in violation of applicable federal securities laws.
(xvii) The Trust intends to direct the investment of the
proceeds of the offering of the Shares in such a manner as to comply
with the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code").
(xviii) To the knowledge of the Trust after due inquiry, no
advertising, sales literature or other promotional materials (excluding
road show slides or road show tapes) were authorized or prepared by or
on behalf of the Trust and the Investment Adviser or any representative
thereof for use in connection with the public offering or sale of the
Shares other than the definitive client brochure and
<PAGE> 11
the broker selling memo which were filed with the NASD on December 15,
1998, a draft prospecting letter which was filed with the NASD on
December 21, 1998 and a draft of a prospecting letter made available on
an Internet web site maintained by the Investment Adviser
(collectively, the "sales materials"); the sales materials and any road
show slides or road show tapes complied and comply in all material
respects with the applicable requirements of the Securities Act, the
Securities Act Rules and the rules and interpretations of the NASD; and
no broker kits, road show slides, road show tapes or sales materials
authorized or prepared by the Trust or authorized or prepared on behalf
of the Trust by the Investment Adviser or any representative thereof
for use in connection with the public offering or sale of the Shares
contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading.
(b) The Investment Adviser represents to each Underwriter as
follows:
(i) The Investment Adviser has been duly formed, is validly
existing as a business trust under the laws of the Commonwealth of
Massachusetts with full power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets owned or
leased by it and to conduct its business as described in the
Registration Statement and Prospectus, and the Investment Adviser is
duly licensed and qualified to do business and in good standing in each
jurisdiction in which it is required to be so qualified, except to the
extent that failure to be so qualified or be in good standing would not
have a material adverse affect on the Investment Adviser; and the
Investment Adviser owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents, orders,
approvals and other authorizations, whether foreign or domestic,
necessary to carry on its business as contemplated in the Registration
Statement and the Prospectus.
(ii) The Investment Adviser is (A) duly registered as an
investment adviser under the Advisers Act and (B) not prohibited by the
Advisers Act, the Investment Company Act, the Advisers Act Rules or the
Investment Company Act Rules from acting as the in-
<PAGE> 12
vestment adviser for the Trust as contemplated by the Investment
Advisory Agreement, the Registration Statement and the Prospectus.
(iii) The Investment Adviser has full power and authority to
enter into each of this Underwriting Agreement, the Investment Advisory
Agreement, the Administration Agreement and the Shareholder Services
Agreement dated as of January 29, 1999 (the "Shareholder Services
Agreement") between the Investment Adviser and PaineWebber Incorporated
(collectively, this Underwriting Agreement, the Investment Advisory
Agreement, the Administration Agreement and the Shareholder Services
Agreement being referred to as the "Investment Adviser Agreements") and
to carry out all the terms and provisions hereof and thereof to be
carried out by it; and each Investment Adviser Agreement has been duly
and validly authorized, executed and delivered by the Investment
Adviser; none of the Investment Adviser Agreements violate in any
material respect any of the applicable provisions of the Investment
Company Act, the Advisers Act, the Investment Company Act Rules and the
Advisers Act Rules; and assuming due authorization, execution and
delivery by the other parties thereto, each Investment Adviser
Agreement constitutes a legal, valid and binding obligation of the
Investment Adviser, enforceable in accordance with its terms, (1)
subject, as to enforcement, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (2) except as rights to indemnity
thereunder may be limited by federal or state securities laws.
(iv) Neither (A) the execution and delivery by the
Investment Adviser of any Investment Adviser Agreement by the
Investment Adviser nor (B) the consummation by the Investment Adviser
of the transactions contemplated by, or the performance of its
obligations under any Investment Adviser Agreement conflicts or will
conflict with, or results or will result in a breach of, the Agreement
and Declaration of Trust or By-Laws of the Investment Adviser or any
agreement or instrument to which the Investment Adviser is a party or
by which the Investment Adviser is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities
<PAGE> 13
exchange or association or arbitrator, whether foreign or domestic,
applicable to the Investment Adviser.
(v) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Investment
Adviser of its obligations under, any Investment Adviser Agreement, as
the case may be, except such as (A) have been obtained under the
Investment Company Act, the Advisers Act, the Securities Act, the
Investment Company Act Rules, the Advisers Act Rules and the Securities
Act Rules, and (B) may be required by the New York Stock Exchange or
under state securities or "blue sky" laws, in connection with the
purchase and distribution of the Shares by the Underwriters pursuant to
this Underwriting Agreement.
(vi) The description of the Investment Adviser and its
business, and the statements attributable to the Investment Adviser, in
the Registration Statement and the Prospectus complies with the
requirements of the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules and do not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(vii) There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Investment Adviser, threatened against or
affecting the Investment Adviser of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably be
expected to result in any material adverse change in the condition,
financial or otherwise, business affairs or business prospects of the
Investment Adviser or the ability of the Investment Adviser to fulfill
its respective obligations under any Investment Adviser Agreement.
(viii) Except for stabilization activities conducted by the
Underwriters and except for tender offers, Share repurchases and
<PAGE> 14
the issuance or purchase of Shares pursuant to the Trust's DRP effected
following the date on which the distribution of the Shares is completed
in accordance with the policies of the Trust as set forth in the
Prospectus, the Investment Adviser has not taken and will not take,
directly or indirectly, any action designed, or which might reasonably
be expected to cause or result in, or which will constitute,
stabilization or manipulation of the price of the Shares of Beneficial
Interest in violation of applicable federal securities laws.
(ix) In the event that the Trust or the Investment Adviser
makes available any promotional materials (other than the sales
materials) intended for use only by qualified broker-dealers and
registered representatives thereof by means of an Internet web site or
similar electronic means, the Investment Adviser will install and
maintain pre-qualification and password-protection or similar
procedures which will effectively prohibit access to such promotional
materials by persons other than qualified broker-dealers and registered
representatives thereof.
5. Agreements of the Parties.
(a) If the registration statement relating to the Shares has not
yet become effective, the Trust will promptly file the Final Amendment, if not
previously filed, with the Commission, and will use its best efforts to cause
such registration statement to become effective and, as soon as the Trust is
advised, will advise the Representative when the Registration Statement or any
amendment thereto has become effective. If the Registration Statement has become
effective and the Prospectus contained therein omits certain information at the
time of effectiveness pursuant to Rule 430A of the Securities Act Rules, the
Trust will file a 430A Prospectus pursuant to Rule 497(h) of the Securities Act
Rules as promptly as practicable, but no later than the second business day
following the earlier of the date of the determination of the offering price of
the Shares or the date the Prospectus is first used after the Effective Date. If
the Registration Statement has become effective and the Prospectus contained
therein does not so omit such information, the Trust will file a Prospectus
pursuant to Rule 497(b) or (j) of the Securities Act Rules as promptly as
practicable, but no later than the fifth business day following the date of the
later of the Effective Date or the commencement of the public offering of the
Shares after the Effective Date. In either case, the Trust will provide the
Representatives satisfactory evidence of the filing. The Trust will not file
with the Commission any Prospectus or any other amendment (except any
post-effective amendment which is filed with the Commission
<PAGE> 15
after the later of (x) one year from the date of this Underwriting Agreement or
(y) the date on which distribution of the Shares is completed) or supplement to
the Registration Statement or the Prospectus unless a copy has first been
submitted to the Managing Representative a reasonable time before its filing and
the Managing Representative has not objected to it in writing within a
reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the
Trust will advise the Representatives promptly (1) of the issuance by the
Commission of any order in respect of the Trust or the Investment Adviser which
relates to the Trust, or which relates to any material arrangements or proposed
material arrangements involving the Trust or the Investment Adviser, (2) of the
initiation or threatening of any proceedings for, or receipt by the Trust of any
notice with respect to, the suspension of the qualification of the Shares for
sale in any jurisdiction or the issuance of any order by the Commission
suspending the effectiveness of the Registration Statement, (3) of receipt by
the Trust, or any representative or attorney of the Trust, of any other
communication from the Commission relating in any material way to the Trust, the
Registration Statement, the Notification, any Preliminary Prospectus, the
Prospectus or to the transactions contemplated by this Underwriting Agreement
and (4) the issuance by any court, regulatory body, administrative agency or
other governmental agency or body, whether foreign or domestic, of any order,
ruling or decree, or the threat to initiate any proceedings with respect
thereto, regarding the Trust, which relates in any material way to the Trust or
any material arrangements or proposed material arrangements involving the Trust.
The Trust will make every reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement and, if any such
order is issued, to obtain its lifting as soon as possible.
(c) If not delivered prior to the date of this Underwriting
Agreement, the Trust will deliver to the Representatives, without charge, a
signed copy of the registration statement and the Notification and of any
amendments (except any post-effective amendment which is filed with the
Commission after the later of (x) one year from the date of this Underwriting
Agreement or (y) the date on which the distribution of the Shares is completed)
to either the Registration Statement or the Notification (including all exhibits
filed with any such document) and as many conformed copies of the registration
statement and any amendments thereto (except any post-effective amendment which
is filed with the Commission after the later of (x) one year from the date of
this Underwriting Agreement or (y) the date on which the distribution of the
Shares is completed) (excluding exhibits) as the Representatives may reasonably
request.
<PAGE> 16
(d) During such period as a prospectus is required by law to
be delivered by an underwriter or a dealer, the Trust will deliver, without
charge, to the Representatives, the Underwriters and any dealers, at such office
or offices as the Representatives may designate, as many copies of the
Prospectus as the Representatives may reasonably request, and, if any event
occurs during such period as a result of which it is necessary to amend or
supplement the Prospectus, in order to make the statements therein, in light of
the circumstances existing when such Prospectus is delivered to a purchaser of
Shares, not misleading in any material respect, or if during such period it is
necessary to amend or supplement the Prospectus to comply with the Securities
Act, the Investment Company Act, the Securities Act Rules or the Investment
Company Act Rules, the Trust promptly will prepare, submit to the Managing
Representative, file with the Commission and deliver, without charge, to the
Underwriters and to dealers (whose names and addresses the Representatives will
furnish to the Trust) to whom Shares may have been sold by the Underwriters, and
to other dealers on request, amendments or supplements to the Prospectus so that
the statements in such Prospectus, as so amended or supplemented, will not, in
light of the circumstances existing when such Prospectus is delivered to a
purchaser, be misleading in any material respect and will comply with the
Securities Act, the Investment Company Act, the Securities Act Rules and the
Investment Company Act Rules. Delivery by the Underwriters of any such
amendments or supplements to the Prospectus will not constitute a waiver of any
of the conditions in Section 6 hereof.
(e) The Trust will make generally available to holders of the
Trust's securities, as soon as practicable but in no event later than the last
day of the 18th full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement, if applicable, satisfying the
provisions of Section 11(a) of the Securities Act and, at the option of the
Trust, Rule 158 of the Securities Act Rules.
(f) The Trust will take such actions as the Representatives
reasonably request in order to qualify the Shares for offer and sale under the
securities or "blue sky" laws of such jurisdictions as the Representatives
reasonably designate; provided that the Trust shall not be required in
connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(g) If the transactions contemplated by this Underwriting
Agreement are consummated, the Trust shall pay all costs and expenses incident
to
<PAGE> 17
the performance of the obligations of the Trust under this Underwriting
Agreement (to the extent such expenses do not, in the aggregate, exceed $0.03
per Share), including but not limited to costs and expenses of or relating to
(1) the preparation, printing and filing of the registration statement and
exhibits to it, each Preliminary Prospectus, the Prospectus and all amendments
and supplements thereto, (2) the issuance of the Shares and the preparation and
delivery of certificates for the Shares, (3) the registration or qualification
of the Shares for offer and sale under the securities or "blue sky" laws of the
jurisdictions referred to in the foregoing paragraph, including the fees and
disbursements of counsel for the Underwriters in that connection, and the
preparation and printing of preliminary and supplemental "blue sky" memoranda,
(4) the furnishing (including costs of design, production, shipping and mailing)
to the Underwriters and dealers of copies of each Preliminary Prospectus
relating to the Shares, the sales materials, the Prospectus, and all amendments
or supplements to the Prospectus, and of the other documents required by this
Section to be so furnished, (5) the filing requirements of the National
Association of Securities Dealers, Inc., in connection with its review of the
financing, including filing fees and the fees, disbursements and other charges
of counsel for the Underwriters in that connection, (6) all transfer taxes, if
any, with respect to the sale and delivery of the Shares to the Underwriters,
(7) the listing of the Shares on the New York Stock Exchange, (8) the transfer
agent for the Shares, and (9) in addition to the foregoing, an aggregate
reimbursement of up to [ ] as partial reimbursement of the costs and expenses of
the Underwriters. To the extent the foregoing costs and expenses incident to the
performance of the obligations of the Trust under this Underwriting Agreement
exceed, in the aggregate, $0.03 per Share, Eaton Vance or an affiliate will pay
all such excess costs and expenses.
(h) If the transactions contemplated by this Underwriting
Agreement are not consummated, except as otherwise provided herein, no party
will be under any liability to any other party, except that (1) if this
Underwriting Agreement is terminated by (x) the Trust or the Investment Adviser
pursuant to any of the provisions hereof (otherwise than pursuant to Section 8
hereof) or (y) by the Representatives or the Underwriters because of any
inability, failure or refusal on the part of the Trust or the Investment Adviser
to comply with any material terms or because any of the conditions in Section 6
are not satisfied, Eaton Vance or an affiliate and the Trust, jointly and
severally, will reimburse the Underwriters for all out-of-pocket expenses
(including the reasonable fees, disbursements and other charges of their
counsel) reasonably incurred by them in connection with the proposed purchase
and sale of the Shares and (2) no Underwriter who has failed or refused to
purchase the Shares agreed to be purchased by it under this Underwriting
Agreement, in breach of its obli-
<PAGE> 18
gations pursuant to this Underwriting Agreement, will be relieved of liability
to the Trust and the Investment Adviser and the other Underwriters for damages
occasioned by its default.
(i) Without the prior written consent of the Representatives,
the Trust will not offer, sell or register with the Commission, or announce an
offering of, any equity securities of the Trust, within 180 days after the
Effective Date, except for the Shares as described in the Prospectus and any
issuances of Shares of Beneficial Interest pursuant to the dividend reinvestment
plan established by the Trust and except in connection with any offering of
preferred shares of beneficial interest as contemplated by the Prospectus.
(j) The Trust will use its best efforts to list the Shares on
the New York Stock Exchange and comply with the rules and regulations of such
exchange.
(k) The Trust will direct the investment of the net proceeds
of the offering of the Shares in such a manner as to comply with the investment
objective and policies of the Trust as described in the Prospectus.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Shares are subject to the accuracy on the date of
this Underwriting Agreement, and on the Closing Dates, of the representations of
the Trust and the Investment Adviser in this Underwriting Agreement, to the
accuracy and completeness of all statements made by the Trust or the Investment
Adviser or any of their respective officers in any certificate delivered to the
Representatives or their counsel pursuant to this Underwriting Agreement, to
performance by the Trust and the Investment Adviser of their respective
obligations under this Underwriting Agreement and to each of the following
additional conditions:
(a) The registration statement must have become effective by
5:30 p.m., New York City time, on the date of this Underwriting Agreement or
such later date and time as the Managing Representative consents to in writing.
The Prospectus must have been filed in accordance with Rule 497(b), (h) or (j),
as the case may be, of the Securities Act Rules.
(b) No order suspending the effectiveness of the Registration
Statement may be in effect and no proceedings for such purpose may be pending
before or, to the knowledge of counsel to the Underwriters, threatened by the
Commis-
<PAGE> 19
sion, and any requests for additional information on the part of the Commission
(to be included in the Registration Statement or the Prospectus or otherwise)
must be complied with or waived to the reasonable satisfaction of the Managing
Representative.
(c) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (1) there must not have been any
material change in the Shares of Beneficial Interest or liabilities of the Trust
except as set forth in or contemplated by the Prospectus; (2) there must not
have been any material adverse change in the general affairs, prospects,
management, business, financial condition or results of operations of the Trust
or the Investment Adviser whether or not arising from transactions in the
ordinary course of business as set forth in or contemplated by the Prospectus;
(3) the Trust must not have sustained any material loss or interference with its
business from any court or from legislative or other governmental action, order
or decree, whether foreign or domestic, or from any other occurrence not
described in the Registration Statement and Prospectus; and (4) there must not
have occurred any event that makes untrue or incorrect in any material respect
any statement or information contained in the Registration Statement or
Prospectus or that is not reflected in the Registration Statement or Prospectus
but should be reflected therein in order to make the statements or information
therein (in the case of the Prospectus, in light of the circumstances in which
they were made) not misleading in any material respect; if, in the judgment of
the Managing Representative, any such development referred to in clause (1),
(2), (3) or (4) of this paragraph (c) makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares pursuant to this Underwriting
Agreement by the Underwriters, at the initial public offering price of the
Shares.
(d) The Representatives must have received on each Closing
Date a certificate, dated such date, of the President or a Vice-President and
the chief financial or accounting officer of each of the Trust and the
Investment Adviser certifying that (1) the signers have carefully examined the
Registration Statement, the Prospectus, and this Underwriting Agreement, (2) the
representations of the Trust (with respect to the certificates from such Trust
officers) and the representations of the Investment Adviser (with respect to the
certificates from such officers of the Investment Adviser) in this Underwriting
Agreement are accurate on and as of the date of the certificate, (3) there has
not been any material adverse change in the general affairs, prospects,
management, business, financial condition or results of operations of the Trust
(with respect to the certificates from such Trust officers) or the Investment
Adviser (with respect to the certificates from such officers of the Investment
Adviser), which change would materially and adversely affect the ability of the
Trust or the In-
<PAGE> 20
vestment Adviser, as the case may be, to fulfill its obligations under this
Underwriting Agreement or the Investment Advisory Agreement, whether or not
arising from transactions in the ordinary course of business, (4) with respect
to the Trust only, to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the Registration
Statement, prohibiting the sale of any of the Shares or otherwise having a
material adverse effect on the Trust has been issued and no proceedings for any
such purpose are pending before or threatened by the Commission or any other
regulatory body, whether foreign or domestic, (5) to the knowledge of the
officers of the Investment Adviser, after reasonable investigation, no order
having a material adverse effect on the ability of the Investment Adviser to
fulfill its obligations under this Underwriting Agreement or the Investment
Advisory Agreement, as the case may be, has been issued and no proceedings for
any such purpose are pending before or threatened by the Commission or any other
regulatory body, whether foreign or domestic, and (6) each of the Trust (with
respect to the certificates from such Trust officers) and the Investment Adviser
(with respect to the certificates from such officers of the Investment Adviser)
has performed all of its respective agreements that this Underwriting Agreement
requires it to perform by such Closing Date (to the extent not waived in writing
by the Managing Representative).
(e) The Representatives must receive on each Closing Date the
opinions dated such Closing Date substantially in the form of Annexes A and B to
this Underwriting Agreement from the counsel identified in each such Annex.
(f) The Representatives must receive on each Closing Date from
Skadden, Arps, Slate, Meagher & Flom LLP and its affiliated entities, its
counsel, an opinion dated such Closing Date with respect to the Trust, the
Shares, the Registration Statement and the Prospectus, this Underwriting
Agreement and the form and sufficiency of all proceedings taken in connection
with the sale and delivery of the Shares. Such opinion and proceedings shall
fulfill the requirements of this Section 6(f) only if such opinion and
proceedings are satisfactory in all respects to the Representatives. The Trust
and the Investment Adviser must have furnished to such counsel such documents as
counsel may reasonably request for the purpose of enabling them to render such
opinion.
(g) The Representatives must receive on the date this
Underwriting Agreement is signed and delivered by the Representatives a signed
letter, dated such date, substantially in the form of Annex C to this
Underwriting Agreement from the firm of accountants designated in such Annex.
The Representatives also must receive on each Closing Date a signed letter from
such accountants, dated as of
<PAGE> 21
such Closing Date, confirming on the basis of a review in accordance with the
procedures set forth in their earlier letter that nothing has come to their
attention during the period from a date not more than five business days before
the date of this Underwriting Agreement, specified in the letter, to a date not
more than five business days before such Closing Date, that would require any
change in their letter referred to in the foregoing sentence.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Underwriting Agreement will comply only if they are
in form and scope reasonably satisfactory to counsel for the Underwriters,
provided that any such documents, forms of which are annexed hereto, shall be
deemed satisfactory to such counsel if substantially in such form.
7. Indemnification and Contribution.
<PAGE> 22
(a) Each of the Trust and the Investment Adviser, jointly and
severally, will indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of such Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in settlement of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim asserted),
to which such Underwriter or any such person, or any of them, may become subject
under the Securities Act, the Exchange Act, the Investment Company Act, the
Advisers Act or other federal or state statutory law or regulation, at common
law or otherwise, whether foreign or domestic, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Preliminary Prospectus, the Prospectus, the sales
materials, or any amendment or supplement to the Registration Statement, the
Preliminary Prospectus, the Prospectus, the sales materials or in any documents
filed under the Exchange Act and deemed to be incorporated by reference into the
Registration Statement, the Preliminary Prospectus, the Prospectus, or in any
application or other document executed by or on behalf of the Trust or based on
written information furnished by or on behalf of the Trust filed in any
jurisdiction in order to qualify the Shares under the securities laws thereof or
filed with the Commission, (ii) the omission or alleged omission to state, in
any or all such documents, a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by such Underwriter in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided, however, that neither the Trust
nor the Investment Adviser shall be liable under this clause (iii) to the extent
it is finally judicially determined by a court of competent jurisdiction that
such loss, claim, liability, expense or damage resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence, bad faith or willful misconduct); provided that
neither the Trust nor the Investment Adviser will be liable to the extent that
such losses, claims, liabilities, expenses or damages are based on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any underwriter furnished in
writing to the Trust by the Representative on behalf of Underwriters expressly
for inclusion in the Regis-
<PAGE> 23
tration Statement, the Preliminary Prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that the Trust or the Investment
Adviser might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Trust
and the Investment Adviser, each person, if any, who controls the Trust or the
Investment Adviser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each trustee of the Trust and each officer of
the Trust who signs the Registration Statement to the same extent as the
foregoing indemnity from the Trust or the Investment Adviser to the Underwriter,
but only insofar as losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating to
such Underwriter furnished in writing to the Trust by such Underwriter expressly
for use in the Registration Statement, the Preliminary Prospectus or Prospectus.
This indemnity will be in addition to any liability that such Underwriter might
otherwise have; provided, however, that in no case shall such Underwriter be
liable or responsible for any amount in excess of the fees and commissions
received by the Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission to so notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provision of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the
<PAGE> 24
fees, disbursements and other charges of such counsel will be at the expense of
such indemnified party unless (1) the employment of counsel by the indemnified
party has been authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based on the advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. Subject to the requirements of
Investment Company Act Release No. 11330, all such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. An indemnifying party will not be liable
for any settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld). No indemnifying party shall,
without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated by this Section
7 (whether or not any indemnified party is a party thereto), unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 7 is
applicable but for any reason is held to be unavailable from the Trust, the
Investment Adviser or the Underwriters, the Trust, the Investment Adviser and
the Underwriters will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Trust and the Investment Adviser from persons other
than the Underwriter, such as persons who control the Trust or the Investment
Adviser within the meaning of the Securities Act or the Exchange Act,
<PAGE> 25
officers of the Trust who signed the Registration Statement and directors of the
Trust, who may also be liable for contribution) to which the Trust, the
Investment Adviser and the Underwriters may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Trust and
the Investment Adviser on the one hand and the Underwriters on the other. The
relative benefits received by the Trust and the Investment Adviser (treated
jointly for this purpose as one person) on the one hand and the Underwriters on
the other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Trust
bear to the total fees and commissions received by the Underwriters. If, but
only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only such relative benefits referred to in the
foregoing sentence but also the relative fault of the Trust and the Investment
Adviser (treated jointly for this purpose as one person) on the one hand and the
Underwriters on the other hand in connection with respect to the statements or
omissions or alleged statements or omissions that resulted in the losses,
claims, liabilities, expenses or damages (including any investigative, legal or
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), as well as
any other relevant equitable considerations appropriate in the circumstances.
