Exhibit K(3)
FORM OF
BLACKROCK STRATEGIC MUNICIPAL BROKER-DEALER AGREEMENT
Basic Terms for Acting as a Broker-Dealer
[ ], 1999
These basic terms ("Basic Terms") set forth the general terms
and conditions pursuant to which a broker-dealer identified in an Acceptance
Letter (together with its successors and assigns, a "BD") will act as a broker-
dealer for Municipal Auction Rate Cumulative Preferred Shares ("Preferred
Shares") issued by The BlackRock Pennsylvania Strategic Municipal Trust and by
the BlackRock Strategic Municipal Trust, each an investment company registered
under the Investment Company Act of 1940, as amended (each a "Trust"), for which
BlackRock Advisors Inc. (the "Adviser") is the investment adviser.
Each Trust has issued or may issue Preferred Shares, pursuant
to its Agreement and Declaration of Trust, as amended or supplemented by the
Statement (as defined below) of such Trust. A bank or trust company specified in
the Request Letter will act as the auction agent (the "Auction Agent") of such
Trust pursuant to authority granted it in the Auction Agency Agreement.
The Statement of each Trust will provide that, for each
Subsequent Rate Period of any series of Preferred Shares of such Trust then
outstanding, the Applicable Rate for such series for such Subsequent Rate Period
shall, except under certain conditions, be the rate per annum that the Auction
Agent of such Trust advises results from implementation of the Auction
Procedures for such series. The Board of Trustees or a committee thereof of each
Trust will adopt a resolution appointing the Auction Agent as auction agent for
purposes of the Auction Procedures for each series of Preferred Shares of such
Trust.
The Auction Procedures of each Trust will require the
participation of one or more Broker-Dealers for each series of Preferred Shares
of such Trust. BD will act as a Broker-Dealer for each series of Preferred
Shares of each Trust identified in a Request Letter.
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Statement.
Capitalized terms not defined herein shall have the respective
meanings specified in the Statement of the relevant Trust.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures, the following terms shall
have the following meanings, unless the context otherwise requires:
(a) "Acceptance Letter" shall mean the letter from Adviser to BD
pursuant to which the Adviser appoints BD as a Broker Dealer for each series of
Preferred Shares issued by any Trust that has executed a Request Letter.
(b) "Agreement", with respect to any Trust, shall mean the Basic
Terms, together with the Acceptance Letter and the Request Letter relating to
one or more series of Preferred Shares of such Trust and any other substantially
similar agreement among such Trust, the Adviser, any Auction Agent for such
Trust and/or BD.
(c) "Auction" shall have the meaning specified in Section 2.1 hereof.
(d) "Auction Agency Agreement", with respect to any Trust, shall mean
the Auction Agency Agreement between such Trust and the Auction Agent relating
to one or more series of Preferred Shares of such Trust.
(e) "Auction Procedures", with respect to any Trust, shall mean the
auction procedures constituting Part II of the form of Statement of such Trust
as of the filing thereof.
(f) "Authorized Officer" of an Auction Agent shall mean each Senior
Vice President, Vice President, Assistant Vice President, Assistant Treasurer
and Assistant Secretary of such Auction Agent assigned to its Corporate Trust
and Agency Group and every other officer or employee of such Auction Agent
designated as an "Authorized Officer" for purposes of the Agreement in a
communication to BD.
(g) "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of the Agreement in a communication to any
Auction Agent.
(h) "Preferred Shares" shall mean the preferred shares, par value
$.001 per share, of any Trust designated as its "Municipal Auction Rate
Cumulative Preferred Shares" and bearing such further designation as to series
as the
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Board of Trustees of such Trust or any committee thereof shall specify, as set
forth in a Request Letter.
(i) "Request Letter", with respect to any Trust, shall mean the letter
from such Trust to the Adviser and the Auction Agent for such Trust pursuant to
which such Trust appoints BD as a Broker-Dealer for each series of Preferred
Shares of such Trust.
(j) "Settlement Procedures" shall mean the Settlement Procedures
attached hereto as Exhibit A.
(k) "Statement", with respect to any Trust, shall mean the Statement
of Preferences of one or more series of Municipal Auction Rate Cumulative
Preferred Shares, as adopted by such Trust, a copy of which will be attached to
the Request Letter of such Trust.
1.3 Rules of Construction.
Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of each Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of such Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof", "herein", "hereto", and other words of similar
import refer to such Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
(e) Section 1 and 2 hereof shall be read in conjunction with the
Statement and in the event of any conflict with the Statement the Statement
shall take precedent.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
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(a) The provisions of the Auction Procedures of any Trust will be
followed by the Auction Agent of such Trust for the purpose of determining the
Applicable Rate for any Subsequent Rate Period of any series of Preferred Shares
of such Trust for which the Applicable Rate is to be determined by an Auction.
