EXHIBIT 13(d)(i)
July 21, 1993
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: General Counsel's Office
Re: Van Kampen Merritt California Value
Municipal Income Trust - Auction Preferred
Shares of Beneficial Interest ("APS")
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters
relating to the issuance and sale by van Kampen Merritt California Value
Municipal Income Trust (the "Fund") of 1,200 shares of its preferred shares of
beneficial interest, par value $.01 per share, liquidation preference $50,000
per share, designated as Auction Preferred shares ("APS"), pursuant to the
Fund's Declaration of Trust (as defined below). Pursuant to the auction agency
agreement, dated as of July 21, 1993 (the "Auction Agency Agreement"), between
the Fund and Bankers Trust Company ("Bankers Trust"), Bankers Trust will act as
the auction agent, transfer agent, registrar and dividend and redemption price
disbursing agent and agent for certain notifications for the Fund in connection
with the shares of APS (hereinafter referred to, when acting in any such
capacity, as the "Auction Agent").
Pursuant to an underwriting agreement, dated July 15, 1993
(the "Underwriting Agreement"), among Goldman, Sachs & Co., Smith Barney, Harris
Upham & Co. Incorporated, PaineWebber Incorporated, Prudential Securities
Incorporated, Kidder, Peabody & Co. Incorporated and A.G. Edwards & Sons, Inc.
(the "Underwriters"), the Fund and Van Kampen Merritt Investment Advisory Corp.
(the "Adviser"), the Underwriters have agreed to purchase from the Fund, and the
Fund has agreed to issue and sell to the Underwriters, the shares of APS.
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Fund has filed with the Securities and Exchange Commission a
Registration Statement on Form N-2 and a prospectus and statement of additional
information contained therein (the "Prospectus") concerning the issuance of the
APS, which includes,
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July 21, 1993
Page 2
among other things, a description of the role of The Depository Trust Company
("DTC") with respect to such APS. Attached hereto is a copy of the Prospectus.
Capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Declaration of Trust (as defined below), a
copy of which is attached hereto, unless the context otherwise requires.
To induce DTC to accept the APS as eligible for deposit at DTC
and to act in accordance with its rules with respect to the APS, the Fund and
the Auction Agent agree with DTC as follows:
1. The Fund shall cause the Underwriters to deliver at the
closing with respect to the Underwriting Agreement, which is scheduled
for July 21, 1993, for deposit with DTC one share certificate with
respect to the APS (the "APS Certificate"), which certificate will
represent the total number of shares of APS issued and registered in
the name of DTC's nominee, Cede & Co. ("Cede"), and such APS
Certificate shall remain in DTC's custody as provided herein.
2. The Fund's Declaration of Trust, as amended, including the
Certificate of Vote (sometimes referred to herein together with the
Fund's Declaration of Trust as the "Declaration of Trust") establishing
the rights and preferences of the shares of APS, provides for the
solicitation of consents from and voting by Holders of the shares of
APS under certain circumstances. The Fund shall establish a record date
for such purposes and give DTC notice of such record date not less than
15 calendar days in advance of such record date to the extent possible.
3. If fewer than all of the shares of APS are to be redeemed
pursuant to Part I, Section 3 of the Certificate of Vote, the number of
shares of APS to be redeemed shall be determined by the Board of
Trustees of the Fund and the Fund shall notify the Auction Agent and
DTC by 1:00 p.m., New York City time, (A) in the case of an optional
redemption at least 30 days prior to the earliest date on which such
redemption shall occur and (B) in the case of a mandatory redemption,
if the Fund shall have received the relief from the Securities and
Exchange Commission described in the Prospectus with respect to
mandatory redemptions, on the second Business Day preceding the
redemption date established by the Board of Trustees and specified in
such notice. By the close of business on the day on which the Auction
Agent receives a Notice of Redemption from the Fund, the Auction Agent
will give telephonic notice to DTC, and the Auction Agent shall give
DTC a hand delivered copy of such notice which will be marked "TIME
CRITICAL" and shall include a copy addressed to Vice President,
Reorganization Department (which call notice shall include the
aggregate number of shares of APS to be redeemed). Unless certificates
representing the shares of APS are held by Holders other than DTC or
its nominee, DTC, upon receipt of a Notice of Redemption from the
Auction Agent, will determine by lot the number
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July 21, 1993
Page 3
of shares of APS to be redeemed from the account of each DTC
Participant ("Participant"). DTC shall use its best efforts to complete
such lottery and notify the Auction Agent of the results of such
lottery by 10:00 a.m., New York City time, on the Business Day
following the date on which DTC receives the call notice from the
Auction Agent. DTC shall notify the Auction Agent by such time that
each Participant has credited to its DTC account shares of APS that are
selected for redemption by DTC and shall, using its best efforts,
provide the Auction Agent with the names of the persons or departments
at each such Participant to be contacted regarding such redemption. The
Auction Agent will in turn determine by lot the number of shares of APS
to be redeemed from the accounts of the Existing Holders of shares of
APS whose Participants have been selected in sufficient time to enable
the Auction Agent to notify the Broker-Dealer and such Existing Holders
as provided in the Auction Agency Agreement.