Such relative fault of the parties shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Trust, the Investment Adviser or the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission and any other equitable considerations
appropriate in the circumstances. The Trust, the Investment Adviser and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 7(d) shall be deemed to
include, for purposes of this Section 7(d) any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding any other provisions of
this Section 7(d), the Underwriters shall not be required to contribute any
amount in excess of the fees and commissions received by them and no person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7(d), any person who controls a party to
<PAGE> 26
this Agreement within the meaning of the Securities Act will have the same
rights to contribution as that party, and each trustee of the Trust and each
officer of the Trust who signed the Registration Statement will have the same
rights to contribution as the Trust, subject in each case to the provisions
hereof. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 7(d), notify such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 7(d). No party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent shall not be unreasonably withheld). The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to the respective number of Firm Shares set forth opposite their
names in Schedule 1 (or such number of Firm Shares as determined pursuant to
Section 9 hereof) and not joint.
(e) Notwithstanding any other provisions in this Section 7, no
party shall be entitled to indemnification or contribution under this Agreement
against any loss, claim, liability, expense or damage arising by reason of such
person's willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder, or by reason of such person's reckless disregard of
such person's obligations and duties hereunder.
(f) The Trust and the Investment Adviser acknowledge that the
statements with respect to (1) the public offering of the Shares as set forth on
the cover page of and (2) the statements relating to stabilization and to
selling concessions and reallowances of selling concessions under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing to the Trust by the Representatives on behalf of the Underwriters
expressly for use in such document. The Underwriters severally confirm that
these statements are correct in all material respects and were so furnished by
or on behalf of the Underwriters severally for use in the Prospectus.
8. Termination. This Underwriting Agreement may be terminated by the
Managing Representative by notifying the Trust at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the Shares are first generally offered
pursuant to
<PAGE> 27
this Underwriting Agreement by the Managing Representative to dealers by letter
or telegram;
(b) at or before any Closing Date if, in the sole judgment of the
Managing Representative, payment for and delivery of any Shares is rendered
impracticable or inadvisable because trading in the equity securities of the
Trust is suspended by the Commission or by the principal exchange that lists the
Shares, trading in securities generally on the New York Stock Exchange or the
Nasdaq Stock Market shall have been suspended or limited or minimum or maximum
prices shall have been generally established on such exchange or
over-the-counter market, or, additional material governmental restrictions, not
in force on the date of this Underwriting Agreement, have been imposed upon
trading in securities or trading has been suspended on any U.S. securities
exchange, a general banking moratorium has been established by U.S. federal or
New York authorities or any material adverse change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States or any outbreak or material escalation of
hostilities or declaration by the United States of a national emergency or war
or other calamity or crisis shall have occurred the effect of any of which is
such as to make it, in the sole judgement of the Managing Representative,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus; or
(c) at or before any Closing Date, if any of the conditions
specified in Section 6 have not been fulfilled when and as required by this
Underwriting Agreement.
9. Substitution of Underwriters. If one or more of the Underwriters fails
(other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on any Closing Date the Shares agreed to be
purchased on such Closing Date by such Underwriter or Underwriters, the Managing
Representative may find one or more substitute underwriters to purchase such
Shares or make such other arrangements as the Managing Representative deems
advisable, or one or more of the remaining Underwriters may agree to purchase
such Shares in such proportions as may be approved by the Managing
Representative, in each case upon the terms set forth in this Underwriting
Agreement. If no such arrangements have been made within 36 hours after such
Closing Date, and
(a) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date does not exceed 10% of the Shares that the
Underwriters are obligated to purchase on such Closing Date, each of the
nondefaulting
<PAGE> 28
Underwriters will be obligated to purchase such Shares on the terms set forth in
this Underwriting Agreement in proportion to their respective obligations under
this Underwriting Agreement, or
(b) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date exceeds 10% of the Shares to be purchased by
all the Underwriters on such Closing Date, the Trust will be entitled to an
additional period of 24 hours within which to find one or more substitute
underwriters reasonably satisfactory to the Managing Representative to purchase
such Shares on the terms set forth in this Underwriting Agreement.
In any such case, either the Managing Representative or the Trust will
have the right to postpone the applicable Closing Date for not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or the
Prospectus) may be effected by the Managing Representative and the Trust. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters exceeds 10% of the Shares that the Underwriters are
obligated to purchase on such Closing Date, and none of the nondefaulting
Underwriters or the Trust makes arrangements pursuant to this Section within the
period stated for the purchase of the Shares that the defaulting Underwriters
agreed to purchase, this Underwriting Agreement will terminate without liability
on the part of any nondefaulting Underwriter, the Trust or the Investment
Adviser, except as provided in Sections 5(g) and 7 hereof. This Section will not
affect the liability of any defaulting Underwriter to the Trust or the
nondefaulting Underwriters arising out of such default. A substitute underwriter
will become a Underwriter for all purposes of this Underwriting Agreement.
10. Miscellaneous.
(a) The reimbursement, indemnification and contribution
agreements in Sections 5(g) and 7 hereof and the representations of the Trust,
the Investment Adviser and the Underwriters in this Underwriting Agreement will
remain in full force and effect regardless of any termination of this
Underwriting Agreement. The reimbursement, indemnification and contribution
agreements in Sections 5(g) and 7 hereof and the representations and agreements
of the Trust, the Investment Adviser and the Underwriters in this Underwriting
Agreement shall survive the Closing Dates and shall remain in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Trust, the Investment Adviser or any controlling person and delivery of and
payment for the Shares.
<PAGE> 29
(b) This Underwriting Agreement is for the benefit of the
Underwriters, the Trust, the Investment Adviser and their successors and
assigns, and, to the extent expressed in this Underwriting Agreement, for the
benefit of persons controlling any of the Underwriters, the Trust, the
Investment Adviser and directors and officers of the Trust and the Investment
Adviser, and their respective successors and assigns, and no other person,
partnership, association or corporation will acquire or have any right under or
by virtue of this Underwriting Agreement. The term "successors and assigns" does
not include any purchaser of the Shares from any Underwriter merely because of
such purchase.
(c) All notices and communications under this Underwriting
Agreement will be in writing, effective only on receipt and mailed or delivered,
by messenger, facsimile transmission or otherwise, to the Representatives in
care of PaineWebber Incorporated, Attn: Financial Institutions Group, 1285
Avenue of the Americas, New York, New York 10019, to the Trust or the Investment
Adviser at 24 Federal Street, Boston, MA 02110, Attn: Chief Legal Officer.
(d) This Underwriting Agreement may be signed in multiple
counterparts that taken as a whole constitute one agreement.
(e) This Underwriting Agreement will be governed by and
construed in accordance with the laws of the State of New York without reference
to choice of law principles thereof.
(f) A copy of the Agreement and Declaration of Trust of each
of the Trust and the Investment Adviser is on file with the Secretary of The
Commonwealth of Massachusetts, and notice hereby is given that this Underwriting
Agreement is executed on behalf of the respective Trustees of the Trust and the
Investment Adviser as Trustees and not individually and that the obligations or
arising out of this Underwriting Agreement are not binding upon any of the
Trustees or beneficiaries individually but are binding only upon the respective
assets and properties of the Trust and the Investment Adviser.
<PAGE> 30
Please confirm that the foregoing correctly sets forth the
agreement between us.
Very truly yours,
Eaton Vance Municipal Income Trust
By:
Name:
Title:
Eaton Vance Management
By:
Name:
Title:
Confirmed:
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
Prudential Securities Incorporated
Salomon Smith Barney Inc.
Dain Rauscher Wessels
EVEREN Securities, Inc.
As Representatives of the Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
By: PaineWebber Incorporated
By:
Name:
Title:
Acting on behalf of itself
and the Underwriters
named in Schedule 1
<PAGE> 31
SCHEDULE 1
NAME NUMBER OF FIRM SHARES TO BE
PURCHASED
PaineWebber Incorporated [_____________]
A.G. Edwards & Sons, Inc. [_____________]
Prudential Securities Incorporated [_____________]
Salomon Smith Barney Inc. [_____________]
Dain Rauscher Wessels [_____________]
EVEREN Securities, Inc. [_____________]
<PAGE> 32
Total Underwriters
<PAGE> 33
ANNEX A
FORM OF OPINION OF
KIRKPATRICK & LOCKHART LLC REGARDING THE TRUST
1. The Registration Statement and all post-effective amendments, if
any, are effective under the Securities Act and no stop order with respect
thereto has been issued and no proceeding for that purpose has been instituted
or, to the best of our knowledge, is threatened by the Commission. Any filing of
the Prospectus or any supplements thereto required under Rule 497 of the
Securities Act Rules prior to the date hereof have been made in the manner and
within the time required by such rule.
2. The Trust has been duly formed and is validly existing as a
Massachusetts business trust under the laws of the Commonwealth of
Massachusetts, with full power and authority to conduct all the activities
conducted by it, to own or lease all assets owned (or to be owned) or leased (or
to be leased) by it and to conduct its business as described in the Registration
Statement and Prospectus, and the Trust is duly licensed and qualified to do
business and in good standing in each jurisdiction in which its ownership or
leasing of property or its conducting of business requires such qualification,
and the Trust owns, possesses or has obtained and currently maintains all
governmental licenses, permits, consents, orders, approvals and other
authorizations, whether foreign or domestic, necessary to carry on its business
as contemplated in the Prospectus. The Trust has no subsidiaries.
3. The capitalization of the Trust is as set forth in the Registration
Statement and the Prospectus. The Shares of Beneficial Interest of the Trust
conform in all respects to the description of them in the Prospectus. All the
outstanding Shares of Beneficial Interest have been duly authorized and are
validly issued, fully paid and nonassessable. The Shares to be issued and
delivered to and paid for by the Underwriters in accordance with the
Underwriting Agreement against payment therefor as provided by the Underwriting
Agreement have been duly authorized and when issued and delivered to the
Underwriters will have been validly issued and will be fully paid and
nonassessable (except as described in the Registration Statement). No person is
entitled to any preemptive or other similar rights with respect to the Shares.
4. The Trust is duly registered with the Commission under the
Investment Company Act as a non-diversified, closed-end management investment
company and all action under the Securities Act, the Investment Company Act, the
Securities Act Rules and the Investment Company Act Rules, as the case may be,
necessary to make
<PAGE> 34
the public offering and consummate the sale of the Shares as provided in the
Underwriting Agreement has or will have been taken by the Trust.
5. The Trust has full power and authority to enter into each of the
Underwriting Agreement, the Investment Advisory Agreement, the Custody Agreement
and the Transfer Agency Agreement (collectively, the "Trust Agreements") and to
perform all of the terms and provisions thereof to be carried out by it and (A)
each Trust Agreement has been duly and validly authorized, executed and
delivered by the Trust, (B) each Trust Agreement complies in all material
respects with all applicable provisions of the Investment Company Act, the
Advisers Act, the Investment Company Act Rules and the Advisers Act Rules, as
the case may be, and (C) assuming due authorization, execution and delivery by
the other parties thereto, each Trust Agreement constitutes the legal, valid and
binding obligation of the Trust enforceable in accordance with its terms, (1)
subject, as to enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and (2) as rights to indemnity thereunder may be limited by federal or
state securities laws.
6. None of (A) the execution and delivery by the Trust of the Trust
Agreements, (B) the issue and sale by the Trust of the Shares as contemplated by
the Underwriting Agreement and (C) the performance by the Trust of its
obligations under the Trust Agreements or consummation by the Trust of the other
transactions contemplated by the Trust Agreements conflicts with or will
conflict with, or results or will result in a breach of, the Declaration of
Trust or the By-laws of the Trust or any agreement or instrument to which the
Trust is a party or by which the Trust is bound, or any law, rule or regulation,
or order of any court, governmental instrumentality, securities exchange or
association or arbitrator, whether foreign or domestic, applicable to the Trust,
except that we express no opinion as to the securities or "blue sky" laws
applicable in connection with the purchase and distribution of the Shares by the
Underwriters pursuant to the Underwriting Agreement.
7. The Trust is not currently in breach of, or in default under, any
written agreement or instrument to which it is a party or by which it or its
property is bound or affected.
8. No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or association, whether
foreign or domestic, is required by the Trust for the consummation by the Trust
of the transactions to be performed by the Trust or the performance by the Trust
of all the terms and provisions to be performed by or on behalf of it in each
case as contemplated in the Trust Agreements, except such as (A) have been
obtained under the Securities Act, the In-
<PAGE> 35
vestment Company Act, the Advisers Act, the Securities Act Rules, the Investment
Company Act Rules and the Advisers Act Rules and (B) may be required by the New
York Stock Exchange or under state securities or "blue sky" laws in connection
with the purchase and distribution of the Shares by the Underwriters pursuant to
the Underwriting Agreement.
9. The Shares have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, and the Trust's Registration
Statement on Form 8-A under the 1934 Act is effective.
10. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to our knowledge, threatened
against or affecting the Trust, which is required to be disclosed in the
Prospectus that is not disclosed in the Prospectus, and there are no contracts,
franchises or other documents that are of a character required to be described
in, or that are required to be filed as exhibits to, the Registration Statement
that have not been described or filed as required.
11. The Trust does not require any tax or other rulings to enable it to
qualify as a regulated investment company under Subchapter M of the Code.
12. Each of the sections in the Prospectus entitled "Distributions and
Taxes" and the section in the Statement of Additional Information entitled
"Taxes" is a fair summary of the principal United States federal income tax
rules currently in effect applicable to the Trust and to the purchase, ownership
and disposition of the Shares.
13. The Registration Statement (except the financial statements and
schedules and other financial data included therein as to which we express no
view), at the time it became effective, and the Prospectus (except as
aforesaid), as of the date thereof, complied as to form in all material respects
to the requirements of the Securities Act, the Investment Company Act and the
rules and regulations of the Commission thereunder.
In rendering our opinion, we have relied, as to factual matters, upon
the attached written certificates and statements of officers of the Trust.
In connection with the registration of the Shares, we have advised the
Trust as to the requirements of the Securities Act, the Investment Company Act
and the applicable rules and regulations of the Commission thereunder and have
rendered other legal advice and assistance to the Trust in the course of its
preparation of the Registration Statement and the Prospectus. Rendering such
assistance involved, among other things, discussions and inquiries concerning
various legal and related subjects and re-
<PAGE> 36
views of certain corporate records, documents and proceedings. We also
participated in conferences with representatives of the Trust and its
accountants at which the contents of the Registration Statement and Prospectus
and related matters were discussed. With your permission, we have not
undertaken, except as otherwise indicated herein, to determine independently,
and do not assume any responsibility for, the accuracy, completeness or fairness
of the statements in the Registration Statement or Prospectus. On the basis of
the information which was developed in the course of the performance of the
services referred to above, no information has come to our attention that would
lead us to believe that the Registration Statement, at the time it became
effective, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and as
of the date hereof, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or that any amendment or supplement to the Prospectus, as
of its respective date, and as of the date hereof, contained any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements in the Prospectus, in the light of the
circumstances under which they were made, not misleading (except the financial
statements, schedules and other financial data included therein, as to which we
express no view).
<PAGE> 37
ANNEX B
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING EATON VANCE MANAGEMENT
1. Eaton Vance has been duly formed and is validly existing as a
Massachusetts business trust under the laws of its jurisdiction of incorporation
with full power and authority to conduct all of the activities conducted by it,
to own or lease all of the assets owned or leased by it and to conduct its
business as described in the Registration Statement and Prospectus, and Eaton
Vance is duly licensed and qualified and in good standing in each other
jurisdiction in which it is required to be so qualified and Eaton Vance owns,
possesses or has obtained and currently maintains all governmental licenses,
permits, consents, orders, approvals and other authorizations, whether foreign
or domestic, necessary for Eaton Vance to carry on its business as contemplated
in the Registration Statement and the Prospectus.
2. Eaton Vance is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act, the Investment Company
Act, the Advisers Act Rules or the Investment Company Act Rules from acting as
investment adviser for the Trust as contemplated by the Investment Advisory
Agreement, the Registration Statement and the Prospectus.
3. Eaton Vance has full power and authority to enter into each of the
Underwriting Agreement, the Investment Advisory Agreement, the Administration
Agreement and the Shareholder Servicing Agreement (collectively, the "Eaton
Vance Agreements") and to carry out all the terms and provisions thereof to be
carried out by it, and each such agreement has been duly and validly authorized,
executed and delivered by Eaton Vance; each Eaton Vance Agreement complies in
all material respects with all provisions of the Investment Company Act, the
Advisers Act, the Investment Company Act Rules and the Advisers Act Rules; and
assuming due authorization, execution and delivery by the other parties thereto,
each Eaton Vance Agreement constitutes a legal, valid and binding obligation of
Eaton Vance, enforceable in accordance with its terms, (1) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law) and (2) as
rights to indemnity thereunder may be limited by federal or state securities
laws.
4. Neither (A) the execution and delivery by Eaton Vance of any Eaton
Vance Agreement nor (B) the consummation by Eaton Vance of the transactions
contemplated by, or the performance of its obligations under any Eaton Vance
Agreement
<PAGE> 38
conflicts or will conflict with, or results or will result in a breach of, the
Agreement and Declaration of Trust or By-Laws of Eaton Vance or any agreement or
instrument to which Eaton Vance is a party or by which Eaton Vance is bound, or
any law, rule or regulation, or order of any court, governmental
instrumentality, securities exchange or association or arbitrator, whether
foreign or domestic, applicable to Eaton Vance.
5. No consent, approval, authorization or order of any court, governmental
agency or body or securities exchange or association, whether foreign or
domestic, is required for the consummation of the transactions contemplated in,
or the performance by Eaton Vance of its obligations under, any Eaton Vance
Agreement, except such as have been obtained under the Investment Company Act,
the Advisers Act, the Securities Act, the Investment Company Act Rules, the
Advisers Act Rules and the Securities Act Rules.
6. The description of Eaton Vance and its business, and the statements
attributable to Eaton Vance, in the Registration Statement and the Prospectus
complies with the requirements of the Securities Act, the Investment Company
Act, the Securities Act Rules and the Investment Company Act Rules and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
7. There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other governmental agency
or body, foreign or domestic, now pending or, to our knowledge, threatened
against or affecting Eaton Vance of a nature required to be disclosed in the
Registration Statement or Prospectus or that might reasonably result in any
material adverse change in the condition, financial or otherwise, business
affairs or business prospects of Eaton Vance or the ability of Eaton Vance to
fulfill its respective obligations under any Eaton Vance Agreement.
8. The Registration Statement (except the financial statements and
schedules and other financial data included therein as to which we express no
view), at the time it became effective, and the Prospectus (except as
aforesaid), as of the date thereof, appeared on their face to be appropriately
responsive in all material respects to the requirements of the Securities Act,
the Investment Company Act and the rules and regulations of the Commission
thereunder.
In rendering our opinion, we have relied, as to factual matters, upon
the attached written certificates and statements of officers of Eaton Vance.
In connection with the registration of the Shares, we have advised
Eaton Vance as to the requirements of the Securities Act, the Investment Company
Act and
<PAGE> 39
the applicable rules and regulations of the Commission thereunder and have
rendered other legal advice and assistance to Eaton Vance in the course of the
preparation of the registration Statement and the Prospectus. Rendering such
assistance involved, among other things, discussions and inquiries concerning
various legal and related subjects and reviews of certain corporate records,
documents and proceedings. We also participated in conferences with
representatives of the Trust and its accountants and Eaton Vance at which the
contents of the registration and Prospectus and related matters were discussed.
With your permission, we have not undertaken, except as otherwise indicated
herein, to determine independently, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements in the Registration
Statement or Prospectus. On the basis of the information which was developed in
the course of the performance of the services referred to above, no information
has come to our attention that would lead us to believe that the Registration
Statement, at the time it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that any amendment
or supplement to the Prospectus, as of its respective date, and as of the date
hereof, contained any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements in the
Prospectus, in the light of the circumstances under which they were made, not
misleading (except the financial statements, schedules and other financial data
included therein, as to which we express no view).
<PAGE> 40
ANNEX C
FORM OF ACCOUNTANT'S LETTER
January 29, 1999
The Board of Trustees of
Eaton Vance Municipal Income Trust
24 Federal Street
Boston, Massachusetts 02110
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
Eaton Vance Municipal Income Trust (the "Trust") as of January ___, 1999
included in the Registration Statement on Form N-2 filed by the Trust under the
Securities Act of 1933 (the "Act") (File No. 333-68719) and under the Investment
Company Act of 1940 (the "1940 Act") (File No. 811-09141); such statement and
our report with respect to such statement are included in the Registration
Statement.
In connection with the Registration Statement:
1. We are independent public accountants with respect to the
Trust within the meaning of the Act and the applicable rules
and regulations thereunder.
2. In our opinion, the statement of assets and liabilities
included in the Registration Statement and audited by us
complies as to form in all respects with the applicable
accounting requirements of the Act, the 1940 Act and the
respective rules and regulations thereunder.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Trustees and all
Committees of the Board of Trustees of the Trust as set forth
in the minute books at the offices of the Trust, officials of
the Trust having advised us that the
<PAGE> 41
minutes of all such meetings through January ___, 1999, were
set forth therein.
4. Trust officials have advised us that no financial statements
as of any date subsequent to January ___, 1999, are available.
We have made inquiries of certain officials of the Trust who
have responsibility for financial and accounting matters
regarding whether there was any change at January ___, 1999,
in the capital shares or net assets of the Trust as compared
with amounts shown in the January ___, 1999, statement of
assets and liabilities included in the Registration Statement,
except for changes that the Registration Statement discloses
have occurred or may occur. On the basis of our inquiries and
our reading of the minutes as described in Paragraph 3,
nothing came to our attention that caused us to believe that
there were any such changes.
The foregoing procedures do not constitute an audit made in
accordance with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees
and to assist the underwriters in conducting and documenting their investigation
of the affairs of the Trust in connection with the offering of the securities
covered by the Registration Statement, and is not to be used, circulated, quoted
or otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very truly yours,
DELOITTE & TOUCHE LLP
<PAGE> 1
Exhibit 99.(h)(2)
AMENDED AND RESTATED
MASTER AGREEMENT AMONG UNDERWRITERS
June 11, 1984
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Gentlemen:
1. General. We understand that PaineWebber Incorporated ("PWI") is
entering into this Agreement in counterparts with us and other firms who may be
underwriters for issues of securities for which PWI is acting as Representative
or one of the Representatives of the several underwriters. This Agreement shall
apply to any offering of securities in which we elect to act as an underwriter
after receipt of a telegram, telex or other form of written communication
("Written Communication") from PWI stating the identity of the issuer and, if
different from the issuer, the seller or sellers of such securities, the
securities proposed to be offered, whether the underwriters are afforded an
option to purchase additional securities to cover over-allotments, the price to
underwriters, public offering price and date, interest rate, if any, and other
variables, the amount of our proposed participation and the names of the other
Representatives, if any, and that our participation as an underwriter in the
proposed offering shall be subject to the provisions of this Agreement. Upon our
telegraphic acceptance of such Written Communication we shall become one of the
underwriters of such issue for the amount specified in the Written
Communication, and this Agreement shall become binding upon us and the
Representatives with respect to such offering. The obligations of each
underwriter shall be several and not joint. The issuer of the securities offered
in any offering of securities made pursuant to this Agreement is hereinafter
referred to as the "Company", and such securities are hereinafter called the
"Securities". The seller or sellers of the Securities (including, if applicable,
the Company) are hereinafter referred to collectively as the "Seller". All
references herein to "you" or the "Representatives" shall include PWI and the
other firms, if any, which are named as Representatives in the Written
Communication. The Securities to be offered in any offering may but need not be
registered in a shelf registration pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"). The following provisions of this Agreement shall
apply separately to each individual offering of Securities.