Each periodic operation of such procedures is hereinafter referred to as an
"Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part hereof to the same extent as if such provisions
were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of, and
limitations and restrictions placed upon, a Broker-Dealer under each Agreement
for each series of Preferred Shares. BD understands that other Persons meeting
the requirements specified in the definition of "Broker-Dealer" contained in the
Auction Procedures may execute Agreements and participate as Broker-Dealers in
Auctions.
2.2 Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date for any series of
Preferred Shares, the Auction Agent for such series shall advise the
Broker-Dealers for such series by telephone of the Maximum Rate therefor and the
Reference Rate(s) and Treasury Note Rate(s), as the case may be, used in
determining such Maximum Rate.
(b) In the event that any Auction Date for any series of Preferred
Shares shall be changed after the Auction Agent for such series has given the
notice referred to in clause (vi) of paragraph (a) of the Settlement Procedures,
or after the notice referred to in Section 2.5(a) hereof, if applicable, such
Auction Agent, by such means as such Auction Agent deems practicable, shall give
notice of such change to BD, if it is a Broker-Dealer for such series, not later
than the earlier of 9:15 A.M. on the new Auction Date or 9:15 A.M. on the old
Auction Date.
(c) For purposes of maintaining its list of Existing Holders, the
Auction Agent for any series of Preferred Shares from time to time may request
any Broker-Dealer to provide such Auction Agent with a list of Persons who such
Broker-Dealer believes should be Existing Holders based upon inquiries of those
Persons such Broker-Dealer believes are Beneficial Owners as a result of the
most recent Auction and with respect to each such Person, the number of shares
of such series of Preferred Shares such Broker-Dealer believes are owned by such
Person. BD shall comply with any such request relating to a series of Preferred
Shares in
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respect of which BD was named a Broker-Dealer, and the Auction Agent shall keep
confidential any such information so provided by BD and shall not disclose any
information so provided by BD to any Person other than the Trust and BD.
(d) BD agrees to maintain a list of customers relating to a series of
Preferred Shares and to use its best efforts, subject to existing laws and
regulations, to contact the customers on such list whom BD believes may be
interested in participating in the Auction on each Auction Date, as a Potential
Holder or a Potential Beneficial Owner, for the purposes set forth in the
Auction Procedures. Nothing herein shall require BD to submit an Order for any
customer in any Auction.
(e) The Auction Agent's registry of Existing Holders of shares of a
series of Preferred Shares shall be conclusive and binding on BD. BD may inquire
of the Auction Agent between 3:00 P.M. on the Business Day preceding an Auction
for shares of a series of Preferred Shares and 9:30 A.M. on the Auction Date for
such Auction to ascertain the number of shares of such series in respect of
which the Auction Agent has determined BD to be an Existing Holder. If BD
believes it is the Existing Holder of fewer shares of such series than specified
by the Auction Agent in response to BD's inquiry, BD may so inform the Auction
Agent of that belief. BD shall not, in its capacity as Existing Holder of shares
of such series, submit Orders in such Auction in respect of shares of such
series covering in the aggregate more than the number of shares of such series
specified by the Auction Agent in response to BD's inquiry.
2.3 Auction Schedule; Method of Submission of Orders.
(a) Each Trust and the Auction Agent for such Trust shall conduct
Auctions for Preferred Shares in accordance with the schedule set forth below.
Such schedule with respect to any series of Preferred Shares of any Trust may be
changed by the Auction Agent for such series with the consent of such Trust,
which consent shall not be unreasonably withheld. Such Auction Agent shall give
written notice of any such change to each Broker-Dealer of such series. Such
notice shall be given prior to the close of business on the Business Day next
preceding the first Auction Date on which such change shall be effective.
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Time Event
---- -----
By 9:30 A.M Auction Agent for such series advises such Trust
and the Broker-Dealers for such series of the
applicable Maximum Rate and the Reference
Rate(s) and Treasury Note Rate(s), as the case
may be, used in determining such Maximum Rate as
set forth in Section 2.2(a) hereof.
9:30 A.M. - 1:30 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Section
2(a) of the Auction Procedures of such Trust.
Submission Deadline is 1:30 P.M.
Not earlier than 1:30 P.M. Auction Agent makes determinations pursuant to
Section 3(a) of the Auction Procedures of such
Trust.
By approximately 3:00 P.M. Auction Agent advises Trust of results of
Auction as provided in Section 3(b) of the
Auction Procedures of such Trust.
Submitted Bids and Submitted Sell Orders are
accepted and rejected and shares of such series
of Preferred Shares allocated as provided in
Section 4 of the Auction Procedures of such
Trust.
Auction Agent gives notice of Auction results as
set forth in Section 2.4(a) hereof.