4. The Declaration of Trust provides that the dividend rate
for the shares of APS may vary from time to time based upon the results
of the implementation of the Auction Procedures set forth in Part II of
the Certificate of Vote. The Auction Agent shall telecopy notice to
Manager, Announcements, Dividends Department, The Depository Trust
Company, at (212) 709-1723, of the Applicable Rate and the Dividend
Payment Date with respect to the shares of APS (the "Dividend Rate
Notices") no later than the day following each Auction after
implementation of such procedures and shall verify receipt by DTC of
such notice by contacting the Supervisor, Announcements, Dividends
Department, The Depository Trust Company, at (212) 709-1270. The
Auction Agent shall make available, by telecopy, facsimile or other
similar means, to Interactive Data Services, Inc., or any other
announcement service to which DTC may subscribe, the Applicable Rate
and the Dividend Payment Date on each Auction Date after implementation
of such procedures.
5. The Prospectus indicates that each purchaser of shares of
APS or its Broker-Dealer must sign a Master Purchaser's Letter which
contains provisions restricting transfer of such APS. The Fund and the
Auction Agent acknowledge that so long as Cede is the sole record owner
of shares of APS, it shall be entitled to all voting rights applicable
to such APS and to receive the full amount of all dividends,
liquidation proceeds and redemption proceeds payable with respect to
such APS. The Fund and the Auction Agent acknowledge that DTC shall
treat any Participant having shares of APS credited to its DTC account
as entitled to the full benefits of ownership of such APS even if the
crediting of shares of such APS to the DTC accounts of such Participant
results from transfers or failures to transfer in violation of the
provisions of the Master Purchaser's Letter. Without limiting the
generality of the preceding sentence, the Fund and the Auction Agent
acknowledge that DTC shall treat any Participant having shares of APS
credited to its DTC account as entitled to receive dividends,
distributions and voting rights, if any, in respect of shares of such
APS and, subject to Section 11 hereof, to receive certificates
evidencing shares of such APS if such certificates are to be
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issued in accordance with the Fund's Declaration of Trust. (The
treatment by DTC of the effects of the crediting by it of shares of
such APS to the accounts of Participants described in the preceding two
sentences shall not affect the rights of the Fund, participants in
Auctions relating to shares of such APS or purchasers, sellers or
Holders of shares of such APS against any Participant.) DTC shall have
no responsibility to ascertain that any transfer of shares of APS is
made in accordance with the provisions of the Master Purchaser's
Letter.
6. All notices and payment advices sent to DTC shall contain
the CUSIP number set forth in the respective APS Certificate.
7. Notices to DTC by facsimile transmission shall be sent to
(212) 709-1093 or (212) 709-1094. Notices to DTC by any other means
shall be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004
8. Dividend payments shall be received by Cede, as nominee of
DTC, or its registered assigns in same-day funds on each payment date
(or the equivalent in accordance with existing arrangements between the
Fund or the Auction Agent and DTC). Such payments shall be made payable
to the order of "Cede & Co." Absent any other existing arrangements
such payments shall be addressed as follows:
Manager, Cash Receipts, Dividends
The Depository Trust Company
7 Hanover Square, 24th Floor
New York, New York 10004
9. Redemption payments shall be made in same-day funds by the
Auction Agent in the manner set forth in the SDFS Paying Agent
Operating Procedures (a copy of which previously has been furnished to
the Auction Agent).
10. DTC may direct the Auction Agent to use any other
telephone number for facsimile transmission, address or department of
DTC as the number, address or department to which payments of
dividends, redemption proceeds or notices may be sent.
11. In the event of a partial redemption necessitating a
reduction in the number of outstanding shares of APS, DTC, in its
discretion, (a) may request the Fund to direct the Auction Agent to
issue and authenticate a new APS Certificate with respect to the shares
of APS in exchange for surrender of the old APS
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Certificate with respect to such APS or (b) shall make an appropriate
notation on the APS Certificate with respect to such APS indicating the
date and amounts of such reduction in the outstanding shares of such
APS, except in the case of a final redemption of shares of such APS in
which case the APS Certificate with respect to such APS must be
surrendered to the Auction Agent prior to payment.