2. Underwriting Arrangements. The Representatives shall determine which
signatories to this Agreement will be invited to become underwriters for the
Securities. Changes may be made by the Representatives in those who are to be
underwriters and in the respective amounts of Securities to be purchased by
them, but the amount of Securities to be purchased by us as set forth in the
Written Communication to us will not be changed without our consent except as
provided herein or in the underwriting agreement (the "Underwriting Agreement")
with the Seller covering the Securities. We authorize you on our behalf to
execute and deliver the Underwriting Agreement in such form as you determine and
to take such action as you deem
<PAGE> 2
advisable in connection with the performance of the Underwriting Agreement and
this Agreement and the purchase, carrying, sale and distribution of the
Securities, including the election to exercise any option to purchase additional
Securities to cover over-allotments if so provided. The parties on whose behalf
you execute the Underwriting Agreement are hereinafter called the
"Underwriters". You may waive performance or satisfaction by the Seller of
certain of its obligations or conditions included in the Underwriting Agreement,
if in your judgment such waiver will not have a material adverse effect upon the
interests of the Underwriters. It is understood that, if so specified in the
Written Communication for the issue, arrangements may be made for the sale of
Securities by the Seller pursuant to delayed delivery contracts. Such Securities
are hereinafter referred to as "Delayed Delivery Securities", and such contracts
as "Delayed Delivery Contracts". References herein to delayed delivery and
Delayed Delivery Contracts apply only to offerings in which delayed delivery is
authorized. The term "underwriting obligation", as used in this Agreement with
respect to any Underwriter, shall refer to the principal amount or number of
shares of the Securities which such Underwriter is obligated to purchase
pursuant to the provisions of the Underwriting Agreement, without regard to any
reduction in such obligation as a result of Delayed Delivery Contracts which are
entered into by the Seller.
As compensation for your services we will pay a management fee as specified
in the Written Communication for the issue (without deduction in respect of
Delayed Delivery Securities), and you may charge our account therefor. If there
is more than one Representative, such compensation will be divided among the
Representatives in such proportions as they determine.
3. Prospectus and Registration Statement. You will furnish to us as soon
as possible copies of the prospectus or supplemented prospectus to be used in
connection with the offering of the Securities. As used herein with respect to
an offering of Securities registered under the Securities Act, "Prospectus"
means the form of prospectus (including any supplements) authorized for use in
connection with such offering, and "Registration Statement" means the
registration statement, as amended, filed under the Securities Act pursuant to
which the Securities are registered under the Securities Act. As used herein
with respect to an offering of Securities not registered under the Securities
Act, "Prospectus" or "Registration Statement" means the form of final offering
circular (including any supplements) authorized for use in connection with such
offering and "preliminary prospectus" means any preliminary offering circular
authorized for use in connection with such offering. We consent to being named
in the prospectus as one of the Underwriters of the Securities.
4. Public Offering. (a) In connection with the public offering of the
Securities, we authorize you, in your discretion
(i) to determine the time of the initial public offering, to change
the public offering price and the concessions and discounts to dealers
after the initial public offering, to furnish the Company with the
information to be included in the Registration Statement or Prospectus with
respect to the terms of offering, and to determine all matters relating to
advertising and communications with dealers or others;
2
<PAGE> 3
(ii) to reserve for sale to dealers selected by you ("Selected
Dealers") and to others, and to reserve for sale pursuant to Delayed
Delivery Contracts (including Delayed Delivery Contracts arranged by you
through Selected Dealers), all or any part of our Securities, which
reservations for sales to others and for sales pursuant to Delayed Delivery
Contracts not arranged through Selected Dealers are to be as nearly as
practicable in proportion to the respective underwriting obligations of the
Underwriters, unless you agree to a smaller proportion at the request of
any Underwriter, and such other reservations to be in such proportions as
you determine, and, from time to time, to add to the reserved Securities
any Securities retained by us remaining unsold and to release to us any of
our Securities reserved but not sold;
(iii) to sell reserved Securities, as nearly as practicable in
proportion to the respective reservations, to Selected Dealers at the
public offering price less the Selected Dealers' concession and to others
at the public offering price; and
(iv) to buy Securities for our account from Selected Dealers at the
public offering price less such amount not in excess of the Selected
Dealers' concession as you determine.
If, in accordance with the terms of offering set forth in the Prospectus,
the offering of the Securities is not at a fixed price but at varying prices set
by individual Underwriters based on market prices or at negotiated prices, the
provisions of clause (i) above relating to your right to change the public
offering price and concessions and discounts to dealers shall not apply, and
other references in this Section and elsewhere in this Agreement to the public
offering price or Selected Dealers' concession shall be deemed to mean the
prices and concessions determined by you from time to time in your discretion.
Sales of Securities between Underwriters may be made with your prior
consent, or as you deem advisable for Blue Sky purposes.
After advice from you that the Securities are released for public offering,
we will offer to the public in conformity with the terms of offering set forth
in the Prospectus such of our Securities as you advise us are not reserved.
Any Securities sold by us (otherwise than through you) which you purchase
in the open market for the account of any Underwriter will be repurchased by us
on demand at a price equal to the total cost of such purchase including any
taxes on redelivery, commissions, accrued interest and dividends. Securities
delivered on such repurchase need not be the identical certificates so
purchased. In lieu of such action you may in your discretion sell for our
account the Securities so purchased and debit or credit our account for the loss
or profit resulting from such sale, or charge our account with an amount not in
excess of the Selected Dealers' concession with respect to such Securities.
(b) We authorize you to act on our behalf in making all arrangements for
the solicitation of offers to purchase Delayed Delivery Securities from the
Seller pursuant to Delayed Delivery Contracts and we agree that all such
arrangements will be made only through you,
3
<PAGE> 4
directly or through Selected Dealers (including Underwriters acting as Selected
Dealers) to whom you may pay a commission as provided in the Prospectus and
herein.
The obligation of each of the Underwriters to purchase and pay for
Securities as set forth in the Underwriting Agreement shall be reduced in the
proportion provided for therein, except that (i) as to any Delayed Delivery
Contract determined by you, in your discretion, to have been directed and
allocated by a purchaser to a particular Underwriter, such obligation of such
Underwriters shall be reduced by the amount of Delayed Delivery Securities
covered thereby, (ii) as to any Delayed Delivery Contracts for which
arrangements are made through Selected Dealers, such obligation of each
Underwriter shall be reduced as nearly as practicable in the proportion
determined by you that the amount of Securities of such Underwriter reserved and
sold pursuant to Delayed Delivery Contracts arranged through Selected Dealers
bears to the total Securities so reserved and sold, and (iii) such reductions
shall be rounded, as you shall determine, to the nearest $1,000 principal amount
or whole share of the Securities.
The fee payable to each Underwriter with respect to Delayed Delivery
Securities pursuant to the Underwriting Agreement shall be credited to the
account of such Underwriter based upon the amount by which such Underwriter's
underwriting obligation is reduced as specified in the preceding paragraph.
If the amount of Delayed Delivery Securities applied to reduce an
Underwriter's underwriting obligation and the amount of Securities sold by or
for the account of such Underwriter exceeds such Underwriter's underwriting
obligation, there shall be credited to such Underwriter in connection with such
excess amount of Securities only the amount of the Selected Dealers' concession
with respect thereto.
The commissions payable to Selected Dealers in respect of Delayed Delivery
Contracts arranged through them shall be charged to each Underwriter in the
proportion which the amount of Securities of such Underwriter reserved and sold
pursuant to Delayed Delivery Contracts arranged through Selected Dealers bears
to the total Securities so reserved and sold.
5. Payment and Delivery. We authorize you to make payment on our behalf
to the Seller of the purchase price of our Securities, to take delivery of our
Securities, registered as you may direct in order to facilitate deliveries, and
to deliver our reserved Securities against sales. At your request we will pay
you, as you direct, (i) an amount equal to the public offering price, less the
selling concession, of either our Securities or our unreserved Securities or
(ii) the amount set forth or indicated in the Written Communication with respect
to the Securities, and such payment will be credited to our account and applied
to the payment of the purchase price. After you receive payment for reserved
Securities sold for our account, you will remit to us the purchase price (if
any) paid by us for such Securities and credit or debit our account with the
difference between the sale prices and the purchase price thereof. You will
deliver to us our unreserved Securities promptly, and our reserved but unsold
Securities, against payment of the purchase price therefor (except in the case
of Securities for which payment has previously been made), as soon as
practicable after the termination of the provisions referred to in Section 9,
except that if the aggregate amount of reserved but unsold Securities upon such
termination does not exceed
4
<PAGE> 5
10% of the total amount of the Securities, you may in your discretion sell such
reserved but unsold Securities for the accounts of the several Underwriters as
soon as practicable after such termination, at such prices and in such manner as
you determine. Unless we promptly give you written instructions otherwise, if
transactions in the Securities may be settled through the facilities of The
Depository Trust Company, payment for and delivery of securities purchased by us
will be made through such facilities, if we are a member, or if we are not a
member, settlement may be made through our ordinary correspondent who is a
member.
6. Authority to Borrow. In connection with the purchase or carrying of
our Securities or other securities purchased for our account, we authorize you,
in your discretion, to advance your funds for our account, charging current
interest rates, to arrange loans for our account, and in connection therewith to
execute and deliver any notes or other instruments and hold or pledge as
security any of our Securities or such other securities. Any lender may rely
upon your instructions in all matters relating to any such loan. Any Securities
or such other securities held by you for our account may be delivered to us for
carrying purposes, and if so delivered will be redelivered to you upon demand.
7. Stabilization and Over-Allotment. We authorize you, in your
discretion, to make purchases and sales of Securities, any other securities of
the Company of the same class and series and any other securities of the Company
which you may designate in the open market or otherwise, for long or short
account, on such terms as you deem advisable, and, in arranging sales, to
over-allot and cover any such over-allotment, at your discretion, by purchasing
Securities, exercising the over-allotment option, if any, indicated in the
Written Communication, or both. Such purchases and sales and over-allotments
will be made for the accounts of the Underwriters as nearly as practicable in
proportion to their respective underwriting obligations. It is understood that
you may have made purchases of securities of the Company for stabilizing
purposes prior to the time when we become one of the Underwriters, and we agree
that any securities so purchased shall be treated as having been purchased for
the respective accounts of the Underwriters pursuant to the foregoing
authorization. We authorize you, in your discretion, to cover any short position
incurred pursuant to this Section by purchasing securities on such terms as you
deem advisable. At no time will our net commitment under the foregoing
provisions of this Section exceed 15% of our underwriting obligation. Solely for
purposes of the immediately preceding sentence, our "underwriting obligation"
shall be deemed to exclude any Securities which we are obligated to purchase
solely by virtue of the exercise of an over-allotment option. We will on demand
take up at cost any securities so purchased and deliver any securities so sold
or over-alloted for our account, and, if any other Underwriter defaults in its
corresponding obligation, we will assume our proportionate share of such
obligation without relieving the defaulting Underwriter from liability. Upon
request, we will advise you of the Securities retained by us and unsold and will
sell to you for the account of one or more of the Underwriters such of our
unsold Securities and at such price, not less than the net price to Selected
Dealers nor more than the public offering price, as you determine.
8. Open Market Transactions. We and you agree not to bid for, purchase,
attempt to induce others to purchase, or sell, directly or indirectly, any
Securities, any other securities of the Company of the same class and series and
any other securities of the Company which you may
5
<PAGE> 6
designate, except as brokers pursuant to unsolicited orders and as otherwise
provided in this Agreement. If the Securities are common stock or securities
convertible into common stock, we and you also agree not to effect, or attempt
to induce others to effect, directly or indirectly, any transactions in or
relating to put or call options on any stock of the Company, except to the
extent permitted by Rule 10b-6 under the Securities Exchange Act of 1934 (the
"Exchange Act") as interpreted by the Securities and Exchange Commission. An
opening uncovered writing transaction in options to acquire Securities for our
account or for the account of any customer shall be deemed, for purposes of the
preceding sentence, to be a transaction effected by us in or relating to put or
call options on stock of the Company not permitted by Rule 10b-6. The term
"opening uncovered writing transaction" means an opening sale transaction where
the seller intends to become a writer of an option to purchase stock which it
does not own or have the right to acquire upon exercise of conversion or option
rights.
9. Termination as to an Offering. The provisions of the last two
paragraphs of Section 4(a), the first sentence of Section 7, and Section 8 will
terminate at the close of business on the thirtieth day after the date of the
initial public offering of the Securities, unless sooner terminated as
hereinafter provided. You may terminate such provision as to such offering at
any time by notice to us to the effect that the offering provisions of this
Agreement as to such offering are terminated.
10. Expenses and Settlement. You may charge our account with any transfer
taxes on sales made by you of Securities purchased by us under the Underwriting
Agreement and with our proportionate shares (based upon our underwriting
obligation) of all other expenses incurred by you under this Agreement or in
connection with the purchase, carrying, sale or distribution of the Securities.
The accounts hereunder will be settled as promptly as practicable after the
termination of the provisions referred to in Section 9, but you may reserve such
amount as you deem advisable for additional expenses. Your determination of the
amount to be paid to or by us will be conclusive. You may at any time make
partial distributions of credit balances or call for payment of debit balances.
Any of our funds in your hands may be held with your general funds without
accountability for interest. Notwithstanding any settlement, we will remain
liable for any taxes on transfers for our account, and for our proportionate
share (based upon our underwriting obligation) of all expenses and liabilities
which may be incurred by or for the accounts of the Underwriters.
11. Default by Underwriters. Default by one or more Underwriters hereunder
or under the Underwriting Agreement will not release the other Underwriters from
their obligations or affect the liability of any defaulting Underwriter to the
other Underwriters for damages resulting from such default. If one or more
Underwriters default under the Underwriting Agreement, you may arrange for the
purchase by others, including nondefaulting Underwriters, of Securities not
taken up by the defaulting Underwriter or Underwriters.
12. Position of Representatives. You will be under no liability to us for
any act or omission except for obligations expressly assumed by you herein, and
no obligations on your part will be implied or inferred herefrom. Your authority
hereunder and under the Underwriting Agreement may be exercised by you jointly
or by PWI. The rights and liabilities of the
6
<PAGE> 7
Underwriters are several and not joint, and nothing will constitute the
Underwriters a partnership, association or separate entity.
If for Federal income tax purposes the Underwriters should be deemed to
constitute a partnership then each Underwriter elects to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code
of 1954, as amended. You, as Representatives of the several Underwriters, are
authorized, in your discretion, to execute on behalf of the Underwriters such
evidence of such election as may be required by the Internal Revenue Service.
13. Indemnification. We will indemnify and hold harmless each other
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act to the extent and upon the terms
upon which each Underwriter agrees to indemnify the Company and any other Seller
in the Underwriting Agreement.
14. Contribution. Each Underwriter (including you) will pay upon your
request, as contribution, its proportionate share, based upon its underwriting
obligation, of any losses, claims, damages or liabilities, joint or several,
paid or incurred by any Underwriter to any person other than an Underwriter,
arising out of or based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any related preliminary prospectus or any
other selling or advertising material approved by you for use by the
Underwriters in connection with the sale of the Securities, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading (other than an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by an Underwriter specifically for use therein); and will pay such
proportionate share of any legal or other expenses reasonably incurred by you or
with your consent in connection with investigating or defending against any such
loss, claim, damage or liability, or any action or proceeding (including any
action or proceeding brought by a governmental or regulatory body) in respect
thereof. In determining the amount of any Underwriter's obligation under this
Section, appropriate adjustment may be made by you to reflect any amounts
received by any one or more Underwriters in respect of such claim from the
Company or any other Seller pursuant to the Underwriting Agreement or otherwise.
There shall be credited against any amount paid or payable by us pursuant to
this Section any loss, damage, liability or expense which is incurred by us as a
result of any such claim asserted against us, and if such loss, claim, damage,
liability or expense is incurred by us subsequent to any payment by us pursuant
to this Section, appropriate provision shall be made to effect such credit, by
refund or otherwise. If any such claim is asserted, you may take such action in
connection therewith as you deem necessary or desirable, including retention of
counsel for the Underwriters, and in your discretion separate counsel for any
particular Underwriter or group of Underwriters, and the fees and disbursements
of any counsel so retained by you shall be included in the amounts payable
pursuant to this Section. In determining amounts payable pursuant to this
Section, any loss, claim, damage, liability or expense incurred by any person
controlling any Underwriter within the meaning of Section 15 of the Securities
Act which has been incurred by reason of such control relationship shall be
deemed to have been incurred by such Underwriter.
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<PAGE> 8
Any Underwriter may elect to retain at its own expense its own counsel. You may
settle or consent to the settlement of any such claim, on advice of counsel
retained by you, with the approval of a majority in interest of the
Underwriters. Whenever you receive notice of the assertion of any claim to which
the provisions of this Section would be applicable, you will give prompt notice
thereof to each Underwriter. You will also furnish each Underwriter with
periodic reports, at such times as you deem appropriate, as to the status of
such claim and the action taken by you in connection therewith. If any
Underwriter or Underwriters default in their obligation to make any payments
under this Section, each nondefaulting Underwriter shall be obligated to pay its
proportionate share of all defaulted payments, based upon such Underwriter's
underwriting obligation as related to the underwriting obligations of all
nondefaulting Underwriters.
15. Reports and Blue Sky Matters. We authorize you to file with the
Securities and Exchange Commission and any other governmental agency any reports
required in connection with any transactions effected by you for our account
pursuant to this Agreement, and we will furnish any information needed for such
reports. If you effect stabilizing purchases pursuant to Section 7, you will
notify us promptly of the initiation and termination thereof. If stabilization
is effected we will file with you, c/o PWI, not later than the fifth full
business day following the termination of stabilization, any report required to
be filed pursuant to Rule 17a-2 under the Exchange Act. You will not have any
responsibility with respect to the right of any Underwriter or other person to
sell the Securities in any jurisdiction, notwithstanding any information you may
furnish in that connection.
16. Representations and Agreements. (a) You represent that you are a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"), and we represent that we are either a member in good standing of
the NASD or a foreign dealer not eligible for membership. If we are such a
member we agree that in making sale of the Securities we will comply with all
applicable rules of the NASD, including, without limitation, the NASD's
interpretation with Respect to Free-Riding and Withholding and Section 24 of
Article III of the Rules of Fair Practice. If we are such a foreign dealer, we
agree not to offer or sell any Securities in the United States of America except
through you and in making sales of Securities outside the United States of
America we agree to comply as though we were a member with such interpretation
and Sections 8, 24 and 36 of Article III of the NASD's Rules of Fair Practice
and to comply with Section 25 of such Article III as it applies to a nonmember
broker or dealer in a foreign country.
(b) We understand that it is our responsibility to examine the
Registration Statement, the Prospectus, any amendment or supplement thereto
relating to the offering of the Securities, any preliminary prospectus and the
material, if any, incorporated by reference therein and we will familiarize
ourselves with the terms of the Securities and the other terms of the offering
thereof which are to be reflected in the Prospectus and the Written
Communication with respect thereto. You are authorized, with the approval of
counsel for the Underwriters, to approve on our behalf any amendments or
supplements to the Registration Statement or the Prospectus.
(c) We confirm that the information that we have given or are deemed to
have given in response to the Master Underwriters' Questionnaire attached as
Exhibit A hereto (which
8
<PAGE> 9
information has been furnished to the Company for use in the Registration
Statement or the Prospectus) is correct. We will notify you immediately of any
development before the termination of this Agreement under Section 9 as to the
offering of the Securities which makes untrue or incomplete any information that
we have given or are deemed to have given in response to the Master
Underwriters' Questionnaire.
(d) Unless we have promptly notified you in writing otherwise, our name as
it should appear in the Prospectus and our address are set forth on the
signature page hereof.
(e)(i) If the Securities are being registered under the Securities Act, we
represent that we are familiar with Rule 15c2-8 under the Exchange Act
relating to the distribution of preliminary and final prospectuses and
agree that we will comply therewith; we agree to keep an accurate record of
the distribution (including dates, number of copies and persons to whom
sent) by us of copies of the Registration Statement, the Prospectus or any
preliminary prospectus (or any amendment or supplement to any thereof), and
promptly upon request by you, to bring all subsequent changes to the
attention of anyone to whom such material shall have been distributed; and
we agree to furnish to persons who receive a confirmation of sale a copy of
the Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under the
Securities Act.
(ii) If the Securities will not be registered under the Securities
Act, we agree that we will deliver all preliminary and final offering
circulars required for compliance with the applicable laws and regulations
governing the use and distribution of offering circulars by underwriters,
and, to the extent consistent with such laws and regulations, we confirm
that we have delivered and agree that we will deliver all preliminary and
final offering circulars which would be required if the provisions of Rule
15c2-8 under the Exchange Act applied to this offering.
(f) If the Securities are being registered under the Securities Act, we
agree that, if we are advised by you that the Company was not, immediately prior
to the filing of the Registration Statement, subject to the requirements of
Section 13(a) or 15(d) of the Exchange Act, we will not, without your consent,
sell any of the Securities to an account over which we exercise discretionary
authority.
17. Miscellaneous. (a) This Agreement may be terminated by either party
hereto upon five business days' written notice to the other party; provided that
with respect to any offering of Securities for which a Written Communication was
sent by you and accepted by us prior to such notice, this Agreement shall remain
in full force and effect as to such offering and shall terminate with respect to
such offering in accordance with the provisions of Section 9. This Agreement may
be supplemented or amended by you by written notice thereof to us, and any such
supplement or amendment to this Agreement shall be effective with respect to any
offering of securities to which this Agreement applies after the date of such
supplement or amendment. Each reference to "this Agreement" herein shall, as
appropriate, be to this Agreement as so amended and supplemented.
9
<PAGE> 10
(b) This Agreement and the terms and conditions set forth herein with
respect to any offering of Securities together with such supplementary terms and
conditions with respect to such offering as may be contained in any Written
Communication from you to us in connection therewith shall be governed by, and
construed in accordance with, the laws of the State of New York.
Very truly yours,
---------------------------------------
(Name of Firm)
by
------------------------------------
Confirmed, as of the date first
above written.
PAINEWEBBER INCORPORATED,
by
------------------------------
Vice President
10
<PAGE> 11
EXHIBIT A
PaineWebber Incorporated
MASTER UNDERWRITERS' QUESTIONNAIRE
The terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Amended and Restated Master Agreement Among Underwriters
dated June 11, 1984, between you and PaineWebber Incorporated ("PWI"). Reference
will be made to this Master Underwriters' Questionnaire in each Written
Communication described in Section 1 of the Amended and Restated Master
Agreement Among Underwriters received by you from PWI in connection with
offerings of securities in which PWI is acting as Representative or the manager
of the Representatives of the several Underwriters. Your telegraphic acceptance
of any such Written Communication should respond to this Master Underwriters'
Questionnaire.
Except as indicated in your telegraphic acceptance of our Written
Communication with respect to the Securities:
(1) neither you nor any of your directors, officers, partners or branch
managers has (nor have you or they had within the last three years) a
material relationship (as "material" is defined in Regulation C under the
Securities Act) with the Company or its parent (if any), nor are you an
affiliate of (within the meaning of the By-laws of the NASD), controlled
by, controlling or under common control with the Company;
(2) neither you nor any of your partners, officers, directors or branch
managers, separately or as a group, owns of record or beneficially more
than 5% of any class of voting securities of the Company or its parent (if
any);
(3) if the Securities are to be issued under an indenture to be qualified
under the Trust Indenture Act of 1939;
(a) neither you nor any of your directors, officers or partners is an
affiliate (as defined in Rule 0-2 under the Trust Indenture Act of 1939) of
the Trustee, or its parent (if any) and neither the Trustee nor its parent
(if any) nor any of their directors or executive officers is a director,
officer, partner, employee, appointee or representative of yours;
(b) neither you nor any of your directors, partners or executive
officers, separately or as a group, owns beneficially more than 1% of any
class of voting securities of the Trustee or its parent (if any); and
(c) if you are a corporation, you do not have outstanding nor have you
assumed or guaranteed any securities otherwise than in your corporate name,
and neither the Trustee nor its parent (if any) is a holder of such
securities.
<PAGE> 12
(4) other than as is, or is to be, stated in the Registration Statement,
the PWI Amended and Restated Master Agreement Among Underwriters, the PWI
Amended and Restated Master Selected Dealer Agreement, or the Underwriting
Agreement relating to the proposed offering, you do not know of or have
reason to believe that (a) there are any discounts or commissions to be
allowed or paid to underwriters or any other items that would be deemed by
the NASD to constitute underwriting compensation for purposes of the NASD's
Rules of Fair Practice, (b) there are any discounts or commissions to be
allowed or paid to dealers, including all cash, securities, contracts, or
other considerations to be received by any dealer in connection with the
sale of the Securities, (c) there is an intention to over-allot or (d) the
price of any security may be stabilized to facilitate the offering of the
Securities;
(5) your proposed commitment to purchase Securities will not result in a
violation of the financial responsibility requirements of Section 15(c)(3)
of the Exchange Act or the rules and regulations thereunder, including Rule
15c3-1, or any provisions of the applicable rules of the NASD or of any
securities exchange to which you are subject or any restrictions imposed
upon you by the NASD or any such exchange;
(6) neither you nor any related person (as defined by the NASD) has (a)
purchased any warrants, options or other securities of the Company within
the preceding 12 months or (b) had any other dealings with the Company
within the preceding 12 months as to which documents or other information
is required to be furnished to the NASD, and, except as stated in the
Registration Statement, you have no knowledge of any private placement of
the Company's Securities within the preceding 18 months;
(7) you have not prepared nor had prepared for you any report or
memorandum for external use in connection with the proposed offering of the
Securities, and if the Registration Statement is on Form S-1, you have not
prepared any engineering, management or similar reports or memoranda
relating to broad aspects of the business, operations or products of the
Company within the past 12 months (except for reports solely comprised of
recommendations to buy, sell or hold the securities of the Company, unless
such recommendations have changed within the past six months). (If any such
report or memorandum has been prepared furnish to PWI (a) four copies
thereof and (b) a statement as to the actual or proposed use, identifying
(i) each class of persons (institutional mailing lists, retail clients,
etc.) who have received or will receive the report or memorandum, (ii) the
number of copies distributed to each such class and (iii) the period of
distribution.);
(8) if the Written Communication states that the Company is subject to
regulation under the Public Utility Holding Company Act of 1935 (the
"Holding Company Act"), you are not a "holding company", or an "affiliate",
or a "subsidiary company" of a "public utility company" or "holding
company", each as defined in the Holding Company Act; and
<PAGE> 13
(9) if the Written Communication states that the Company is subject to
regulation under the Holding Company Act, to the best of your knowledge,
you are not a party to any proceeding being conducted by the Securities and
Exchange Commission pursuant to any of the Acts administered by it, which
is required to be disclosed in the Registration Statement or Prospectus or
which would disqualify you from purchasing the Securities.
<PAGE> 1
Exhibit 99.(h)(3)
AMENDED AND RESTATED MASTER SELECTED DEALER AGREEMENT
June 11, 1984
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Gentlemen:
1. General. We understand that PaineWebber Incorporated ("PW") is
entering into this Agreement with us and other firms who may be offered the
right to purchase as principal a portion of securities being distributed to the
public. The terms and conditions of this Agreement shall be applicable to any
public offering of securities ("Securities") wherein PW (acting for its own
account or for the account of any underwriting or similar group or syndicate) is
responsible for managing or otherwise implementing the sale of the Securities to
selected dealers ("Selected Dealers") and has expressly informed us that such
terms and conditions shall be applicable. Any such offering of Securities to us
as a Selected Dealer is hereinafter called an "Offering". In the case of any
Offering in which you are acting for the account of any underwriting or similar
group or syndicate ("Underwriters"), the terms and conditions of this Agreement
shall be for the benefit of, and binding upon, such Underwriters, including, in
the case of any Offering in which you are acting with others as representatives
of Underwriters, such other representatives. The term "preliminary prospectus"
means, in the case of an Offering registered under the Securities Act of 1933
(the "Securities Act"), any preliminary prospectus relating to an Offering of
Securities or any preliminary prospectus supplement together with a prospectus
relating to an Offering of Securities and, in the case of an Offering not
registered under the Securities Act, any preliminary offering circular relating
to an Offering of Securities or any preliminary offering circular supplement
together with an offering circular relating to an Offering of Securities; the
term "Prospectus" means in the case of an Offering registered under the
Securities Act of 1933 (the "Securities Act"), the prospectus, together with the
final prospectus supplement, if any, relating to such Offering of Securities,
filed pursuant to Rule 424(b) or Rule 424(c) under the Securities Act and, in
the case of an Offering not registered under the Securities Act, the final
offering circular, including any supplements, relating to such Offering of
Securities.
2. Conditions of Offering; Acceptance and Purchase. Any Offering will be
subject to delivery of the Securities and their acceptance by you and any other
Underwriters may be subject to the approval of all legal matters by counsel and
the satisfaction of other conditions, and may be made on the basis of
reservation of Securities or an allotment against subscription. You will advise
us by telegram, telex or other form of written communication ("Written
Communication") of the particular method and supplementary terms and conditions
(including, without limitation, the information as to prices and offering date
referred to in Section 3(b)) of any Offering in which we are invited to
participate. To the extent such supplementary terms and conditions are
inconsistent with any provision herein,
<PAGE> 2
such terms and conditions shall supersede any such provision. Unless otherwise
indicated in any such Written Communication, acceptances and other
communications by us with respect to any Offering should be sent to PaineWebber
Incorporated, 1285 Avenue of the Americas, New York, New York 10019. You reserve
the right to reject any acceptance in whole or in part. Payment for Securities
purchased by us is to be made at such office as you may designate, at the public
offering price, or, if you shall so advise us, at such price less the concession
to dealers or at the price set forth or indicated in a Written Communication, on
such date as you shall determine, on one day's prior notice to us, by certified
or official bank check in New York Clearing House funds payable to the order of
PaineWebber Incorporated, against delivery of certificates evidencing such
Securities. If payment is made for Securities purchased by us at the public
offering price, the concession to which we shall be entitled will be paid to us
upon termination of the provisions of Section 3(b) with respect to such
Securities.
Unless we promptly give you written instructions otherwise, if transactions
in the Securities may be settled through the facilities of The Depository Trust
Company, payment for and delivery of Securities purchased by us will be made
through such facilities if we are a member, or if we are not a member,
settlement may be made through our ordinary correspondent who is a member.
3. Representations, Warranties and Agreements. (a) Prospectuses. You
shall provide us with such number of copies of each preliminary prospectus, the
Prospectus and any supplement thereto relating to each Offering as we may
reasonably request. If the Securities will be registered under the Securities
Act, we represent that we are familiar with Rule 15c2-8 under the Exchange Act
relating to the distribution of preliminary and final prospectuses and agree
that we will comply therewith; we agree to keep an accurate record of our
distribution (including dates, number of copies and persons to whom sent) of
copies of the Prospectus or any preliminary prospectus (or any amendment or
supplement to any thereof), and promptly upon request by you, to bring all
subsequent changes to the attention of anyone to whom such material shall have
been furnished; and we agree to furnish to persons who receive a confirmation of
sale a copy of the Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under
the Securities Act. If the Securities will not be registered under the
Securities Act, we agree that we will deliver all preliminary and final offering
circulars required for compliance with the applicable laws and regulations
governing the use and distribution of the offering circulars by underwriters,
and, to the extent consistent with such laws and regulations, we confirm that we
have delivered and agree that we will deliver all preliminary and final offering
circulars which would be required if the provisions of Rule 15c2-8 under the
Exchange Act applied to this offering. We agree that in purchasing Securities in
an Offering we will rely upon no statements whatsoever, written or oral, other
than the statements in the Prospectus delivered to us by you. We will not be
authorized by the issuer or other seller of Securities offered pursuant to a
Prospectus or by any Underwriters to give any information or to make any
representation not contained in the Prospectus in connection with the sale of
such Securities.
2
<PAGE> 3
(b) Offer and Sale of the Public. With respect to any Offering of
Securities, you will inform us by a Written Communication of the public offering
price, the selling concession, the reallowance (if any) to dealers and the time
when we may commence selling Securities to the public. After such public
offering has commenced, you may change the public offering price, the selling
concession and the reallowance to dealers. With respect to each Offering of
Securities, until the provisions of this Section 3(b) shall be terminated
pursuant to Section 4, we agree to offer Securities to the public only at the
public offering price, except that if a reallowance is in effect, a reallowance
from the public offering price not in excess of such reallowance may be allowed
as consideration for services rendered in distribution to dealers who are
actually engaged in the investment banking or securities business, who execute
the written agreement prescribed by Section 24(c) of Article III of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. (the
"NASD"), and who are either members in good standing of the NASD or foreign
brokers or dealers not eligible for membership in the NASD who represent to us
that they will promptly reoffer such Securities at the public offering price and
will abide by the conditions with respect to foreign brokers and dealers set
forth in Section 3(e).
(c) Stabilization and Over-Allotment. You may, with respect to any
Offering, be authorized to over-allot in arranging sales to Selected Dealers, to
purchase and sell Securities, any other securities of the issuer of the
Securities of the same class and series and any other securities of such issuer
that you may designate for long or short account and to stabilize or maintain
the market price of the Securities. We agree to advise you from time to time
upon request, prior to the termination of the provisions of Section 3(b) with
respect to any Offering, of the amount of Securities purchased by us hereunder
remaining unsold and we will, upon your request, sell to you, for the accounts
of the Underwriters, such amount of Securities as you may designate, at the
public offering price thereof less an amount to be determined by you not in
excess of the concession to dealers. In the event that prior to the later of (i)
the termination of the provisions of Section 3(b) with respect to any Offering,
or (ii) the covering by you of any short position created by you in connection
with such Offering for your account or the account of one or more Underwriters,
you purchase or contract to purchase for the account of any of the Underwriters,
in the open market or otherwise, any Securities theretofore delivered to us, you
reserve the right to withhold the above-mentioned concession to dealers on such
Securities if sold to us at the public offering price, or if such concession has
been allowed to us through our purchase at a net price, we agree to repay such
concession upon your demand, plus in each case any taxes on redelivery,
commissions, accrued interest and dividends paid in connection with such
purchase or contract to purchase.
(d) Open Market Transactions. We agree not to bid for, purchase, attempt
to purchase, or sell, directly or indirectly, any Securities, any other
securities of the issuer of the Securities of the same class and series or any
other securities of such issuer as you may designate, except as brokers pursuant
to unsolicited orders and as otherwise provided in this Agreement. If the
Securities are common stock or securities convertible into common stock, we
agree not to effect, or attempt to induce others to effect, directly or
indirectly, any transactions in or relating to put or call options on any stock
of such issuer, except to the
3
<PAGE> 4
extent permitted by Rule 10b-6 under the Exchange Act as interpreted by the
Securities and Exchange Commission. An opening uncovered writing transaction in
options to acquire Securities for our account or for the account of any customer
shall be deemed, for purposes of the preceding sentence, to be a transaction
effected by us in or relating to put or call options on stock of the Company not
permitted by Rule 10b-6. The term "opening uncovered writing transaction" means
an opening sale transaction where the seller intends to become a writer of an
option to purchase stock which it does not own or have the right to acquire upon
exercise of conversion or option rights.
(e) NASD. We represent that we are actually engaged in the investment
banking or securities business and we are either a member in good standing of
the NASD, or, if not such a member, a foreign dealer not eligible for
membership. If we are such a member we agree that in making sales of the
Securities we will comply with all applicable rules of the NASD, including,
without limitation, the NASD's Interpretation with Respect to Fee-Riding and
Withholding and Section 24 of Article III of the Rules of Fair Practice. If we
are such a foreign dealer, we agree not to offer or sell any Securities in the
United States of America except through you and in making sales of Securities
outside the United States of America we agree to comply as though we were a
member with such Interpretation and Sections 8.24 and 36 of Article III of the
NASD's Rules of Fair Practice and to comply with Section 25 of such Article III
as it applies to a nonmember broker or dealer in a foreign country.
(f) Relationship among Underwriters and Selected Dealers. You may buy
Securities from or sell Securities to any Underwriter or Selected Dealer and,
with your consent, the Underwriters (if any) and the Selected Dealers may
purchase Securities from and sell Securities to each other at the public
offering price less all or any part of the concession. We are not authorized to
act as agent for you or any Underwriter or the issuer or other seller of any
Securities in offering Securities to the public or otherwise. Nothing contained
herein or in any Written Communication from you shall constitute the Selected
Dealers partners with you or any Underwriter or with one another. Neither you
nor any Underwriter shall be under any obligation to us except for obligations
assumed hereby or in any Written Communication from you in connection with any
Offering. In connection with any Offering, we agree to pay our proportionate
share of any claim, demand or liability asserted against us, and the other
Selected Dealers or any of them, or against you or the Underwriters, if any,
based on any claim that such Selected Dealers or any of them constitute an
association, unincorporated business or other separate entity, including in each
case our proportionate share of any expense incurred in defending against any
such claim, demand or liability.
(g) Blue Sky Laws. Upon application to you, you will inform us as to the
jurisdictions in which you believe the Securities have been qualified for sale
under the respective securities of "blue sky" laws of such jurisdictions. We
understand and agree that compliance with the securities or "blue sky" laws in
each jurisdiction in which we shall offer or sell any of the Securities shall be
our sole responsibility and that you assume no responsibility or obligations as
to the eligibility of the Securities for sale or our right to sell the
Securities in any jurisdiction.
4
<PAGE> 5
(h) Compliance with Law. We agree that in selling Securities pursuant to
any Offering (which agreement shall also be for the benefit of the issuer or
other seller of such Securities) we will comply with the applicable provisions
of the Securities Act and the Exchange Act, the applicable rules and regulations
of the Securities and Exchange Commission thereunder, the applicable rules and
regulations of the NASD and the applicable rules and regulations of any
securities exchange having jurisdiction over the Offering. You shall have full
authority to take such action as you may deem advisable in respect of all
matters pertaining to any Offering. Neither you nor any Underwriter shall be
under any liability to us, except for lack of good faith and for obligations
expressly assumed by you in this Agreement; provided, however, that nothing in
this sentence shall be deemed to relieve you from any liability imposed by the
Securities Act.
4. Termination; Supplements and Amendments. This agreement may be
terminated by either party hereto upon five business days' written notice to the
other party; provided that with respect to any Offering for which a Written
Communication was sent and accepted prior to such notice, this Agreement as it
applies to such Offering shall remain in full force and effect and shall
terminate with respect to such Offering in accordance with the last sentence of
this Section. This Agreement may be supplemented or amended by you by written
notice thereof to us, and any such supplement or amendment to this Agreement
shall be effective with respect to any Offering to which this Agreement applies
after the date of such supplement or amendment. Each reference to "this
Agreement" herein shall, as appropriate, be to this Agreement as so amended and
supplemented. The terms and conditions set forth in Sections 3(b) and (d) with
regard to any Offering will terminate at the close of business on the thirtieth
day after the date of the initial public offering of the Securities to which
such Offering relates, but such terms and conditions, upon notice to us, may be
terminated by you at any time.
5. Successors and Assigns. This Agreement shall be binding on, and inure
to the benefit of, the parties hereto and other persons specified or indicated
in Section 1, and the respective successors and assigns of each of them.
6. Governing Law. This Agreement and the terms and conditions set forth
herein with respect to any Offering together with such supplementary terms and
conditions with respect to such Offering as may be contained in any Written
Communication from you to us in connection therewith shall be governed by, and
construed in accordance with, the laws of the State of New York.
By signing this Agreement we confirm that our subscription to, or our
acceptance of any reservation of, any Securities pursuant to an Offering shall
constitute (i) acceptance of and agreement to other terms and conditions of this
Agreement (as supplemented and amended pursuant to Section 4) together with and
subject to any supplementary terms and conditions contained in any Written
Communication from you in connection with such Offering, all of which shall
constitute a binding agreement between us and you, individually or as
representative of any Underwriters, (ii) confirmation that our representations
and warranties set forth in Section 3 are true and correct at that time and
(iii) confirmation that
5
<PAGE> 6
our agreements set forth in Sections 2 and 3 have been and will be fully
performed by us to the extent and at the times required thereby.
Very truly yours,
-------------------------------------
(Name of Firm)
by
-----------------------------------
Confirmed, as of the date first
above written.
PAINEWEBBER INCORPORATED.
by
-------------------------------
Vice President
<PAGE> 1
EATON VANCE MUNICIPAL INCOME TRUST
Exhibit 99.(j)
December 21, 1998
Eaton Vance Municipal Income Trust hereby adopts and agrees to become a party to
the attached Master Custodian Agreement between the Eaton Vance Group of Funds
and Investors Bank & Trust Company.
EATON VANCE MUNICIPAL INCOME TRUST
By: /s/ Thomas J. Fetter
-----------------------------
Thomas J. Fetter
President
Accepted and agreed to:
Investors Bank & Trust Company
By: /s/ Andrew M. Nesvet
----------------------------
Andrew M. Nesvet
Director, Client Management
<PAGE> 2
MASTER CUSTODIAN AGREEMENT
between
EATON VANCE GROUP OF FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Definitions....................................................... 1-2
2. Employment of Custodian and Property to be held by it............. 2-3
3. Duties of the Custodian with Respect to
Property of the Fund.............................................. 3
A. Safekeeping and Holding of Property........................... 3
B. Delivery of Securities........................................ 3-6
C. Registration of Securities.................................... 6
D. Bank Accounts................................................. 6
E. Payments for Shares of the Fund............................... 6
F. Investment and Availability of Federal Funds.................. 6
G. Collections................................................... 7
H. Payment of Fund Moneys........................................ 8-9
I. Liability for Payment in Advance of
Receipt of Securities Purchased............................... 9
J. Payments for Repurchases of Redemptions
of Shares of the Fund......................................... 9-10
K. Appointment of Agents by the Custodian........................ 10
L. Deposit of Fund Portfolio Securities in Securities Systems.... 10-11
M. Deposit of Fund Commercial Paper in an Approved Book-Entry
System for Commercial Paper................................ 12-13
N. Segregated Account............................................ 13-14
O. Ownership Certificates for Tax Purposes....................... 14
P. Proxies....................................................... 14
Q. Communications Relating to Fund Portfolio Securities.......... 14
R. Exercise of Rights; Tender Offers............................ 14-15
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
S. Depository Receipts............................................. 15
T. Interest Bearing Call or Time Deposits.......................... 15
U. Options, Futures Contracts and Foreign Currency Transactions. 15-17
V. Actions Permitted Without Express Authority..................... 17
4. Duties of Bank with Respect to Books of Account and
Calculations of Net Asset Value..................................... 17
5. Records and Miscellaneous Duties.................................... 18
6. Opinion of Fund`s Independent Public Accountants.................... 18
7. Compensation and Expenses of Bank................................... 18
8. Responsibility of Bank.............................................. 18-19
9. Persons Having Access to Assets of the Fund......................... 19
10. Effective Period, Termination and Amendment; Successor Custodian.... 20
11. Interpretive and Additional Provisions.............................. 20
12. Notices............................................................. 21
13. Massachusetts Law to Apply.......................................... 21
14. Adoption of the Agreement by the Fund............................... 21
</TABLE>
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<PAGE> 5
MASTER CUSTODIAN AGREEMENT
This Agreement is made between each investment company advised by Eaton
Vance Management which has adopted this Agreement in the manner provided herein
and Investors Bank & Trust Company (hereinafter called "Bank", "Custodian" and
"Agent"), a trust company established under the laws of Massachusetts with a
principal place of business in Boston, Massachusetts.
Whereas, each such investment company is registered under the Investment
Company Act of 1940 and has appointed the Bank to act as Custodian of its
property and to perform certain duties as its Agent, as more fully hereinafter
set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Fund" shall mean the investment company which has adopted this
Agreement. If the Fund is a Massachusetts business trust, it may in the future
establish and designate other separate and distinct series of shares, each of
which may be called a "portfolio"; in such case, the term "Fund" shall also
refer to each such separate series or portfolio.
(b) "Board" shall mean the board of directors/trustees/managing general
partners/director general partners of the Fund, as the case may be.
(c) "The Depository Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(d) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Fund by the Board.
(e) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository BUT
ONLY if the Custodian has received a certified copy of a vote of the Board
approving such clearing agency as a securities depository for the Fund.
(f) "Federal Book-Entry System" shall mean the book-entry system referred
to in Rule 17f-4(b) under the Investment Company Act of 1940 for United States
and federal agency securities (i.e., as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart O).
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<PAGE> 6
(g) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in Rule 17f-4 under the
Investment Company Act of 1940 for foreign securities BUT ONLY if the Custodian
has received a certified copy of a vote of the Board approving such depository
or clearing agency as a foreign securities depository for the Fund.
(h) "Approved Book-Entry System for Commercial Paper" shall mean a system
maintained by the Custodian or by a subcustodian employed pursuant to Section 2
hereof for the holding of commercial paper in book-entry form BUT ONLY if the
Custodian has received a certified copy of a vote of the Board approving the
participation by the Fund in such system.
(i) The Custodian shall be deemed to have received "proper instructions" in
respect of any of the matters referred to in this Agreement upon receipt of
written or facsimile instructions signed by such one or more person or persons
as the Board shall have from time to time authorized to give the particular
class of instructions in question. Electronic instructions for the purchase and
sale of securities which are transmitted by Eaton Vance Management to the
Custodian through the Eaton Vance equity trading system and the Eaton Vance
fixed income trading system shall be deemed to be proper instructions; the Fund
shall cause all such instructions to be confirmed in writing. Different persons
may be authorized to give instructions for different purposes. A certified copy
of a vote of the Board may be received and accepted by the Custodian as
conclusive evidence of the authority of any such person to act and may be
considered as in full force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in terms and, where
appropriate, may be standing instructions. Unless the vote delegating authority
to any person or persons to give a particular class of instructions specifically
requires that the approval of any person, persons or committee shall first have
been obtained before the Custodian may act on instructions of that class, the
Custodian shall be under no obligation to question the right of the person or
persons giving such instructions in so doing. Oral instructions will be
considered proper instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be confirmed
in writing. The Fund authorizes the Custodian to tape record any and all
telephonic or other oral instructions given to the Custodian. Upon receipt of a
certificate signed by two officers of the Fund as to the authorization by the
President and the Treasurer of the Fund accompanied by a detailed description of
the communication procedures approved by the President and the Treasurer of the
Fund, "proper instructions" may also include communications effected directly
between electromechanical or electronic devices provided that the President and
Treasurer of the Fund and the Custodian are satisfied that such procedures
afford adequate safeguards for the Fund's assets. In performing its duties
generally, and more particularly in connection with the purchase, sale and
exchange of securities made by or for the Fund, the Custodian may take
cognizance of the provisions of the governing documents and registration
statement of the Fund as the same may from time to time be in effect (and votes,
resolutions or proceedings of the shareholders or the Board), but, nevertheless,
except as otherwise expressly provided herein, the Custodian may assume unless
and until notified in writing to the contrary that so-called proper instructions
received by it are not in conflict with or in any way contrary to any provisions
of such governing documents and registration statement, or votes, resolutions or
proceedings of the shareholders or the Board.
2. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby appoints and employs the Bank as its Custodian and Agent in
accordance with and subject to the provisions hereof, and the Bank hereby
accepts such appointment and employment. The Fund agrees to deliver to the
Custodian all securities, participation interests, cash and other assets owned
by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Fund from time to time, and the cash
-2-
<PAGE> 7
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held by the Fund and not delivered by
the Fund to the Custodian. The Fund will also deliver to the Bank from time to
time copies of its currently effective charter (or declaration of trust or
partnership agreement, as the case may be), by-laws, prospectus, statement of
additional information and distribution agreement with its principal
underwriter, together with such resolutions, votes and other proceedings of the
Fund as may be necessary for or convenient to the Bank in the performance of its
duties hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board of Directors. Any such subcustodian so
employed by the Custodian shall be deemed to be the agent of the Custodian, and
the Custodian shall remain primarily responsible for the securities,
participation interests, moneys and other property of the Fund held by such
subcustodian. Any foreign subcustodian shall be a bank or trust company which is
an eligible foreign custodian within the meaning of Rule 17f-5 under the
Investment Company Act of 1940, and the foreign custody arrangements shall be
approved by the Board of Directors and shall be in accordance with and subject
to the provisions of said Rule. For the purposes of this Agreement, any property
of the Fund held by any such subcustodian (domestic or foreign) shall be deemed
to be held by the Custodian under the terms of this Agreement.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
A. SAFEKEEPING AND HOLDING OF PROPERTY The Custodian shall keep safely all
property of the Fund and on behalf of the Fund shall from time to time receive
delivery of Fund property for safekeeping. The Custodian shall hold, earmark and
segregate on its books and records for the account of the Fund all property of
the Fund, including all securities, participation interests and other assets of
the Fund (1) physically held by the Custodian, (2) held by any subcustodian
referred to in Section 2 hereof or by any agent referred to in Paragraph K
hereof, (3) held by or maintained in The Depository Trust Company or in
Participants Trust Company or in an Approved Clearing Agency or in the Federal
Book-Entry System or in an Approved Foreign Securities Depository, each of which
from time to time is referred to herein as a "Securities System", and (4) held
by the Custodian or by any subcustodian referred to in Section 2 hereof and
maintained in any Approved Book-Entry System for Commercial Paper.