12. In the event that beneficial owners of shares of APS shall
be able to obtain certified shares, the Auction Agent may notify DTC of
the availability of certificates representing the ownership of shares
of such APS. In such event, the Auction Agent will issue, transfer and
exchange APS Certificates with respect to APS as required by DTC and
others in appropriate amounts.
13. Whenever DTC requests the Fund and the Auction Agent to do
so, the Auction Agent and the Fund will cooperate with DTC in taking
appropriate action to make available one or more separate certificates
evidencing shares of APS to any Participant having shares of such APS
credited to its DTC account.
14. DTC may determine to discontinue providing its services as
securities depository with respect to shares of APS at any time by
giving 90 days written notice to the Fund and the Auction Agent (at
which time DTC will confirm with the Auction Agent the aggregate amount
of outstanding shares of APS). Under such circumstances, at DTC's
request the Fund or the Auction Agent will cooperate with DTC in taking
appropriate action to make available one or more separate certificates
evidencing shares of such APS to any Participant having shares of such
APS credited to its DTC account.
15. The Fund hereby authorizes DTC to provide to the Auction
Agent position listings of its Participants with respect to shares of
APS from time to time at the request of the Auction Agent and upon
DTC's receipt of its customary fee, and also authorizes DTC in the
event of a partial redemption of shares of APS to provide the Auction
Agent, upon request, with the names of those Participants whose
position in such APS has been selected for redemption by DTC. DTC
agrees to use its best efforts to notify the Auction Agent of those
Participants whose position in shares of APS has been selected for
redemption by DTC and to provide the Auction Agent with the names of
the person or department at such Participants to contact regarding such
redemption. The Fund authorizes the Auction Agent to provide DTC with
such signatures, examples of signatures and authorizations to act as
may be deemed necessary to DTC to permit DTC to discharge its
obligations to its Participants and appropriate regulatory authorities.
This authorization, unless revoked by the Fund, shall
continue with respect to shares of APS while shares of such APS are on
deposit at DTC, until and unless the Auction Agent shall no longer be
acting. In such event, the Fund shall provide DTC with similar evidence
of authorization of any successor thereto to so act. Such requests for
securities positions shall be addressed as follows:
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July 21, 1993
Page 6
Supervisory; Proxy
Reorganization Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, New York 10004-2695
Phone (212) 789-6870
Fax (212) 709-6896
16. (a) The Prospectus indicates that the Fund may at any time
designate a Special Dividend Period with respect to shares of APS prior
to the commencement of such Special Dividend Period. In the event of
such designation, the Fund will notify DTC in writing at least seven
days prior to the Auction Date relating to such Special Dividend Period
of all details concerning the Special Dividend Period. If the new
dividend for a Special Dividend Period is to be payable on more than
one Dividend Payment Date, such notice shall state all such Dividend
Payment Dates and payment factors associated with such Dividend Period.
The Auction Agent shall also notify DTC of each upcoming Dividend
Payment Date on the business day after the preceding Dividend Payment
Date.
(b) The Fund will notify DTC, at least 10 business
days prior to the payment date for an Additional Dividend (as
defined in the Prospectus) in respect of shares of APS, of (i)
the record date for Holders of shares of such APS entitled to
receive Additional Dividends, (ii) the amount of Additional
Dividends payable on a per share basis to such Holders and
(ii) the CUSIP number set forth on the share certificate
representing shares of APS.
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July 21, 1993
Page 7
If you are in agreement with the terms of this Letter
Agreement, please execute the Letter Agreement in the space provided below.
Very truly yours
VAN KAMPEN MERRITT CALIFORNIA
VALUE MUNICIPAL INCOME TRUST
By: /s/ Ronald A. Nyberg
-----------------------------
Name: Ronald A. Nyberg
Title: Vice President & Secretary
BANKERS TRUST COMPANY
as auction agent
By: /s/ Sandra Becker
-----------------------------
Name: Sandra Becker
Title: Assistant Treasurer
Accepted as of the date first written above
THE DEPOSITORY TRUST COMPANY
By: /s/ Richard B. Nesson
-----------------------------
Name: Richard B. Nesson
Title: General Counsel
Enclosures
CC: Goldman, Sachs & Co.
Smith Barney, Harris Upham & Co. Incorporated
PaineWebber Incorporated
Prudential Securities Incorporated
Kidder, Peabody & Co. Incorporated
A.G. Edwards & Sons, Inc.