B. DELIVERY OF SECURITIES The Custodian shall release and deliver
securities or participation interests owned by the Fund held (or deemed to be
held) by the Custodian or maintained in a Securities System account or in an
Approved Book-Entry System for Commercial Paper account only upon receipt of
proper instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities or participation interests for the account
of the Fund, BUT ONLY against receipt of payment therefor; if delivery is made
in Boston or New York City, payment therefor shall be made in accordance with
generally accepted clearing house procedures or by use of Federal Reserve Wire
System procedures; if delivery is made elsewhere payment therefor shall be in
accordance with the then current "street delivery" custom or in accordance with
such procedures agreed to in writing from time to time by the parties hereto; if
the sale is effected through a Securities System, delivery and payment therefor
shall be made in accordance with the provisions of Paragraph L hereof; if the
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<PAGE> 8
sale of commercial paper is to be effected through an Approved Book-Entry System
for Commercial Paper, delivery and payment therefor shall be made in accordance
with the provisions of Paragraph M hereof; if the securities are to be sold
outside the United States, delivery may be made in accordance with procedures
agreed to in writing from time to time by the parties hereto; for the purposes
of this subparagraph, the term "sale" shall include the disposition of a
portfolio security (i) upon the exercise of an option written by the Fund and
(ii) upon the failure by the Fund to make a successful bid with respect to a
portfolio security, the continued holding of which is contingent upon the making
of such a bid;
2) Upon the receipt of payment in connection with any repurchase agreement
or reverse repurchase agreement relating to such securities and entered into by
the Fund;
3) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
4) To the issuer thereof or its agent when such securities or participation
interests are called, redeemed, retired or otherwise become payable; PROVIDED
that, in any such case, the cash or other consideration is to be delivered to
the Custodian or any subcustodian employed pursuant to Section 2 hereof;
5) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee of the Custodian or into the name or
nominee name of any agent appointed pursuant to Paragraph K hereof or into the
name or nominee name of any subcustodian employed pursuant to Section 2 hereof;
or for exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units; PROVIDED that,
in any such case, the new securities or participation interests are to be
delivered to the Custodian or any subcustodian employed pursuant to Section 2
hereof;
6) To the broker selling the same for examination in accordance with the
"street delivery" custom; PROVIDED that the Custodian shall adopt such
procedures as the Fund from time to time shall approve to ensure their prompt
return to the Custodian by the broker in the event the broker elects not to
accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the Issuer of such securities, or pursuant to provisions for
conversion of such securities, or pursuant to any deposit agreement; PROVIDED
that, in any such case, the new securities and cash, if any, are to be delivered
to the Custodian or any subcustodian employed pursuant to Section 2 hereof;
-4-
<PAGE> 9
8) In the case of warrants, rights or similar securities, the surrender
thereof in connection with the exercise of such warrants, rights or similar
securities, or the surrender of interim receipts or temporary securities for
definitive securities; PROVIDED that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian or any subcustodian employed
pursuant to Section 2 hereof;
9) For delivery in connection with any loans of securities made by the Fund
(such loans to be made pursuant to the terms of the Fund's current registration
statement), BUT ONLY against receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities; except that in connection with any securities loans for which
collateral is to be credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of Treasury, the Custodian will not be held
liable or responsible for the delivery of securities loaned by the Fund prior to
the receipt of such collateral;
10) For delivery as security in connection with any borrowings by the Fund
requiring a pledge or hypothecation of assets by the Fund (if then permitted
under circumstances described in the current registration statement of the
Fund), provided, that the securities shall be released only upon payment to the
Custodian of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, further securities
may be released for that purpose; upon receipt of proper instructions, the
Custodian may pay any such loan upon redelivery to it of the securities pledged
or hypothecated therefor and upon surrender of the note or notes evidencing the
loan;
11) When required for delivery in connection with any redemption or
repurchase of Shares of the Fund in accordance with the provisions of Paragraph
J hereof;
12) For delivery in accordance with the provisions of any agreement between
the Custodian (or a subcustodian employed pursuant to Section 2 hereof) and a
broker-dealer registered under the Securities Exchange Act of 1934 and, if
necessary, the Fund, relating to compliance with the rules of The Options
Clearing Corporation or of any registered national securities exchange, or of
any similar organization or organizations, regarding deposit or escrow or other
arrangements in connection with options transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian (or a subcustodian employed pursuant to Section 2
hereof), and a futures commissions merchant, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or of any contract market
or commodities exchange or similar organization, regarding futures margin
account deposits or payments in connection with futures transactions by the
Fund;
-5-
<PAGE> 10
14) For any other proper corporate purpose, BUT ONLY upon receipt of, in
addition to proper instructions, a certified copy of a vote of the Board
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made.
C. REGISTRATION OF SECURITIES Securities held by the Custodian (other than
bearer securities) for the account of the Fund shall be registered in the name
of the Fund or in the name of any nominee of the Fund or of any nominee of the
Custodian, or in the name or nominee name of any agent appointed pursuant to
Paragraph K hereof, or in the name or nominee name of any subcustodian employed
pursuant to Section 2 hereof, or in the name or nominee name of The Depository
Trust Company or Participants Trust Company or Approved Clearing Agency or
Federal Book-Entry System or Approved Book-Entry System for Commercial Paper;
provided, that securities are held in an account of the Custodian or of such
agent or of such subcustodian containing only assets of the Fund or only assets
held by the Custodian or such agent or such subcustodian as a custodian or
subcustodian or in a fiduciary capacity for customers. All certificates for
securities accepted by the Custodian or any such agent or subcustodian on behalf
of the Fund shall be in "street" or other good delivery form or shall be
returned to the selling broker or dealer who shall be advised of the reason
thereof.
D. BANK ACCOUNTS The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or order by
the Custodian acting in pursuant to the terms of this Agreement, and shall hold
in such account or accounts, subject to the provisions hereof, all cash received
by it from or for the account of the Fund other than cash maintained by the Fund
in a bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the Fund may be
deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as the Custodian may in its
discretion deem necessary or desirable; PROVIDED, however, that every such bank
or trust company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved in writing by
two officers of the Fund. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be subject to withdrawal only by the Custodian
in that capacity.
E. PAYMENT FOR SHARES OF THE FUND The Custodian shall make appropriate
arrangements with the Transfer Agent and the principal underwriter of the Fund
to enable the Custodian to make certain it promptly receives the cash or other
consideration due to the Fund for such new or treasury Shares as may be issued
or sold from time to time by the Fund, in accordance with the governing
documents and offering prospectus and statement of additional information of the
Fund. The Custodian will provide prompt notification to the Fund of any receipt
by it of payments for Shares of the Fund.
F. INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS Upon agreement between the
Fund and the Custodian, the Custodian shall, upon the receipt of proper
instructions, which may be continuing instructions when deemed appropriate by
the parties,
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<PAGE> 11
1) invest in such securities and instruments as may be set forth in such
instructions on the same day as received all federal funds received after a time
agreed upon between the Custodian and the Fund; and
2) make federal funds available to the Fund as of specified times agreed
upon from time to time by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are deposited into the Fund's
account.
G. COLLECTIONS The Custodian shall promptly collect all income and other
payments with respect to registered securities held hereunder to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall promptly collect all income and other payments with respect
to bearer securities if, on the date of payment by the issuer, such securities
are held by the Custodian or agent thereof and shall credit such income, as
collected, to the Fund's custodian account.
The Custodian shall do all things necessary and proper in connection with
such prompt collections and, without limiting the generality of the foregoing,
the Custodian shall
1) Present for payment all coupons and other income items requiring
presentations;
2) Present for payment all securities which may mature or be called,
redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the Fund, checks,
drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities System or in an
Approved Book-Entry System for Commercial Paper at the time funds become
available to the Custodian; in the case of securities maintained in The
Depository Trust Company funds shall be deemed available to the Fund not later
than the opening of business on the first business day after receipt of such
funds by the Custodian.
The Custodian shall notify the Fund as soon as reasonably practicable
whenever income due on any security is not promptly collected. In any case in
which the Custodian does not receive any due and unpaid income after it has made
demand for the same, it shall immediately so notify the Fund in writing,
enclosing copies of any demand letter, any written response thereto, and
memoranda of all oral responses thereto and to telephonic demands, and await
instructions from the Fund; the Custodian shall in no case have any liability
for any nonpayment of such income provided the Custodian meets the standard of
care set forth in Section 8 hereof. The Custodian shall not be obligated to take
legal action for collection unless and until reasonably indemnified to its
satisfaction.
The Custodian shall also receive and collect all stock dividends, rights
and other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
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<PAGE> 12
H. PAYMENT OF FUND MONEYS Upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out moneys of the Fund in the following cases only:
1) Upon the purchase of securities, participation interests, options,
futures contracts, forward contracts and options on futures contracts purchased
for the account of the Fund but only (a) against the receipt of
(i) such securities registered as provided in Paragraph C hereof or in
proper form for transfer or
(ii) detailed instructions signed by an officer of the Fund regarding the
participation interests to be purchased or
(iii) written confirmation of the purchase by the Fund of the options,
futures contracts, forward contracts or options on futures contracts
by the Custodian (or by a subcustodian employed pursuant to Section 2 hereof or
by a clearing corporation of a national securities exchange of which the
Custodian is a member or by any bank, banking institution or trust company doing
business in the United States or abroad which is qualified under the Investment
Company Act of 1940 to act as a custodian and which has been designated by the
Custodian as its agent for this purpose or by the agent specifically designated
in such instructions as representing the purchasers of a new issue of privately
placed securities); (b) in the case of a purchase effected through a Securities
System, upon receipt of the securities by the Securities System in accordance
with the conditions set forth in Paragraph L hereof; (c) in the case of a
purchase of commercial paper effected through an Approved Book-Entry System for
Commercial Paper, upon receipt of the paper by the Custodian or subcustodian in
accordance with the conditions set forth in Paragraph M hereof; (d) in the case
of repurchase agreements entered into between the Fund and another bank or a
broker-dealer, against receipt by the Custodian of the securities underlying the
repurchase agreement either in certificate form or through an entry crediting
the Custodian's segregated, non-proprietary account at the Federal Reserve Bank
of Boston with such securities along with written evidence of the agreement by
the bank or broker-dealer to repurchase such securities from the Fund; or (e)
with respect to securities purchased outside of the United States, in accordance
with written procedures agreed to from time to time in writing by the parties
hereto;
2) When required in connection with the conversion, exchange or surrender
of securities owned by the Fund as set forth in Paragraph B hereof;
3) When required for the redemption or repurchase of Shares of the Fund in
accordance with the provisions of Paragraph J hereof;
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<PAGE> 13
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
advisory fees, distribution plan payments, interest, taxes, management
compensation and expenses, accounting, transfer agent and legal fees, and other
operating expenses of the Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends or other distributions to holders of
Shares declared or authorized by the Board; and
6) For any other proper corporate purpose, BUT ONLY upon receipt of, in
addition to proper instructions, a certified copy of a vote of the Board,
specifying the amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom such payment is to be made.
I. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED In
any and every case where payment for purchase of securities for the account of
the Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions signed by two officers
of the Fund to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the securities had been
received by the Custodian; EXCEPT that in the case of a repurchase agreement
entered into by the Fund with a bank which is a member of the Federal Reserve
System, the Custodian may transfer funds to the account of such bank prior to
the receipt of (i) the securities in certificate form subject to such repurchase
agreement or (ii) written evidence that the securities subject to such
repurchase agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal Reserve
Bank of Boston or (iii) the safekeeping receipt, PROVIDED that such securities
have in fact been so transfered by book-entry and the written repurchase
agreement is received by the Custodian in due course; AND EXCEPT that if the
securities are to be purchased outside the United States, payment may be made in
accordance with procedures agreed to in writing from time to time by the parties
hereto.
J. PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND From such
funds as may be available for the purpose, but subject to any applicable votes
of the Board and the current redemption and repurchase procedures of the Fund,
the Custodian shall, upon receipt of written instructions from the Fund or from
the Fund's transfer agent or from the principal underwriter, make funds and/or
portfolio securities available for payment to holders of Shares who have caused
their Shares to be redeemed or repurchased by the Fund or for the Fund`s account
by its transfer agent or principal underwriter.
The Custodian may maintain a special checking account upon which special
checks may be drawn by shareholders of the Fund holding Shares for which
certificates have not been issued. Such checking account and such special checks
shall be subject to such rules and regulations as the Custodian and the Fund may
from time to time adopt. The Custodian or the Fund may suspend or terminate use
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<PAGE> 14
of such checking account or such special checks (either generally or for one or
more shareholders) at any time. The Custodian and the Fund shall notify the
other immediately of any such suspension or termination.
K. APPOINTMENT OF AGENTS BY THE CUSTODIAN The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company (PROVIDED such bank or trust company is itself qualified under the
Investment Company Act of 1940 to act as a custodian or is itself an eligible
foreign custodian within the meaning of Rule 17f-5 under said Act) as the agent
of the Custodian to carry out such of the duties and functions of the Custodian
described in this Section 3 as the Custodian may from time to time direct;
PROVIDED, however, that the appointment of any such agent shall not relieve the
Custodian of any of its responsibilities or liabilities hereunder, and as
between the Fund and the Custodian the Custodian shall be fully responsible for
the acts and omissions of any such agent. For the purposes of this Agreement,
any property of the Fund held by any such agent shall be deemed to be held by
the Custodian hereunder.
L. DEPOSIT OF FUND PORTFOLIO SECURITIES IN SECURITIES SYSTEMS The Custodian
may deposit and/or maintain securities owned by the Fund
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, and at all times
subject to the following provisions:
(a) The Custodian may (either directly or through one or more subcustodians
employed pursuant to Section 2 keep securities of the Fund in a Securities
System provided that such securities are maintained in a non-proprietary account
("Account") of the Custodian or such subcustodian in the Securities System which
shall not include any assets of the Custodian or such subcustodian or any other
person other than assets held by the Custodian or such subcustodian as a
fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by book-entry those
securities belonging to the Fund, and the Custodian shall be fully and
completely responsible for maintaining a recordkeeping system capable of
accurately and currently stating the Fund's holdings maintained in each such
Securities System.
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<PAGE> 15
(c) The Custodian shall pay for securities purchased in book-entry form for
the account of the Fund only upon (i) receipt of notice or advice from the
Securities System that such securities have been transferred to the Account, and
(ii) the making of any entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund only upon (i) receipt of notice or
advice from the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such transfer and payment for the account of the Fund.
Copies of all notices or advices from the Securities System of transfers of
securities for the account of the Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be promptly provided to the Fund at its
request. The Custodian shall promptly send to the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written advice or
notice of each such transaction, and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the Securities System
for the account of the Fund on the next business day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to the Securities
System's accounting system, system of internal accounting controls or procedures
for safeguarding securities deposited in the Securities System; the Custodian
shall promptly send to the Fund any report or other communication relating to
the Custodian's internal accounting controls and procedures for safeguarding
securities deposited in any Securities System; and the Custodian shall ensure
that any agent appointed pursuant to Paragraph K hereof or any subcustodian
employed pursuant to Section 2 hereof shall promptly send to the Fund and to the
Custodian any report or other communication relating to such agent's or
subcustodian's internal accounting controls and procedures for safeguarding
securities deposited in any Securities System. The Custodian's books and records
relating to the Fund's participation in each Securities System will at all times
during regular business hours be open to the inspection of the Fund's authorized
officers, employees or agents.
(e) The Custodian shall not act under this Paragraph L in the absence of
receipt of a certificate of an officer of the Fund that the Board has approved
the use of a particular Securities System; the Custodian shall also obtain
appropriate assurance from the officers of the Fund that the Board has annually
reviewed the continued use by the Fund of each Securities System, and the Fund
shall promptly notify the Custodian if the use of a Securities System is to be
discontinued; at the request of the Fund, the Custodian will terminate the use
of any such Securities System as promptly as practicable.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the Fund
resulting from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or subcustodians
or of any of its or their employees or from any failure of the Custodian or any
such agent or subcustodian to enforce effectively such rights as it may have
against the Securities System or any other person; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and to the
extent that the Fund has not been made whole for any such loss or damage.
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<PAGE> 16
M. DEPOSIT OF FUND COMMERCIAL PAPER IN AN APPROVED BOOK-ENTRY SYSTEM FOR
COMMERCIAL PAPER Upon receipt of proper instructions with respect to each issue
of direct issue commercial paper purchased by the Fund, the Custodian may
deposit and/or maintain direct issue commercial paper owned by the Fund in any
Approved Book-Entry System for Commercial Paper, in each case only in accordance
with applicable Securities and Exchange Commission rules, regulations, and
no-action correspondence, and at all times subject to the following provisions:
(a) The Custodian may (either directly or through one or more subcustodians
employed pursuant to Section 2) keep commercial paper of the Fund in an Approved
Book-Entry System for Commercial Paper, provided that such paper is issued in
book entry form by the Custodian or subcustodian on behalf of an issuer with
which the Custodian or subcustodian has entered into a book-entry agreement and
provided further that such paper is maintained in a non-proprietary account
("Account") of the Custodian or such subcustodian in an Approved Book-Entry
System for Commercial Paper which shall not include any assets of the Custodian
or such subcustodian or any other person other than assets held by the Custodian
or such subcustodian as a fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to commercial paper of the
Fund which is maintained in an Approved Book-Entry System for Commercial Paper
shall identify by book-entry each specific issue of commercial paper purchased
by the Fund which is included in the System and shall at all times during
regular business hours be open for inspection by authorized officers, employees
or agents of the Fund. The Custodian shall be fully and completely responsible
for maintaining a recordkeeping system capable of accurately and currently
stating the Fund's holdings of commercial paper maintained in each such System.
(c) The Custodian shall pay for commercial paper purchased in book-entry
form for the account of the Fund only upon contemporaneous (i) receipt of notice
or advice from the issuer that such paper has been issued, sold and transferred
to the Account, and (ii) the making of an entry on the records of the Custodian
to reflect such purchase, payment and transfer for the account of the Fund. The
Custodian shall transfer such commercial paper which is sold or cancel such
commercial paper which is redeemed for the account of the Fund only upon
contemporaneous (i) receipt of notice or advice that payment for such paper has
been transferred to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer or redemption and payment for the
account of the Fund. Copies of all notices, advices and confirmations of
transfers of commercial paper for the account of the Fund shall identify the
Fund, be maintained for the Fund by the Custodian and be promptly provided to
the Fund at its request. The Custodian shall promptly send to the Fund
confirmation of each transfer to or from the account of the Fund in the form of
a written advice or notice of each such transaction, and shall furnish to the
Fund copies of daily transaction sheets reflecting each day's transactions in
the System for the account of the Fund on the next business day.
(d) The Custodian shall promptly send to the Fund any report or other
communication received or obtained by the Custodian relating to each System's
accounting system, system of internal accounting controls or procedures for
safeguarding commercial paper deposited in the System; the Custodian shall
promptly send to the Fund any report or other communication relating to the
Custodian's internal accounting controls and procedures for safeguarding
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<PAGE> 17
commercial paper deposited in any Approved Book-Entry System for Commercial
Paper; and the Custodian shall ensure that any agent appointed pursuant to
Paragraph K hereof or any subcustodian employed pursuant to Section 2 hereof
shall promptly send to the Fund and to the Custodian any report or other
communication relating to such agent's or subcustodian's internal accounting
controls and procedures for safeguarding securities deposited in any Approved
Book-Entry System for Commercial Paper.
(e) The Custodian shall not act under this Paragraph M in the absence of
receipt of a certificate of an officer of the Fund that the Board has approved
the use of a particular Approved Book-Entry System for Commercial Paper; the
Custodian shall also obtain appropriate assurance from the officers of the Fund
that the Board has annually reviewed the continued use by the Fund of each
Approved Book-Entry System for Commercial Paper, and the Fund shall promptly
notify the Custodian if the use of an Approved Book-Entry System for Commercial
Paper is to be discontinued; at the request of the Fund, the Custodian will
terminate the use of any such System as promptly as practicable.
(f) The Custodian (or subcustodian, if the Approved Book-Entry System for
Commercial Paper is maintained by the subcustodian) shall issue physical
commercial paper or promissory notes whenever requested to do so by the Fund or
in the event of an electronic system failure which impedes issuance, transfer or
custody of direct issue commercial paper by book-entry.
(g) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the Fund
resulting from use of any Approved Book-Entry System for Commercial Paper by
reason of any negligence, misfeasance or misconduct of the Custodian or any of
its agents or subcustodians or of any of its or their employees or from any
failure of the Custodian or any such agent or subcustodian to enforce
effectively such rights as it may have against the System, the issuer of the
commercial paper or any other person; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to any
claim against the System, the issuer of the commercial paper or any other person
which the Custodian may have as a consequence of any such loss or damage if and
to the extent that the Fund has not been made whole for any such loss or damage.
N. SEGREGATED ACCOUNT The Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Custodian pursuant to Paragraph L hereof, (i) in accordance with the provisions
of any agreement among the Fund, the Custodian and any registered broker-dealer
(or any futures commission merchant), relating to compliance with the rules of
the Options Clearing Corporation and of any registered national securities
exchange (or of the Commodity Futures Trading Commission or of any contract
market or commodities exchange), or of any similar organization or
organizations, regarding escrow or deposit or other arrangements in connection
with transactions by the Fund, (ii) for purposes of segregating cash or U.S.
Government securities in connection with options purchased, sold or written by
the Fund or futures contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with the procedures required by
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<PAGE> 18
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in addition to
proper instructions, a certificate signed by two officers of the Fund, setting
forth the purpose such segregated account and declaring such purpose to be a
proper purpose.
O. OWNERSHIP CERTIFICATES FOR TAX PURPOSES The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
securities of the Fund held by it and in connection with transfers of
securities.
P. PROXIES The Custodian shall, with respect to the securities held by it
hereunder, cause to be promptly delivered to the Fund all forms of proxies and
all notices of meetings and any other notices or announcements or other written
information affecting or relating to the securities, and upon receipt of proper
instructions shall execute and deliver or cause its nominee to execute and
deliver such proxies or other authorizations as may be required. Neither the
Custodian nor its nominee shall vote upon any of the securities or execute any
proxy to vote thereon or give any consent or take any other action with respect
thereto (except as otherwise herein provided) unless ordered to do so by proper
instructions.
Q. COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES The Custodian shall
deliver promptly to the Fund all written information (including, without
limitation, pendency of call and maturities of securities and participation
interests and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from issuers
and other persons relating to the securities and participation interests being
held for the Fund. With respect to tender or exchange offers, the Custodian
shall deliver promptly to the Fund all written information received by the
Custodian from issuers and other persons relating to the securities and
participation interests whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer.
R. EXERCISE OF RIGHTS; TENDER OFFERS In the case of tender offers, similar
offers to purchase or exercise rights (including, without limitation, pendency
of calls and maturities of securities and participation interests and
expirations of rights in connection therewith and notices of exercise of call
and put options and the maturity of futures contracts) affecting or relating to
securities and participation interests held by the Custodian under this
Agreement, the Custodian shall have responsibility for promptly notifying the
Fund of all such offers in accordance with the standard of reasonable care set
forth in Section 8 hereof. For all such offers for which the Custodian is
responsible as provided in this Paragraph R, the Fund shall have responsibility
for providing the Custodian with all necessary instructions in timely fashion.
Upon receipt of proper instructions, the Custodian shall timely deliver to the
issuer or trustee thereof, or to the agent of either, warrants, puts, calls,
rights or similar securities for the purpose of being exercised or sold upon
proper receipt therefor and upon receipt of assurances satisfactory to the
Custodian that the new securities and cash, if any, acquired by such action are
to be delivered to the Custodian or any subcustodian employed pursuant to
Section 2 hereof. Upon receipt of proper instructions, the Custodian shall
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<PAGE> 19
timely deposit securities upon invitations for tenders of securities upon proper
receipt therefor and upon receipt of assurances satisfactory to the Custodian
that the consideration to be paid or delivered or the tendered securities are to
be returned to the Custodian or subcustodian employed pursuant to Section 2
hereof. Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary by proper instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall thereafter promptly notify the Fund in writing of such
action.
S. DEPOSITORY RECEIPTS The Custodian shall, upon receipt of proper
instructions, surrender or cause to be surrendered foreign securities to the
depository used by an issuer of American Depository Receipts or International
Depository Receipts (hereinafter collectively referred to as "ADRs") for such
securities, against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Custodian that the
depository has acknowledged receipt of instructions to issue with respect to
such securities ADRs in the name of a nominee of the Custodian or in the name or
nominee name of any subcustodian employed pursuant to Section 2 hereof, for
delivery to the Custodian or such subcustodian at such place as the Custodian or
such subcustodian may from time to time designate. The Custodian shall, upon
receipt of proper instructions, surrender ADRs to the issuer thereof against a
written receipt therefor adequately describing the ADRs surrendered and written
evidence satisfactory to the Custodian that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
securities underlying such ADRs to the Custodian or to a subcustodian employed
pursuant to Section 2 hereof.
T. INTEREST BEARING CALL OR TIME DEPOSITS The Custodian shall, upon receipt
of proper instructions, place interest bearing fixed term and call deposits with
the banking department of such banking institution (other than the Custodian)
and in such amounts as the Fund may designate. Deposits may be denominated in
U.S. Dollars or other currencies. The Custodian shall include in its records
with respect to the assets of the Fund appropriate notation as to the amount and
currency of each such deposit, the accepting banking institution and other
appropriate details and shall retain such forms of advice or receipt evidencing
the deposit, if any, as may be forwarded to the Custodian by the banking
institution. Such deposits shall be deemed portfolio securities of the
applicable Fund for the purposes of this Agreement, and the Custodian shall be
responsible for the collection of income from such accounts and the transmission
of cash to and from such accounts.
U. OPTIONS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS
1. OPTIONS. The Custodians shall, upon receipt of proper instructions and
in accordance with the provisions of any agreement between the Custodian, any
registered broker-dealer and, if necessary, the Fund, relating to compliance
with the rules of the Options Clearing Corporation or of any registered national
securities exchange or similar organization or organizations, receive and retain
confirmations or other documents, if any, evidencing the purchase or writing of
an option on a security or securities index or other financial instrument or
index by the Fund; deposit and maintain in a segregated account for each Fund
separately, either physically or by book-entry in a Securities System,
securities subject to a covered call option written by the Fund; and release
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<PAGE> 20
and/or transfer such securities or other assets only in accordance with a notice
or other communication evidencing the expiration, termination or exercise of
such covered option furnished by the Options Clearing Corporation, the
securities or options exchange on which such covered option is traded or such
other organization as may be responsible for handling such options transactions.
The Custodian and the broker-dealer shall be responsible for the sufficiency of
assets held in each Fund's segregated account in compliance with applicable
margin maintenance requirements.
2. FUTURES CONTRACTS The Custodian shall, upon receipt of proper
instructions, receive and retain confirmations and other documents, if any,
evidencing the purchase or sale of a futures contract or an option on a futures
contract by the Fund; deposit and maintain in a segregated account, for the
benefit of any futures commission merchant, assets designated by the Fund as
initial, maintenance or variation "margin" deposits (including mark-to-market
payments) intended to secure the Fund's performance of its obligations under any
futures contracts purchased or sold or any options on futures contracts written
by Fund, in accordance with the provisions of any agreement or agreements among
the Fund, the Custodian and such futures commission merchant, designed to comply
with the rules of the Commodity Futures Trading Commission and/or of any
contract market or commodities exchange or similar organization regarding such
margin deposits or payments; and release and/or transfer assets in such margin
accounts only in accordance with any such agreements or rules. The Custodian and
the futures commission merchant shall be responsible for the sufficiency of
assets held in the segregated account in compliance with the applicable margin
maintenance and mark-to-market payment requirements.
3. FOREIGN EXCHANGE TRANSACTIONS The Custodian shall, pursuant to proper
instructions, enter into or cause a subcustodian to enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund. Such transactions may be
undertaken by the Custodian or subcustodian with such banking or financial
institutions or other currency brokers, as set forth in proper instructions.
Foreign exchange contracts and options shall be deemed to be portfolio
securities of the Fund; and accordingly, the responsibility of the Custodian
therefor shall be the same as and no greater than the Custodian's responsibility
in respect of other portfolio securities of the Fund. The Custodian shall be
responsible for the transmittal to and receipt of cash from the currency broker
or banking or financial institution with which the contract or option is made,
the maintenance of proper records with respect to the transaction and the
maintenance of any segregated account required in connection with the
transaction. The Custodian shall have no duty with respect to the selection of
the currency brokers or banking or financial institutions with which the Fund
deals or for their failure to comply with the terms of any contract or option.
Without limiting the foregoing, it is agreed that upon receipt of proper
instructions and insofar as funds are made available to the Custodian for the
purpose, the Custodian may (if determined necessary by the Custodian to
consummate a particular transaction on behalf and for the account of the Fund)
make free outgoing payments of cash in the form of U.S. dollars or foreign
currency before receiving confirmation of a foreign exchange contract or
confirmation that the countervalue currency completing the foreign exchange
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<PAGE> 21
contact has been delivered or received. The Custodian shall not be responsible
for any costs and interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties to deliver
foreign exchange; provided that the Custodian shall nevertheless be held to the
standard of care set forth in, and shall be liable to the Fund in accordance
with, the provisions of Section 8.
V. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Agreement,
PROVIDED, that all such payments shall be accounted for by the Custodian to the
Treasurer of the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all nondiscretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Fund.
4. DUTIES OF BANK WITH RESPECT TO BOOKS OF ACCOUNT AND CALCULATIONS OF NET
ASSET VALUE
The Bank shall as Agent (or as Custodian, as the case may be) keep such
books of account (including records showing the adjusted tax costs of the Fund's
portfolio securities) and render as at the close of business on each day a
detailed statement of the amounts received or paid out and of securities
received or delivered for the account of the Fund during said day and such other
statements, including a daily trial balance and inventory of the Fund's
portfolio securities; and shall furnish such other financial information and
data as from time to time requested by the Treasurer or any executive officer of
the Fund; and shall compute and determine, as of the close of business of the
New York Stock Exchange, or at such other time or times as the Board may
determine, the net asset value of a Share in the Fund, such computation and
determination to be made in accordance with the governing documents of the Fund
and the votes and instructions of the Board at the time in force and applicable,
and promptly notify the Fund and its investment adviser and such other persons
as the Fund may request of the result of such computation and determination. In
computing the net asset value the Custodian may rely upon security quotations
received by telephone or otherwise from sources or pricing services designated
by the Fund by proper instructions, and may further rely upon information
furnished to it by any authorized officer of the Fund relative (a) to
liabilities of the Fund not appearing on its books of account, (b) to the
existence, status and proper treatment of any reserve or reserves, (c) to any
procedures established by the Board regarding the valuation of portfolio
securities, and (d) to the value to be assigned to any bond, note, debenture,
Treasury bill, repurchase agreement, subscription right, security, participation
interests or other asset or property for which market quotations are not readily
available.
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<PAGE> 22
5. RECORDS AND MISCELLANEOUS DUTIES
The Bank shall create, maintain and preserve all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund. All books of account and
records maintained by the Bank in connection with the performance of its duties
under this Agreement shall be the property of the Fund, shall at all times
during the regular business hours of the Bank be open for inspection by
authorized officers, employees or agents of the Fund, and in the event of
termination of this Agreement shall be delivered to the Fund or to such other
person or persons as shall be designated by the Fund. Disposition of any account
or record after any required period of preservation shall be only in accordance
with specific instructions received from the Fund. The Bank shall assist
generally in the preparation of reports to shareholders, to the Securities and
Exchange Commission, including Forms N-SAR and N-1Q, to state "blue sky"
authorities and to others, audits of accounts, and other ministerial matters of
like nature; and, upon request, shall furnish the Fund's auditors with an
attested inventory of securities held with appropriate information as to
securities in transit or in the process of purchase or sale and with such other
information as said auditors may from time to time request. The Custodian shall
also maintain records of all receipts, deliveries and locations of such
securities, together with a current inventory thereof, and shall conduct
periodic verifications (including sampling counts at the Custodian) of
certificates representing bonds and other securities for which it is responsible
under this Agreement in such manner as the Custodian shall determine from time
to time to be advisable in order to verify the accuracy of such inventory. The
Bank shall not disclose or use any books or records it has prepared or
maintained by reason of this Agreement in any manner except as expressly
authorized herein or directed by the Fund, and the Bank shall keep confidential
any information obtained by reason of this Agreement.
6. OPINION OF FUND'S INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to enable the Fund to obtain from year to year favorable
opinions from the Fund's independent public accountants with respect to its
activities hereunder in connection with the preparation of the Fund's
registration statement and Form N-SAR or other periodic reports to the
Securities and Exchange Commission and with respect to any other requirements of
such Commission.
7. COMPENSATION AND EXPENSES OF BANK
The Bank shall be entitled to reasonable compensation for its services as
Custodian and Agent, as agreed upon from time to time between the Fund and the
Bank. The Bank shall be entitled to receive from the Fund on demand
reimbursement for its cash disbursements, expenses and charges, including
counsel fees, in connection with its duties as Custodian and Agent hereunder,
but excluding salaries and usual overhead expenses.
8. RESPONSIBILITY OF BANK
So long as and to the extent that it is in the exercise of reasonable care,
the Bank as Custodian and Agent shall be held harmless in acting upon any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed by the proper party or parties.
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<PAGE> 23
The Bank as Custodian and Agent shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
The Bank as Custodian and Agent shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement but shall be liable only
for its own negligent or bad faith acts or failures to act. Notwithstanding the
foregoing, nothing contained in this paragraph is intended to nor shall it be
construed to modify the standards of care and responsibility set forth in
Section 2 hereof with respect to subcustodians and in subparagraph f of
Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
subcustodians generally in Section 2 hereof, provided that, regardless of
whether assets are maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim resulting
from, or caused by, the direction of or authorization by the Fund to maintain
custody of any securities or cash of the Fund in a foreign county including, but
not limited to, losses resulting from nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, revolution,
military or usurped powers, nuclear fission, fusion or radiation, earthquake,
storm or other disturbance of nature or acts of God.
If the Fund requires the Bank in any capacity to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of the Bank, result in the Bank or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
9. PERSONS HAVING ACCESS TO ASSETS OF THE FUND
(i) No trustee, director, general partner, officer, employee or agent of
the Fund shall have physical access to the assets of the Fund held by the
Custodian or be authorized or permitted to withdraw any investments of the Fund,
nor shall the Custodian deliver any assets of the Fund to any such person. No
officer or director, employee or agent of the Custodian who holds any similar
position with the Fund or the investment adviser of the Fund shall have access
to the assets of the Fund.
(ii) Access to assets of the Fund held hereunder shall only be available to
duly authorized officers, employees, representatives or agents of the Custodian
or other persons or entities for whose actions the Custodian shall be
responsible to the extent permitted hereunder, or to the Fund's independent
public accountants in connection with their auditing duties performed on behalf
of the Fund.
(iii) Nothing in this Section 9 shall prohibit any officer, employee or
agent of the Fund or of the investment adviser of the Fund from giving
instructions to the Custodian or executing a certificate so long as it does not
result in delivery of or access to assets of the Fund prohibited by paragraph
(i) of this Section 9.
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<PAGE> 24
10. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT; SUCCESSOR CUSTODIAN
This Agreement shall become effective as of its execution, shall continue
in full force and effect until terminated by either party after August 31, 2000
by an instrument in writing delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than sixty (60) days after the
date of such delivery or mailing; PROVIDED, that the Fund may at any time by
action of its Board, (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian in the event the
Custodian assigns this Agreement to another party without consent of the
noninterested Trustees of the Funds, or (ii) immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by the Federal Deposit Insurance Corporation or by the Banking
Commissioner of The Commonwealth of Massachusetts or upon the happening of a
like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction. Upon termination of the Agreement, the Fund shall pay to
the Custodian such compensation as may be due as of the date of such termination
(and shall likewise reimburse the Custodian for its costs, expenses and
disbursements).
This Agreement may be amended at any time by the written agreement of the
parties hereto. If a majority of the non-interested trustees of any of the Funds
determines that the performance of the Custodian has been unsatisfactory or
adverse to the interests of shareholders of any Fund or Funds or that the terms
of the Agreement are no longer consistent with publicly available industry
standards, then the Fund or Funds shall give written notice to the Custodian of
such determination and the Custodian shall have 60 days to (1) correct such
performance to the satisfaction of the non-interested trustees or (2)
renegotiate terms which are satisfactory to the non-interested trustees of the
Funds. If the conditions of the preceding sentence are not met then the Fund or
Funds may terminate this Agreement on sixty (60) days written notice.
The Board of the Fund shall, forthwith, upon giving or receiving notice of
termination of this Agreement, appoint as successor custodian, a bank or trust
company having the qualifications required by the Investment Company Act of 1940
and the Rules thereunder. The Bank, as Custodian, Agent or otherwise, shall,
upon termination of the Agreement, deliver to such successor custodian, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank hereunder and all books of account and
records kept by the Bank pursuant to this Agreement, and all documents held by
the Bank relative thereto. In the event that no written order designating a
successor custodian shall have been delivered to the Bank on or before the date
when such termination shall become effective, then the Bank shall not deliver
the securities, funds and other properties of the Fund to the Fund but shall
have the right to deliver to a bank or trust company doing business in Boston,
Massachusetts of its own selection meeting the above required qualifications,
all funds, securities and properties of the Fund held by or deposited with the
Bank, and all books of account and records kept by the Bank pursuant to this
Agreement, and all documents held by the Bank relative thereto. Thereafter such
bank or trust company shall be the successor of the Custodian under this
Agreement.
11. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, PROVIDED that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing instruments of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Agreement.
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<PAGE> 25
12. NOTICES
Notices and other writings delivered or mailed postage prepaid to the Fund
addressed to 24 Federal Street, Boston, Massachusetts 02110, or to such other
address as the Fund may have designated to the Bank, in writing, or to Investors
Bank & Trust Company, 24 Federal Street, Boston, Massachusetts 02110, shall be
deemed to have been properly delivered or given hereunder to the respective
addressees.
13. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
If the Fund is a Massachusetts business trust, the Custodian expressly
acknowledges the provision in the Fund's declaration of Trust limiting the
personal liability of the trustees and shareholders of the Fund; and the
Custodian agrees that it shall have recourse only to the assets of the Fund for
the payment of claims or obligations as between the Custodian and the Fund
arising out of this Agreement, and the Custodian shall not seek satisfaction of
any such claim or obligation from the trustees or shareholders of the Fund.
14. ADOPTION OF THE AGREEMENT BY THE FUND
The Fund represents that its Board has approved this Agreement and has duly
authorized the Fund to adopt this Agreement, such adoption to be evidenced by a
letter agreement between the Fund and the Bank reflecting such adoption, which
letter agreement shall be dated and signed by a duly authorized officer of the
Fund and duly authorized officer of the Bank. This Agreement shall be deemed to
be duly executed and delivered by each of the parties in its name and behalf by
its duly authorized officer as of the date of such letter agreement, and this
Agreement shall be deemed to supersede and terminate, as of the date of such
letter agreement, all prior agreements between the Fund and the Bank relating to
the custody of the Fund's assets.
* * * * *
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<PAGE> 1
EXHIBIT 99.(K)(1)
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT dated as of December 21, 1998, between each registered investment
company listed on Exhibit 1 hereof (as may be amended from time to time) (each a
"Fund"), each being a voluntary association commonly known as a "Massachusetts
business trust" having its principal place of business at 24 Federal Street,
Boston, MA 02110, and FIRST DATA INVESTOR SERVICES GROUP, INC. (the "Transfer
Agent" or "FDISG"), a Massachusetts corporation with principal offices at 4400
Computer Drive, Westboro, Massachusetts 01581.
W I T N E S S E T H:
WHEREAS, each Fund desires to retain FDISG as its transfer agent, dividend
disbursing agent and agent in connection with certain other activities, and
FDISG desires to provide such services on the terms herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, each Fund and FDISG agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Organization" shall mean the Articles of Organization,
Declaration of Trust or other charter document of the Fund, as the same may be
amended from time to time;
(b) "Authorized Person" shall be deemed to include any person duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Fund as indicated in writing to FDISG from time to time;
(c) "Commission" shall mean the Securities and Exchange Commission;
(d) "Counsel" shall mean (i) outside legal counsel of the Fund in its
capacity as such and (ii) outside legal counsel of FDISG if such counsel has
been specifically authorized by an Authorized Person of the Fund to render its
opinion on the matter that has arisen;
(e) "Custodian" refers to the custodian and any sub-custodian of all
securities and other property which the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such custodian duly
engaged by the Fund;
(f) "Trustees" or "Board of Trustees" refers to the duly elected Trustees
or Directors of the Fund;
<PAGE> 2
(g) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by FDISG from a person reasonably believed by
FDISG to be an Authorized Person;
(h) "Prospectus" shall mean the Fund's current prospectus and statement of
additional information, including any supplements thereto, relating to the
registration of the Fund's Shares under the Securities Act of 1933, as amended,
and the 1940 Act;
(i) "Shares" refers to the shares of beneficial interest or common stock of
the Fund (which may be divided into classes);
(j) "Shareholder" means a record owner of Shares;
(k) Written Instructions" means any written communication signed by an
Authorized Person and actually received by FDISG, and shall include manually
executed originals and authorized electronic transmissions of such originals
(including telefacsimile); and
(l) The "1940 Act" refers to the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, all as amended from time to time.
2. APPOINTMENT OF FDISG. The Fund hereby appoints FDISG as transfer agent
for its Shares and as shareholder servicing agent for the Fund, and FDISG
accepts such appointment and agrees to perform the duties hereinafter set forth.
3. DUTIES OF FDISG.
(a) FDISG shall be responsible for administering and/or performing transfer
agent functions; for acting as service agent in connection with dividend and
distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance and transfer
(including coordination with the Custodian) of Shares. Such duties are described
in the written Schedule of Duties of FDISG annexed hereto as Schedule A. FDISG
shall also act in accordance with the terms of the Prospectus of the Fund,
applicable law and the procedures established from time to time between FDISG
and the Fund.
(b) FDISG shall record the issuance of Shares and maintain pursuant to Rule
17Ad-10(e) under the Securities Act of 1934 a record of the total number of
Shares of the Fund which are authorized (with due authorization based upon data
provided by the Fund), issued and outstanding. FDISG shall provide the Fund on a
regular basis with such information but shall have no obligation, when recording
the issuance of Shares, to monitor the legality of issuance of Shares or to take
cognizance of any laws relating to the proper issue or sale of such Shares,
which functions shall be the sole responsibility of the Fund (or its
administrator).
(c) FDISG shall serve as agent for Shareholders pursuant to the Fund's
dividend reinvestment plan, as amended from time to time.
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<PAGE> 3
(d) FDISG acknowledges that the Funds' administrator, Eaton Vance
Management ("EVM"), currently employs personnel to provide shareholders with,
among other things, information regarding their accounts and transaction
procedures of FDISG. FDISG acknowledges that EVM is not responsible for transfer
agency services to the Fund. In the event FDISG determines that a particular
transaction requested by a shareholder cannot be processed because it is not
permitted by law or procedures established hereby but EVM or Fund personnel
desire the transaction to be so processed, then FDISG shall nonetheless process
the transaction if EVM provides a standard form indemnification to FDISG. At the
request of EVM, FDISG shall provide a written explanation for its decision.
4. RECORDKEEPING, AND OTHER INFORMATION.
(a) FDISG shall create and maintain all records required of it pursuant to
its duties hereunder and as set forth in Schedule A in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the 1940 Act and the rules thereunder. Where applicable, such records
shall be maintained by FDISG for the periods and the places required by Rule
31a-2 under the 1940 Act.
(b) FDISG agrees that all such records prepared or maintained by FDISG
relating to the services to be performed by FDISG hereunder are the property of
the Fund, and will be surrendered promptly to the Fund on and in accordance with
the Fund's request.
(c) In case of any requests or demands for the inspection of Shareholder
records of the Fund by third parties, FDISG will endeavor to notify the Fund of
such request and secure Written Instructions as to the handling of such request.
FDISG reserves the right, however, to exhibit the Shareholder records to any
person whenever it is required to do so by law.
5. FUND INSTRUCTIONS - LIMITATIONS OF LIABILITY.
(a) FDISG will have no liability when acting in conformance with Written or
Oral Instructions reasonably believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Fund. FDISG will also have no liability when processing Share
certificates which it reasonably believes them to bear the proper manual or
facsimile signatures of the Officers of the Fund and the proper countersignature
of FDISG.
(b) At any time, FDISG may apply to any Authorized Person of the Fund for
Written Instructions and may, after obtaining prior oral or written approval by
an Authorized Person, seek advise from Counsel with respect to any matter
arising in connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in accordance with
such Written Instructions or in accordance with this opinion of Counsel. Written
Instructions requested by FDISG will be provided by the Fund within a reasonable
3
<PAGE> 4
period of time. In addition, FDISG, its Officers, agents or employees, shall
accept Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is
known by FDISG, or its Officers, agents or employees, to be an Authorized
Person. FDISG shall have no duty or obligation to inquire into, nor shall FDISG
be responsible for, the legality of any act done by it upon the request or
direction of an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this Agreement,
FDISG shall be under no duty or obligation to inquire into, and shall not be
liable for: (i) the legality of the issuance or sale of any Shares or the
sufficiency of the amount to be received therefor; (ii) the propriety of the
amount per share to be paid on any redemption; (iii) the legality of the
declaration of any dividend by the Trustees, or the legality of the issuance of
any Shares in payment of any dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares.
(d) FDISG will not be liable or responsible for delays or errors by reason
of circumstances beyond its control, including acts of civil or military
authority, national emergencies, fire, mechanical breakdown beyond its control,
flood, acts of God, insurrection, war, riots, and loss of communication or power
supply, provided, however, that FDISG shall have acted in accordance with its
Disaster Recovery Plan previously provided to the Eaton Vance Group of Funds,
which may be amended from time to time by agreement of the Fund and FDISG.
6. COMPENSATION.
(a) The Fund will compensate FDISG for the performance of its obligations
hereunder in accordance with the fees set forth in the written schedule of fees
annexed hereto as Schedule B and incorporated herein.
(b) Out-of-pocket disbursements shall mean the items specified in the
written schedule of out-of-pocket charges annexed hereto as Schedule C and
incorporated herein. Reimbursement by the Fund for such out-of-pocket
disbursements incurred by FDISG in any month shall be made as soon as
practicable after the receipt of an itemized bill from FDISG. Reimbursement by
the Fund for expenses other than those specified in Schedule C shall be upon
mutual agreement of the parties as provided in Schedule C.
(c) FDISG will bill the Fund as soon as practicable after the end of each
calendar month, and said billings will be detailed in accordance with Schedule
B. The Fund will promptly pay to FDISG the amount of such billing.
(d) The parties agree to review at least annually at a Trustees' meeting of
the Fund the services provided, cost thereof, and fees and expenses charged,
including comparative information regarding the transfer agency industry. The
compensation agreed to hereunder may be adjusted from time to time by attaching
to this Agreement a revised Schedule, dated and executed by the parties hereto.
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<PAGE> 5
7. DOCUMENTS. In connection with the appointment of FDISG, the Fund shall
upon request, on or before the date this Agreement goes into effect, but in any
case within a reasonable period of time for FDISG to prepare to perform its
duties hereunder, furnish FDISG with the following documents:
(a) A certified copy of the Articles of Organization and By-Laws of the
Fund, as amended;
(b) A copy of the resolution of the Trustees authorizing the execution and
delivery of this Agreement;
(c) If applicable, a specimen of the certificate for Shares of the Fund in
the form approved by the Trustees, with a certificate of an Officer of the Fund
as to such approval;
(d) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund; and
(e) With respect to any Fund previously serviced by another transfer agent,
to the extent practicable a certified list of Shareholders of the Fund with the
name, address and taxpayer identification number of each Shareholder, and the
number of shares of the Fund held by each, certificate numbers and denominations
(if any certificates have been issued), lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefor, and the
number of Shares redeemed by the Fund.
8. REPRESENTATIONS AND WARRANTIES.
(a) FDISG represents and warrants to the Fund that:
(i) it is a corporation duly organized, existing and in good standing under
the laws of the Commonwealth of Massachusetts;
(ii) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize it
to enter into this Agreement;
(iv) FDISG will maintain its registration as a transfer agent as provided
in Section 17A(c) of the Securities Act of 1934, as amended, (the "1934 Act")
and shall comply with all applicable provisions of Section 17A of the 1934 Act
and the rules promulgated thereunder, as may be amended from time to time,
including rules relating to record retention;
(v) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement;
5
<PAGE> 6
(vi) to the best of its knowledge, the various procedures and systems which
FDISG has implemented or will implement with regard to safeguarding from loss or
damage attributable to fire, theft or any other cause (including provision for
24 hours-a-day restricted access) of the Fund's records and other data and
FDISG's records, data, equipment, facilities and other property used in the
performance of its obligations hereunder are adequate and that it will make such
changes therein from time to time as in its judgement are required for the
secure performance of its obligations hereunder. The parties shall review such
systems and procedures on a periodic basis; and
(vii) it maintains adequate insurance to enable it to continue its
operations as described herein, including coverage for Year 2000 system
failures. FDISG shall notify the Fund should any of its insurance coverage as
set forth in Schedule F attached hereto be changed for any reason. Such
notification shall include the date of change and reason or reasons therefor.
FDISG shall notify the Fund of any claims against it whether or not they may be
covered by insurance and shall notify the Fund from time to time as may be
appropriate, and at lest within 30 days following the end of each fiscal year of
FDISG, of the total outstanding claims made by FDISG under its insurance
coverage.
(b) The Fund represents and warrants to FDISG that:
(i) it is duly organized, existing and in good standing under the laws of
the jurisdiction in which it is organized;
(ii) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into this Agreement;
(iii) all corporate proceedings required by said Articles of Incorporation,
By-Laws and applicable laws have been taken to authorize it to enter into this
Agreement;
(iv) a registration statement under the Securities Act of 1933, as amended,
and/or the 1940 Act is currently effective and will remain effective, and all
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for sale; and
(v) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with the terms
of the Fund's Articles of Incorporation and its Prospectus, such Shares when
issued shall be validly issued, fully paid and non-assessable.
9. DUTY OF CARE AND INDEMNIFICATION.
(a) Each party shall fulfill its obligations hereunder by acting with
reasonable care and in good faith;
6
<PAGE> 7
(b) The Fund will indemnify FDISG against and hold it harmless from any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit not
resulting from the bad faith or negligence of FDISG, and arising out of, or in
connection with, its duties on behalf of the Fund hereunder. In addition, the
Fund will indemnify FDISG against and hold it harmless from any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit as a result of : (i)
any action taken in accordance with Written or Oral Instructions, or share
certificates reasonably believed by FDISG to be genuine and to be signed,
countersigned or executed, or orally communicated by an Authorized Person; (ii)
any action taken in accordance with written or oral advice reasonably believed
by FDISG to have been given by counsel for the Fund; or (iii) any action taken
as a result of any error or omission in any record which FDISG had no reasonable
basis to believe was inaccurate (including but not limited to magnetic tapes,
computer printouts, hard copies and microfilm copies) and was delivered, or
caused to be delivered, by the Fund to FDISG in connection with this Agreement;
(c) FDISG will indemnify the Fund against and hold it harmless from any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit not
resulting from the bad faith or negligence of the Fund, or arising out of, or in
connection with, FDISG's breach of this Agreement;
(d) In any case in which a party may be asked to indemnify or hold the
other party harmless, the indemnifying party shall be advised of all pertinent
facts concerning the situation in question and the party seeking indemnification
shall notify the indemnifying party promptly concerning any situation which
presents or appears likely to present a claim for indemnification. The
indemnifying party shall have the option to defend against any claim which may
be the subject of this indemnification and, in the event that the indemnifying
party so elects, such defense shall be conducted by counsel chosen by the
indemnifying party, and thereupon the indemnifying party shall take over
complete defense of the claim and the party seeking indemnification shall
sustain no further legal or other expenses in such situation for which it seeks
indemnification. The party seeking indemnification will not confess any claim or
make any compromise in any case in which the indemnifying party will be asked to
provide indemnification, except with the indemnifying party's prior written
consent; and
(e) The obligations of the parties hereto under this Section shall survive
the termination of this Agreement.
10. TERMS AND TERMINATION.
(a) Either party may terminate this Agreement without cause on or after
July 31, 2002 by giving 180 days written notice to the other party;
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<PAGE> 8
(b) Either party may terminate this Agreement if the other party has
materially breached the Agreement by giving the defaulting party 30 days written
notice and the defaulting party has failed to cure the breach within 60 days
thereafter; and
(c) Any written notice of termination shall specify the date of
termination. The Fund shall provide notice of the successor transfer agent
within 30 days of the termination date. Upon termination, FDISG will deliver to
such successor a certified list of shareholders of the Fund (with names,
addresses and taxpayer identification of Social Security numbers and such other
federal tax information as FDISG may be required to maintain), an historical
record of the account of each shareholder and the status thereof, and all other
relevant books, records, correspondence, and other data established or
maintained by the books, records, correspondence, and other data established or
maintained by FDISG under this Agreement in the form reasonably acceptable to
the Fund, and will cooperate in the transfer of such duties and
responsibilities, including provisions for assistance from FDISG's personnel in
the establishment of books, records and other data by such successor or
successors. FDISG shall be entitled to its out-of-pocket expenses set forth in
Schedule C incurred in the delivery of such records net of the fees owed to
FDISG for the last month of service if this Agreement is terminated pursuant to
paragraph (b) immediately above.
(d) If a majority of the non-interested trustees of any of the Funds
determines, in the exercise of their fiduciary duties and pursuant to their
reasonable business judgement after consultation with Eaton Vance Management,
that the performance of FDISG has been unsatisfactory or adverse to the
interests of shareholders of any Fund or Funds or that the terms of the
Agreement are no longer consistent with publicly available industry standards,
then the Fund or Funds shall give written notice to FDISG of such determination
and FDISG shall have 60 days (or such longer period if the non-interested
Trustees so determine) to (1) correct such performance to the satisfaction of
the non-interested trustees or (2) renegotiate terms which are satisfactory to
the non-interested trustees of the Funds. If the conditions of the preceding
sentence are not met then the Fund or Funds may terminate this Agreement on
sixty (60) days written notice provided, however, that the provisions of
Paragraph 11(c) shall remain outstanding for an additional 30 days if necessary
to transfer records to a successor transfer agent.
(e) If the Board of Trustees hereafter establishes and designates a new
Fund, FDISG agrees that it will act as transfer agent and shareholder servicing
agent for such new Fund in accordance with the terms set forth herein. The
Trustees shall cause a written notice to be sent to FDISG to the effect that it
has established a new Fund and that it appoints FDISG as transfer agent and
shareholder servicing agent for the new Fund. Such written notice must be
received by FDISG in a reasonable period of time prior to the commencement of
operations of the new Fund to allow FDISG, in the ordinary course of its
business, to prepare to perform its duties.
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<PAGE> 9
11. CONFIDENTIALITY OF RECORDS.
(a) FDISG agrees to treat all records and other information relative to the
Fund and its prior, present or potential Shareholders in confidence except that,
after prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld and may not be withheld where FDISG may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Fund.
(b) FDISG shall make available during regular business hours all records
and other data created and maintained pursuant to this Agreement for reasonable
audit and inspection by the Fund, or any person retained by the Fund. Upon
reasonable notice by the Fund, FDISG shall make available during regular
business hours its facilities and premises employed in connection with its
performance of this Agreement for reasonable visitation by the Fund, or any
person retained by the Fund, to inspect its operating capabilities or for any
other reason.
(c) The Fund agrees to keep all records and information of FDISG (including
trade secrets) in confidence, unless such is required to be divulged pursuant to
law or where the Fund may be exposed to or criminal contempt proceedings for
failure to comply. FDISG acknowledges that such records and information may be
disclosed to Eaton Vance Management personnel and to Fund auditors consistent
with the responsibilities of such parties, and in such cases the Fund shall take
reasonable precautions to safeguard the confidentiality of such data to the
extent practicable.
12. AMENDMENT, ASSIGNMENT AND SUBCONTRACTING.
(a) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.
(b) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that any
assignment of this Agreement (as defined in the 1940 Act) to an entity shall
require the written consent of the other party.
(c) The Fund agrees that FDISG may, in its discretion, subcontract for
certain of the services described under this Agreement or the Schedules hereto;
provided that the appointment of any such Agent shall not relieve FDISG of its
responsibilities hereunder.
13. USE OF TRADE NAMES.
(a) FDISG shall approve all reasonable uses of its name which merely refer
in accurate terms to its appointment hereunder or which are required by the
Commission or a state securities commission. Notwithstanding the foregoing, any
reference to FDISG shall include a statement to the effect that it is a wholly
owned subsidiary of First Data Corporation.
9
<PAGE> 10
(b) FDISG shall not use the name of the Fund or material relating to the
Fund on any documents or forms for other than internal use in a manner not
approved prior thereto in writing; provided, that the Fund shall approve all
reasonable uses of its name which merely refer in accurate terms to the
appointment of FDISG or which are required by the Commission or a state
securities commission.
14. NOTICE. Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or FDISG, shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
24 Federal Street
Boston, MA 02110
Attention: Fund Secretary
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attn: President
with a copy to FDISG's General Counsel
15. GOVERNING LAW/VENUE. The laws of the Commonwealth of Massachusetts,
excluding the laws on conflicts of laws, shall govern the interpretation,
validity, and enforcement of this agreement. All actions arising from or related
to this Agreement shall be brought in the state and federal courts sitting in
the City of Boston, and the parties hereby submit themselves to the exclusive
jurisdiction of those courts.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
17. CAPTIONS. The captions of this Agreement are included for convenience
or reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
18. SEVERABILITY. The parties intend every provision of this Agreement to
be severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
10
<PAGE> 11
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement failed
of its essential purpose, then all provisions of this Agreement, including the
limitations on liability and exclusion of damages, shall remain fully effective.
19. LIABILITY OF TRUSTEES, OFFICERS AND SHAREHOLDERS. The execution and
delivery of this Agreement have been authorized by the Trustees of the Fund and
signed by an authorized Officer of the Fund, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such Officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement are
not binding upon any of the Trustees or shareholders of the Fund, but bind only
the property of the Fund. No class of the Fund shall be liable for the
obligations of another class.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers thereunder duly authorized as of the day
and year first above written.
<TABLE>
<S> <C>
First Data Investors Services Group, Inc. Eaton Vance Michigan Municipal
Income Trust
By: /s/ Michael G. McCarthy
Senior Vice President, General Manager By: /s/ James B. Hawkes
-------------------------------- -----------------------------
Eaton Vance Municipal Income Trust Eaton Vance New Jersey Municipal
Income Trust
By: /s/ James B. Hawkes By: /s/ James B. Hawkes
---------------------------------- -----------------------------
Eaton Vance California Municipal Eaton Vance New York Municipal
Income Trust Income Trust
By: /s/ James B. Hawkes By: /s/ James B. Hawkes
--------------------------------- -----------------------------
Eaton Vance Florida Municipal Eaton Vance Ohio Municipal
Income Trust Income Trust
By: /s/ James B. Hawkes By: /s/ James B. Hawkes
---------------------------------- -----------------------------
Eaton Vance Massachusetts Municipal Eaton Vance Pennsylvania
Income Trust Municipal Income Trust
By: /s/ James B. Hawkes By: /s/ James B. Hawkes
-------------------------------- -----------------------------
</TABLE>
11
<PAGE> 12
SCHEDULE A
DUTIES OF FDISG
1. SHAREHOLDER INFORMATION. FDISG shall maintain a record of the number of
Shares held by each Shareholder of record which shall include name, address,
taxpayer identification and which shall indicate whether such Shares are held in
certificates or uncertificated form.
2. SHAREHOLDER SERVICES. FDISG will investigate all shareholder inquiries
relating to Shareholder accounts and will answer all communications from
Shareholders and others with respect to its duties hereunder. FDISG shall keep
records of all Shareholder correspondence and replies thereto, and of lapse of
time between the receipt of such correspondence and the mailing of such replies.
3. SHARE CERTIFICATES.
(a) At the expense of the Fund, the Fund shall supply FDISG with an
adequate supply of blank share certificates to meet FDISG requirements therefor.
Such Share certificates shall be properly signed by facsimile. The Fund agrees
that, notwithstanding the death, resignation, or removal of any officer of the
Fund whose signature appears on such certificates, FDISG or its agent may
continue to countersign certificates which bear such signatures until otherwise
directed by Written Instructions.
(b) FDISG shall issue replacement Share certificates in lieu of
certificates which have been lost, stolen or destroyed, upon receipt by FDISG of
properly executed affidavits and lost certificate bonds, in form satisfactory to
FDISG, with the Fund and FDISG as obligees under the bond.
(c) FDISG shall also maintain a record of each certificate issued, the
number of Shares represented thereby and the Shareholder of record. With respect
to Shares held in open accounts or uncertificated form (i.e., no certificate
being issued with respect thereto) FDISG shall maintain comparable records of
the Shareholders thereof, including their names, addresses and taxpayer
identification numbers. FDISG shall further maintain a stop transfer record on
lost and/or replaced certificates.
4. MAILING COMMUNICATIONS TO SHAREHOLDERS; PROXY MATERIALS. FDISG will
address and mail to Shareholders of the Fund, all reports to Shareholders,
dividend and distribution notices and proxy material for the Fund's meetings of
Shareholders, and such other communications as the Fund may authorize. In
connection with meetings of Shareholders, FDISG will prepare Shareholder lists,
mail and certify as to the mailing of proxy materials, process and tabulate
returned proxy cards, report on proxies voted prior to meetings, act as
inspector of election at meetings and certify Shares voted at meetings.
5. TRANSFER OF SHARES.
(a) FDISG shall process all requests to transfer Shares in accordance with
the transfer procedures set forth in the Fund's Prospectus.
<PAGE> 13
(b) FDISG will transfer Shares upon receipt of Written Instructions or
otherwise pursuant to the Prospectus and Share certificates, if any, properly
endorsed for transfer, accompanied by such documents as FDISG reasonably may
deem necessary.
(c) FDISG reserves the right to refuse to transfer Shares until it is
satisfied that the endorsement on the instructions is valid and genuine. FDISG
also reserves the right to refuse to transfer Shares until it is satisfied that
the requested transfer is legally authorized, and it shall incur no liability
for the refusal, in good faith, to make transfers which FDISG in its good
judgment, deems improper or unauthorized, or until it is reasonably satisfied
that there is no basis to any claims adverse to such transfer.
7. DIVIDENDS.
(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund with respect to Shares of the
Fund, the Fund shall furnish or cause to be furnished to FDISG Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record date
as of which Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the total
amount payable on the payment date and whether such dividend or distribution is
to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution of the Board
of Directors, the Fund will provide FDISG with sufficient cash to make payment
to the Shareholders of record as of such payment date.
(c) If FDISG does not receive sufficient cash from the Fund to make total
dividend and/or distribution payments to all Shareholders of the Fund as of the
record date, FDISG will, upon notifying the Fund, withhold payment to all
Shareholders of record as of the record date until sufficient cash is provided
to FDISG.
8. MISCELLANEOUS
In addition to and neither in lieu nor in contravention of the services set
forth above, FDISG shall perform all the customary services of a transfer agent
registrar dividend disbursing agent and agent of the dividend reinvestment plan
as described herein consistent with those requirements in effect as at the date
of this Agreement. The detailed definition, frequency, limitations and
associated costs (if any) set out in the attached fee schedule, include but are
not limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, tabulating proxies, mailing Shareholder reports
to current Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts where applicable, preparing and filing U.S. Treasury Department
Forms 1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all registered Shareholders.
<PAGE> 14
SCHEDULE B
FEE SCHEDULE
1. INITIAL PUBLIC OFFERING FEES
IPO Project Administration Fee: $3,000 per Fund
IPO Project Administration Fee covers:
Issuance of up to 1,000 certificates - Issuance of certificates
in excess of 1,000 to be billed at $2.00 per certificate
Administrative coordination with IPO client, underwriter and
legal representatives
Attendance at closing (out of pocket expenses associated with
such attendance will be billed as incurred)
Set-up, testing and implementation of electronic settlement and
delivery of shares through The Depository Trust Company
2. OVER-ALLOTMENT FEE: $1,000 per Fund
Applies in the event that the underwriters elect to exercise an
over-allotment option which requires a second closing
3. STANDARD SERVICE FEES: The following fees shall apply with respect to
the initial class of shares offered by the Fund. Should the Fund issue
additional classes of shares, the fees for such shall be mutually
agreed to in writing by the parties.
Annual Service Fee $15.00 Per Account
Monthly Minimum Fee $5,000.00
After the one year anniversary of the effective date of this Agreement,
FDISG may adjust the above fees once per calendar year, upon thirty
(30) days prior written notice in an amount not to exceed the
cumulative percentage increase in the Consumer Price Index for All
Urban Consumers (CPI-U) U.S. City Average, All items (unadjusted) -
(1982-84=100), published by the U.S. Department of Labor since the last
such adjustment in the Fund's monthly fees (or the Effective Date
absent a prior such adjustment).
<PAGE> 15
SCHEDULE C
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket
expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations - Daily &
Distribution advice mailings - Shipping, Certified and Overnight
mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges - Federal Reserve charges for
check clearance - Overtime, as approved by the Fund - Temporary
staff, as approved by the Fund - Travel and entertainment, as
approved by the Fund
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- Third party audit reviews
- Ad hoc SQL time Insurance
- Such other miscellaneous expenses reasonably incurred by FDISG in
performing its duties and responsibilities under this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing as agreed with FDISG. In addition, the Fund will promptly
reimburse FDISG for any other unscheduled expenses incurred by FDISG whenever
the Fund and FDISG mutually agree that such expenses are not otherwise properly
borne by FDISG as part of its duties and obligations under the Agreement.
<PAGE> 16
EXHIBIT 1
LIST OF FUNDS
Eaton Vance Municipal Income Trust
Eaton Vance California Municipal Income Trust
Eaton Vance Florida Municipal Income Trust
Eaton Vance Massachusetts Municipal Income Trust
Eaton Vance Michigan Municipal Income Trust
Eaton Vance New Jersey Municipal Income Trust
Eaton Vance New York Municipal Income Trust
Eaton Vance Ohio Municipal Income Trust
Eaton Vance Pennsylvania Municipal Income Trust
Dated: December 21, 1998
<PAGE> 1
EXHIBIT 99.(k)(2)
EATON VANCE MUNICIPAL INCOME TRUST
ADMINISTRATION AGREEMENT
AGREEMENT made this 21st day of December, 1998, between Eaton Vance
Municipal Income Trust, a Massachusetts business trust (the "Fund"), and Eaton
Vance Management, a Massachusetts business trust (the "Administrator").
1. Duties of the Administrator. The Fund hereby employs the Administrator
to act as administrator for and to administer the affairs of the Fund, subject
to the supervision of the Trustees of the Fund for the period and on the terms
set forth in this Agreement.
The Administrator hereby accepts such employment, and agrees to administer
the Fund's business affairs and, in connection therewith, to furnish for the use
of the Fund office space and all necessary office facilities, equipment and
personnel for administering the affairs of the Fund. The Administrator shall
also pay the salaries and compensation of all officers and Trustees of the Fund
who are members of the Administrator's organization and who render executive and
administrative services to the Fund, and the salaries and compensation of all
other personnel of the Administrator performing management and administrative
services for the Fund. The Administrator shall for all purposes herein be deemed
to be an independent contractor and shall, except as otherwise expressly
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund.
In connection with its responsibilities as Administrator of the Fund, the
Administrator (i) will assist in preparing all annual, semi-annual and other
reports required to be sent to Fund shareholders, and arrange for the printing
and dissemination of such reports to shareholders; (ii) will prepare and
assemble all reports required to be filed by the Fund with the Securities and
Exchange Commission ("SEC") on Form N-SAR, or on such other form as the SEC may
substitute for Form N-SAR, and file such reports with the SEC; (iii) will review
the provision of services by the Fund's independent accountants, including but
not limited to the preparation by such accountants of audited financial
statements of the Fund and the Fund's federal, state and local tax returns; and
make such reports and recommendations to the Trustees of the Fund concerning the
performance of the independent accountants as the Trustees deem appropriate;
(iv) will arrange for the filing with the appropriate authorities all required
federal, state and local tax returns; (v) will arrange for the dissemination to
shareholders of the Fund's proxy materials, and will oversee the tabulation of
proxies by the Fund's transfer agent; (vi) will review and supervise the
provision of custodian services to the Fund; and make such reports and
recommendations to the Trustees concerning the provision of such services as the
Trustees deem appropriate; (vii) will value all such portfolio investments and
other assets of the Fund as may be designated by the Trustees (subject to any
guidelines, directions and instructions of the Trustees), and review and
supervise the calculation of the net asset value of the Fund's shares by the
custodian; (viii) will negotiate the terms and conditions under which transfer
agency and dividend disbursing services will be provided to the Fund, and the
fees to be paid by the Fund in connection therewith; review and supervise the
<PAGE> 2
2
provision of transfer agency and dividend disbursing services to the Fund; and
make such reports and recommendations to the Trustees concerning the performance
of the Fund's transfer and dividend disbursing agent as the Trustees deem
appropriate; (ix) will establish the accounting policies of the Fund; reconcile
accounting issues which may arise with respect to the Fund's operations; and
consult with the Fund's independent accountants, legal counsel, custodian,
accounting and bookkeeping agents and transfer and dividend disbursing agent as
necessary in connection therewith; (x) will determine the amount of all
distributions to be paid by the Fund to its shareholders; prepare and arrange
for the printing of notices to shareholders regarding such distributions and
provide the Fund's transfer and dividend disbursing agent and custodian with
such information as is required for such parties to effect the payment of
distributions and to implement the Fund's dividend reinvestment plan; (xi) will
review the Fund's bills and authorize payments of such bills by the Fund's
custodian; (xii) will make recommendations to the Trustees as to whether the
Fund should make repurchase or tender offers for its own shares; arrange for the
preparation and filing of all documents required to be filed by the Fund with
the SEC; arrange for the preparation and dissemination of all appropriate
repurchase or tender offer documents and papers on behalf of the Fund; and
supervise and conduct the Fund's periodic repurchase or tender offers for its
own shares; (xiii) monitor any variance between the market value and net asset
value per share, and periodically report to the Trustees available actions that
may conform such values; (xiv) monitor the activities of the Shareholder
Servicing Agent retained by the Administrator and periodically report to the
Trustees about such activities; (xv) will arrange for the preparation and filing
of all other reports, forms, registration statements and documents required to
be filed by the Fund with the SEC, the National Association of Securities
Dealers, Inc. and any securities exchange where Fund shares are listed; and
(xvi) will provide to the Fund such other internal legal, auditing and
accounting services and internal executive management and administrative
services as the Trustees deem appropriate to conduct the Fund's business
affairs.
Notwithstanding the foregoing, the Administrator shall not be deemed to
have assumed any duties with respect to, and shall not be responsible for, the
management of the Fund's assets or the rendering of investment advice and
supervision with respect thereto or the distribution of shares of the Fund, nor
shall the Administrator be deemed to have assumed or have any responsibility
with respect to functions specifically assumed by any transfer agent, custodian
or shareholder servicing agent of the Fund.
Sub-Administrators. The Administrator may employ one or more
sub-administrators from time to time to perform such of the acts and services of
the Administrator and upon such terms and conditions as may be agreed upon
between the Administrator and such sub-administrators and approved by the
Trustees of the Fund.
2. Compensation of the Administrator. For the services, payments and
facilities to be furnished hereunder by the Administrator, the Fund shall pay to
the Administrator on the last day of each month a fee equivalent to .20%
annually of the average weekly gross assets of the Fund. (Gross assets shall be
calculated by deducting accrued liabilities of the Fund except the principal
amount of any indebtedness for money borrowed, including debt securities issued
by the Fund, and the amount of any outstanding preferred shares issued by the
Fund. Accrued liabilities are expenses incurred in the normal course of
operations.)
In case of initiation or termination of the Agreement during any month, the
fee for that month shall be reduced proportionately on the basis of the number
of calendar days during which the Agreement is in effect and the fee shall be
computed upon the basis of the average gross assets for the business days the
Agreement is so in effect for that month.
The Administrator may, from time to time, waive all or a part of the above
compensation.
3. Allocation of Charges and Expenses. It is understood that the Fund will
pay all its expenses other than those expressly stated to be payable by the
Administrator hereunder, which expenses payable by the Fund shall include,
without implied limitation: (i) expenses of maintaining the Fund and continuing
<PAGE> 3
3
its existence; (ii) registration of the Fund under the Investment Company Act of
1940; (iii) commissions, fees and other expenses connected with the acquisition,
holding and disposition of securities and other investments; (iv) auditing,
accounting and legal expenses; (v) taxes and interest; (vi) governmental fees;
(vii) expenses of repurchase and redemption (if any) of shares, including all
expenses incurred in conducting repurchase and tender offers for the purpose of
repurchasing Fund shares; (viii) expenses of registering and qualifying the Fund
and its shares under federal and state securities laws and of preparing
registration statements and amendments for such purposes; (ix) expenses of
reports and notices to shareholders and of meetings of shareholders and proxy
solicitations therefor; (x) expenses of reports to governmental officers and
commissions; (xi) insurance expenses; (xii) association membership dues; (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Fund (including without limitation safekeeping of funds and
securities, keeping of books and accounts and determination of net asset value);
(xiv) fees, expenses and disbursements of transfer agents, dividend disbursing
agents, shareholder servicing agents and registrars for all services to the
Fund; (xv) expenses of listing shares with a stock exchange; (xvi) any direct
charges to shareholders approved by the Trustees of the Fund; (xvii)
compensation of and any expenses of Trustees of the Fund who are not members of
the Administrator's organization; (xviii) all payments to be made and expenses
to be assumed by the Fund in connection with the distribution of Fund shares;
(xix) any pricing and valuation services employed by the Fund; (xx) any
investment advisory fee payable to an investment adviser; (xxi) all expenses
incurred in connection with leveraging the Fund's assets through a line of
credit, or issuing and maintaining preferred shares; and (xxii) such
non-recurring items as may arise, including expenses incurred in connection with
litigation, proceedings and claims and obligation of the Fund to indemnify its
Trustees, officers and with respect thereto.
4. Other Interests. It is understood that Trustees, officers and
shareholders of the Fund are or may be or become interested in the Administrator
as trustees, officers, employees, shareholders or otherwise and that trustees,
officers, employees and shareholders of the Administrator are or may be or
become similarly interested in the Fund, and that the Administrator may be or
become interested in the Fund as a shareholder or otherwise. It is also
understood that trustees, officers, employees and shareholders of the
Administrator may be or become interested (as directors, trustees, officers,
employees, stockholders or otherwise) in other companies or entities (including,
without limitation, other investment companies) which the Administrator may
organize, sponsor or acquire, or with which it may merge or consolidate, and
that the Administrator or its subsidiaries or affiliates may enter into
advisory, management or administration agreements or other contracts or
relationship with such other companies or entities.
5. Limitation of Liability of the Administrator. The services of the
Administrator to the Fund are not to be deemed to be exclusive, the
Administrator being free to render services to others and engage in other
business activities. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Administrator, the Administrator shall not be subject to liability to the
Fund or to any shareholder of the Fund for any act or omission in the course of,
or connected with, rendering services hereunder or for any losses which may be
sustained in the acquisition, holding or disposition of any security or other
investment.
6. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date of its execution, and, unless terminated as herein
provided, shall remain in full force and effect through and including February
28, 2000 and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance after February 28, 2000 is specifically
approved at least annually (i) by the Board of Trustees of the Fund, and (ii) by
the vote of a majority of those Trustees of the Fund who are not interested
persons of the Administrator or the Fund.
<PAGE> 4
4
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement by action of the Trustees of the
Fund or the trustees of the Administrator, and the Fund may, at any time upon
such written notice to the Administrator, terminate the Agreement by vote of a
majority of the outstanding voting securities of the Fund. This Agreement shall
terminate automatically in the event of its assignment.
7. Amendments of the Agreement. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (i) by the vote of a majority of those
Trustees of the Fund who are not interested persons of the Administrator or the
Fund, and (ii) by vote of the Board of Trustees of the Fund.
8. Limitation of Liability. Each party expressly acknowledges the provision
in the other party's Agreement and Declaration of Trust limiting the personal
liability of its shareholders officers, and Trustees, and each party hereby
agrees that it shall have recourse to the other party for payment of claims or
obligations as between the Fund and the Administrator arising out of this
Agreement and shall not seek satisfaction from the Trustees, officers or
shareholders of the other party.
9. Use of the Name "Eaton Vance." The Administrator hereby consents to the
use by the Fund of the name "Eaton Vance" as part of the Fund's name; provided,
however, that such consent shall be conditioned upon the employment of the
Administrator or one of its affiliates as the administrator of the Fund. The
name "Eaton Vance" or any variation thereof may be used from time to time in
other connections and for other purposes by the Administrator and its affiliates
and other investment companies that have obtained consent to the use of the name
"Eaton Vance." The Administrator shall have the right to require the Fund to
cease using the name "Eaton Vance" as part of the Fund's name if the Fund
ceases, for any reason, to employ the Administrator or one of its affiliates as
the Fund's administrator. Future names adopted by the Fund for itself, insofar
as such names include identifying words requiring the consent of the
Administrator, shall be the property of the Administrator and shall be subject
to the same terms and conditions.
10. Certain Definitions. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote of the lesser of (a) 67 per
centum or more of the shares of the Fund present or represented by proxy at the
meeting if the holders of more than 50 per centum of the outstanding shares of
the Fund are present or represented by proxy at the meeting, or (b) more than 50
per centum of the outstanding shares of the Fund.
EATON VANCE MUNICIPAL INCOME TRUST EATON VANCE MANAGEMENT
By: /s/ Thomas J. Fetter By: /s/ Alan R. Dynner
---------------------------------- ------------------------------------
President, and not Individually Vice President, and not Individually
<PAGE> 1
EXHIBIT 99.(k)(3)
FORM OF
SHAREHOLDER SERVICING AGREEMENT
SHAREHOLDER SERVICING AGREEMENT (the "Agreement"), dated as of
January 29, 1999, between Eaton Vance Management ("Eaton Vance") and PaineWebber
Incorporated ("PaineWebber").
WHEREAS, Eaton Vance Municipal Income Trust (the "Trust") is a
closed-end, non-diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and its shares of
beneficial interest are registered under the Securities Act of 1933, as amended;
and
WHEREAS, Eaton Vance is the investment adviser and the
administrator of the Trust; and
WHEREAS, Eaton Vance desires to retain PaineWebber to provide
shareholder servicing and market information with respect to the Trust, and
PaineWebber is willing to render such services;
NOW, THEREFORE, in consideration of the mutual terms and
conditions set forth below, the parties hereto agree as follows:
1) Eaton Vance hereby employs PaineWebber, for the period and
on the terms and conditions set forth herein, to provide the following services:
a) Undertake to make available public information pertaining
to the Trust on an ongoing basis and to communicate to investors and
prospective investors the Trust's features and benefits (including
periodic seminars or conference calls, responses to questions from
current or prospective shareholders and specific shareholder contact
where appropriate);
b) Make available to investors and prospective investors
market price, net asset value, yield and other information regarding
the Trust, if reasonably obtainable, for the purpose of maintaining the
visibility of the Trust in the investor community;
c) At the request of Eaton Vance or the Trust, provide certain
economic research and statistical information and reports, if
reasonably obtainable, on behalf of Eaton Vance or the Trust and
consult with representatives of Eaton Vance and/or Trustees of the
Trust in connection therewith, which information and reports shall
include: (i) statistical and financial market information with respect
<PAGE> 2
to the Trust's market performance; and (ii) comparative information
regarding the Trust and other closed-end management investment
companies with respect to (x) the net asset value of their respective
shares, (y) the respective market performance of the Trust and such
other companies, and (z) other relevant performance indicators; and
d) At the request of Eaton Vance or the Trust, provide
information to and consult with Eaton Vance and/or the Board of
Trustees of the Trust with respect to applicable strategies designed to
address market value discounts, which may include share repurchases,
tender offers, modifications to dividend policies or capital structure,
repositioning or restructuring of the Trust, conversion of the Trust to
an open-end investment company, liquidation or merger; including
providing information concerning the use and impact of the above
strategic alternatives by other market participants.
e) At the request of Eaton Vance or the Trust, PaineWebber
shall limit or cease any action or service provided hereunder to the
extent and for the time period requested by Eaton Vance or the Trust;
provided, however, that pending termination of this Agreement as
provided for is Section 5 hereof, any such limitation or cessation
shall not relieve Eaton Vance of its payment obligations pursuant to
Section 2 hereof.
f) PaineWebber will promptly notify Eaton Vance or the Trust,
as the case may be, if it learns of any material inaccuracy or
misstatement in, or material omission from, any written information
provided by PaineWebber to Eaton Vance or the Trust in connection with
the performance of services by PaineWebber under this Agreement.
2) Eaton Vance will pay PaineWebber a fee computed weekly and
payable quarterly at an annualized rate of 0.10% of the average weekly gross
assets of the Trust.
3) Eaton Vance acknowledges that the shareholder services of
PaineWebber provided for hereunder do not include any advice as to the value of
securities or regarding the advisability of purchasing or selling any securities
for the Trust's portfolio. No provision of this Agreement shall be considered as
creating, nor shall any provision create, any obligation on the part of
PaineWebber, and PaineWebber is not hereby agreeing, to: (i) furnish any advice
or make any recommendations regarding the purchase or sale of portfolio
securities or (ii) render any opinions, valuations or recommendations of any
kind or to perform any such similar services in connection with providing the
services described in Section 1 hereof.
<PAGE> 3
4) Nothing herein shall be construed as prohibiting
PaineWebber or its affiliates from providing similar or other services to any
other clients (including other registered investment companies or other
investment managers), so long as PaineWebber's services to Eaton Vance and the
Trust are not impaired thereby.
5) The term of this Agreement shall commence upon the date
referred to above, shall be in effect for a period of two years and shall
thereafter continue for successive one year periods provided that the agreement
may be terminated by either party upon 60 days' written notice of the intention
to terminate.
6) Eaton Vance will furnish PaineWebber with such information
as PaineWebber believes appropriate to its assignment hereunder (all such
information so furnished being the "Information"). Eaton Vance recognizes and
confirms that PaineWebber (a) will use and rely primarily on the Information and
on information available from generally recognized public sources in performing
the services contemplated by this Agreement without having independently
verified the same and (b) does not assume responsibility for the accuracy or
completeness of the Information and such other information. To the best of Eaton
Vance's knowledge, the Information to be furnished by Eaton Vance when
delivered, will be true and correct in all material respects and will not
contain any material misstatement of fact or omit to state any material fact
necessary to make the statements contained therein not misleading. Eaton Vance
will promptly notify PaineWebber if it learns of any material inaccuracy or
misstatement in, or material omission from, any Information delivered to
PaineWebber.
7) It is understood that PaineWebber is being engaged
hereunder solely to provide the services described above to Eaton Vance and to
the Trust and that PaineWebber is not acting as an agent or fiduciary of, and
shall have no duties or liability to the current or future shareholders of the
Trust, the current or future shareholders of the Trust or any other third party
in connection with its engagement hereunder, all of which are hereby expressly
waived.
8) Eaton Vance agrees that PaineWebber shall have no liability
to Eaton Vance or the Trust for any act or omission to act by PaineWebber in the
course of its performance under this Agreement, in the absence of gross
negligence or willful misconduct on the part of PaineWebber. Eaton Vance agrees
to the indemnification and other agreements set forth in the Indemnification
Agreement attached hereto, the provisions of which are incorporated herein by
reference and shall survive the termination, expiration or supersession of this
Agreement.
9) THIS AGREEMENT SHALL BE CONSTRUED IN ACCOR DANCE WITH THE
LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO
<PAGE> 4
BE PERFORMED ENTIRELY THEREIN AND WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES
THEREOF.
10) EACH OF THE EATON VANCE AND PAINEWEBBER AGREE THAT ANY
ACTION OR PROCEEDING BASED HEREON, OR ARISING OUT OF PAINEWEBBER'S ENGAGEMENT
HEREUNDER, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE
STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. EATON VANCE AND
PAINEWEBBER EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH ACTION OR PROCEEDING AS SET FORTH ABOVE AND IRREVOCABLY
AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
ACTION OR PROCEEDING. EACH OF EATON VANCE AND PAINEWEBBER HEREBY IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE
OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11) Eaton Vance and PaineWebber each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby. This
Agreement may not be assigned by either party without the prior written consent
of the other party.
12) This Agreement (including the attached Indemnification
Agreement) embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings relating to the
subject matter hereof. If any provision of this Agreement is determined to be
invalid or unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this Agreement, which
will remain in full force and effect. This Agreement may not be amended or
otherwise modified or waived except by an instrument in writing signed by both
PaineWebber and Eaton Vance.
13) All notices required or permitted to be sent under this
Agreement shall be sent, if to Eaton Vance:
Eaton Vance Corporation
<PAGE> 5
24 Federal Street
Boston, MA 02110
Attention: Chief Legal Officer
or if to PaineWebber:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Attention: Oscar J. Junquera
or such other name or address as may be given in writing to the other parties.
Any notice shall be deemed to be given or received on the third day after
deposit in the U.S. mail with certified postage prepaid or when actually
received, whether by hand, express delivery service or facsimile transmission,
whichever is earlier.
14) This Agreement may be exercised on separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
15) A copy of the Agreement and Declaration of Trust of Eaton
Vance is on file with the Secretary of The Commonwealth of Massachusetts, and
notice hereby is given that this Agreement is executed on behalf of the Trustees
of Eaton Vance as Trustees and not individually and that the obligations or
arising out of this Agreement are not binding upon any of the Trustees or
beneficiaries individually but are binding only upon the assets and properties
of Eaton Vance.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Shareholder Servicing Agreement as of the date first above written.
EATON VANCE MANAGEMENT
By: _____________________________
Name:
Title:
<PAGE> 6
PAINEWEBBER INCORPORATED
By: _____________________________
Name:
Title:
<PAGE> 7
PAINEWEBBER INDEMNIFICATION AGREEMENT
Date January 29, 1999
Paine Webber Incorporated
1285 Avenue of the Americas
New York, NY 10019
Gentlemen:
In connection with the engagement of Paine Webber Incorporated ("Paine Webber")
to advise and assist the undersigned (referred to herein as "we," or "us") with
the matters set forth in the Agreement dated January 29, 1999 between us and
Paine Webber, we hereby agree to indemnify and hold harmless Paine Webber, its
affiliated companies, and each of Paine Webber's and such affiliated companies'
respective officers, directors, agents, employees and controlling persons
(within the meaning of each of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933) (each of the foregoing, including
Paine Webber, being hereinafter referred to as an "Indemnified Person") to the
fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including reasonable fees, disbursements and other charges of
counsel), actions (including actions brought by us or our equity holders or
derivative actions brought by any person claiming through us or in our name),
proceedings, arbitrations or investigations (whether formal or informal), or
threats thereof (all of the foregoing being hereinafter referred to as
"Liabilities"), based upon, relating to or arising out of such engagement or any
Indemnified Person's role therein; provided, however, that we shall not be
liable under this paragraph: (a) for any amount paid in settlement of claims
without our consent, unless our consent is unreasonably withheld, or (b) to the
extent that it is finally judicially determined, or expressly stated in an
arbitration award, that such Liabilities resulted primarily from the willful
misconduct or gross negligence of the Indemnified Person seeking
indemnification. If multiple claims are brought against any Indemnified Person
in an arbitration or other proceeding and at least one such claim is based upon,
relates to or arises out of the engagement of Paine Webber by us or any
Indemnified Person's role therein, we agree that any award, judgment and other
Liabilities resulting therefrom shall be deemed conclusively to be based on,
relate to or arise out of the engagement of Paine Webber by us or any
Indemnified Person's role
<PAGE> 8
therein, except to the extent that such award or judgment expressly states that
the award or judgment, or any portion thereof, is based solely upon, relates to
or arises out of other matters for which indemnification is not available
hereunder. In connection with our obligation to indemnify for expenses as set
forth above, we further agree to reimburse each Indemnified Person for all such
expenses (including reasonable fees, disbursements and other charges of counsel)
as they are incurred by such Indemnified Person; provided, however, that if an
Indemnified Person is reimbursed hereunder for any expenses, the amount so paid
shall be refunded if and to the extent it is finally judicially determined, or
expressly stated in an arbitration award, that the Liabilities in question
resulted primarily from the willful misconduct or gross negligence of such
Indemnified Person. We hereby also agree that neither Paine Webber nor any other
Indemnified Person shall have any liability to us (or anyone claiming through us
or in our name) in connection with Paine Webber's engagement by us except to the
extent that such Indemnified Person has engaged in willful misconduct or been
grossly negligent.
Promptly after Paine Webber receives notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, Paine Webber will notify us thereof; but the omission so to
notify us shall not relieve us from any obligation hereunder unless, and only to
the extent that, such omission results in our forfeiture of substantive rights
or defenses. If any such action or other proceeding shall be brought against any
Indemnified Person, we shall, upon written notice given reasonably promptly
following your notice to us of such action or proceeding, be entitled to assume
the defense thereof at our expense with counsel chosen by us and reasonably
satisfactory to such Indemnified Person; provided, however, that any Indemnified
Person may at its own expense retain separate counsel to participate in such
defense. Notwithstanding the foregoing, such Indemnified Person shall have the
right to employ separate counsel at our expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (i) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to us, or (ii) a difference of position or
potential difference of position exists between us and such Indemnified Person
that would make such separate representation advisable; provided, however, that
in no event shall we be required to pay fees and expenses under this indemnity
for more than one firm of attorneys (in addition to local counsel) in any
jurisdiction in any one legal action or group of related legal actions. We agree
that we will not, without the prior written consent of PaineWebber, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated by
PaineWebber's engagement (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise or
<PAGE> 9
consent includes an unconditional release of PaineWebber and each other
Indemnified Person from all liability arising or that may arise out of such
claim, action or proceeding.
If the indemnification of an Indemnified Person provided for hereunder is
finally judicially determined by a court of competent jurisdiction to be
unenforceable, then we agree, in lieu of indemnifying such Indemnified Person,
to contribute to the amount paid or payable by such Indemnified Person as a
result of such Liabilities in such proportion as is appropriate to reflect the
relative benefits received, or sought to be received, by us on the one hand and
by PaineWebber on the other from transactions in connection with which
PaineWebber has been engaged. If the allocation provided in the preceding
sentence is not permitted by applicable law, then we agree to contribute to the
amount paid or payable by such Indemnified Person as a result of such
Liabilities in such proportion as is appropriate to reflect not only the
relative benefits referred to in such preceding sentence but also the relative
fault of us and of such Indemnified Person. Notwithstanding the foregoing, in no
event shall the aggregate amount required to be contributed by all Indemnified
Persons taking into account our contributions as described above exceed the
amount of fees actually received by PaineWebber pursuant to such engagement. The
relative benefits received or sought to be received by us on the one hand and by
PaineWebber on the other shall be deemed to be in the same proportion as (a) the
total value of the transactions with respect to which PaineWebber has been
engaged bears to (b) the fees paid or payable to PaineWebber with respect to
such engagement.
<PAGE> 1
EXHIBIT 99(2)
KIRKPATRICK & LOCKHART LLP
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 261-3100
MARK P. GOSHKO
(617) 261-3163
[email protected]
January 26, 1999
Eaton Vance Municipal Income Trust
24 Federal Street
Boston, MA 02110
Dear Sirs:
This opinion is furnished in connection with the registration by Eaton
Vance Municipal Income Trust, a business trust organized under the laws of the
Commonwealth of Massachusetts ("Fund"), of 15,300,000 shares of beneficial
interest, par value $.01 per share ("Shares"), under the Securities Act of 1933,
as amended, pursuant to a registration statement on Form N-2 (File No.
333-68719), as amended ("Registration Statement"), in the amounts set forth
under "Amount Being Registered" on the facing page of the Registration
Statement.
As counsel for the Fund, we are familiar with the proceedings taken by
it in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Agreement and Declaration
of Trust of the Fund, the By-Laws of the Fund, and such other documents as we
have deemed relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement, will
be legally issued, fully paid and non-assessable (except as described in the
Registration Statement) shares of common stock of the Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus constituting
a part thereof.
Very truly yours,
/s/ Kirkpatrick & Lockhart LLP
Kirkpatrick & Lockhart LLP
<PAGE> 1
EXHIBIT 99.(N)(2)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in the Registration Statement on Form N-2 of Eaton Vance
Municipal Income Trust of our report, dated January 22, 1999, appearing in the
Statement of Additional Information, which is part of this Registration
Statement.
/s/ Deloitte & Touche LLP
- ----------------------------------
Deloitte & Touche LLP
Boston, Massachusetts
January 22, 1999
<PAGE> 1
EXHIBIT 99.(p)
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Telephone: (617) 482-8260
Telecopy: (617) 338-8054
January 21, 1999
Eaton Vance Municipal Income Trust
24 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
With respect to our purchase from you, at the purchase price of $100,000 of
6,666.67 shares of beneficial interest, net asset value of $15.00 per share
("Initial Shares") in Eaton Vance Municipal Income Trust, we hereby advise you
that we are purchasing such Initial Shares for investment purposes without any
present intention of redeeming or reselling.
Very truly yours,
EATON VANCE MANAGEMENT
By: /s/ William M. Steul
-------------------------------
William M. Steul
Treasurer and Vice President
<PAGE> 1
EXHIBIT 99.(s)(1)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Eaton Vance Municipal Income
Trust, a Massachusetts business trust, do hereby severally constitute and
appoint Alan R. Dynner, James B. Hawkes and Eric G. Woodbury, or any of them, to
be true, sufficient and lawful attorneys, or attorney for each of us, to sign
for each of us, in the name of each of us in the capacities indicated below, the
Registration Statement and any and all amendments (including post-effective
amendments) to the Registration Statement on Form N-2 filed by Eaton Vance
Municipal Income Trust with the Securities and Exchange Commission in respect of
shares of beneficial interest and other documents and papers relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set opposite
our respective signatures.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas J. Fetter President and Principal December 21, 1998
- ----------------------------------------------- Executive Officer
Thomas J. Fetter
/s/ James L. O'Connor Treasurer and Principal Financial December 21, 1998
- ---------------------------------------------- and Accounting Officer
James L. O'Connor
- ---------------------------------------------- Trustee
Jessica M. Bibliowicz
/s/ Donald R. Dwight Trustee December 21, 1998
- ----------------------------------------------
Donald R. Dwight
/s/ James B. Hawkes Trustee December 21, 1998
- -----------------------------------------------
James B. Hawkes
/s/ Samuel L. Hayes, III Trustee December 21, 1998
- -----------------------------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee December 21, 1998
- ----------------------------------------------
Norton H. Reamer
/s/ Lynn A. Stout Trustee December 21, 1998
- -----------------------------------------------
Lynn A. Stout
/s/ Jack L. Treynor Trustee December 21, 1998
- -----------------------------------------------
Jack L. Treynor
</TABLE>
<PAGE> 1
EXHIBIT 99.(s)(2)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Eaton Vance Municipal Income
Trust, a Massachusetts business trust, do hereby severally constitute and
appoint Alan R. Dynner, James B. Hawkes and Eric G. Woodbury, or any of them, to
be true, sufficient and lawful attorneys, or attorney for each of us, to sign
for each of us, in the name of each of us in the capacities indicated below, the
Registration Statement and any and all amendments (including post-effective
amendments) to the Registration Statement on Form N-2 filed by Eaton Vance
Municipal Income Trust with the Securities and Exchange Commission in respect of
shares of beneficial interest and other documents and papers relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set opposite
our respective signatures.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Jessica M. Bibliowicz Trustee January 5, 1999
- ---------------------------------
Jessica M. Bibliowicz
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> JAN-21-1999
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 50
<ASSETS-OTHER> 100
<OTHER-ITEMS-ASSETS> 600
<TOTAL-ASSETS> 750
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 650
<TOTAL-LIABILITIES> 650
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100
<SHARES-COMMON-STOCK> 7
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