(b) BD shall submit Orders to the appropriate Auction Agent in writing
substantially in the form attached hereto as Exhibit B. BD shall submit a
separate Order to such Auction Agent for each Potential Holder or Existing
Holder with respect to whom BD is submitting an Order and shall not otherwise
net or aggregate such Orders prior to their submission to such Auction Agent.
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(c) BD shall deliver to the appropriate Auction Agent (i) a written
notice in substantially the form attached hereto as Exhibit C of transfers of
Preferred Shares to BD from another Person other than pursuant to an Auction and
(ii) a written notice substantially in the form attached hereto as Exhibit D, of
the failure of any Preferred Shares to be transferred to or by any Person that
purchased or sold Preferred Shares through BD pursuant to an Auction. Such
Auction Agent is not required to accept any such notice described in clause (i)
for an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day preceding such Auction.
(d) BD and other Broker-Dealers may submit Orders in Auctions for
their own accounts (including Orders for their own accounts where the Order is
placed beneficially for a customer) unless the relevant Trust shall have
notified BD and all other Broker-Dealers that they may no longer do so, in which
case Broker-Dealers may continue to submit Hold Orders and Sell Orders for their
own accounts. Any Broker-Dealer that is an affiliate of the Trust may submit
Orders in auctions, but only if such Orders are not for its own account. For
purposes of this Section 2.3(d), a Broker-Dealer shall not be deemed to be an
affiliate of the Trust solely because one or more of the directors or executive
officers of such Broker-Dealer or any Person controlled by, in control of or
under common control with such Broker-Dealer is also a Director of the Trust.
(e) BD agrees to handle its customers' orders in accordance with its
duties under applicable securities laws and rules.
(f) To the extent that pursuant to Section 4 of the Auction Procedures
of any Trust, BD continues to hold, sells, or purchases a number of shares that
is fewer than the number of shares in an Order submitted by BD to the Auction
Agent in which BD designated itself as an Existing Holder or Potential Holder in
respect of customer Orders, BD shall make appropriate pro rata allocations among
its customers for which it submitted Orders of similar tenor. If as a result of
such allocations, any Beneficial Owner would be entitled or required to sell, or
any Potential Beneficial Owner would be entitled or required to purchase, a
fraction of a Preferred Share on any Auction Date, BD shall, in such manner as
it shall determine in its sole discretion, round up or down the number of
Preferred Shares to be purchased or sold on such Auction Date by any Beneficial
Owner or Potential Beneficial Owner on whose behalf BD submitted an Order so
that the number of shares so purchased or sold by each such Beneficial Owner or
Potential Beneficial Owner on such Auction Date shall be whole shares.
2.4 Notices.
(a) On each Auction Date for any series of Preferred Shares, the
Auction Agent for such series shall notify BD, if BD is a Broker-Dealer of such
series, by telephone of the results of the Auction as set forth in paragraph (a)
of the
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Settlement Procedures. By approximately 11:30 A.M. on the Business Day next
succeeding such Auction Date, the relevant Auction Agent shall confirm to BD in
writing the disposition of all Orders submitted by BD in such Auction.
(b) BD shall notify each Existing Holder, Potential Holder, Beneficial
Owner or Potential Beneficial Owner of Preferred Shares with respect to whom BD
has submitted an Order as set forth in paragraph (b) of the Settlement
Procedures and take such other action as is required of BD pursuant to the
Settlement Procedures.
2.5 Designation of Special Rate Period.
(a) If any Trust delivers to its Auction Agent a notice of the Auction
Date for any series of Preferred Shares of such Trust for a Rate Period thereof
that next succeeds a Rate Period that is not a Minimum Rate Period in the form
of Exhibit C to the Auction Agency Agreement, and BD is a Broker-Dealer of such
series, the Auction Agent shall deliver such notice to BD as promptly as
practicable after its receipt of such notice from such Trust.
(b) If the Board of Trustees of any Trust proposes to designate any
succeeding Subsequent Rate Period of any series of Preferred Shares of such
Trust as a Special Rate Period and such Trust delivers to its Auction Agent a
notice of such proposed Special Rate Period in the form of Exhibit D to the
Auction Agency Agreement, and BD is a Broker-Dealer for such series, such
Auction Agent shall deliver such notice to BD as promptly as practicable after
its receipt of such notice from the Trust.
(c) If the Board of Trustees of any Trust determines to designate such
succeeding Subsequent Rate Period as a Special Rate Period, and such Trust
delivers to its Auction Agent a notice of such Special Rate Period in the form
of Exhibit E to the Auction Agency Agreement not later than 11:00 A.M. on the
second Business Day next preceding the first day of such Rate Period (or by such
later time or date, or both, as may be agreed to by such Auction Agent), and BD
is a Broker-Dealer for such series, such Auction Agent shall deliver such notice
to BD not later than 3:00 P.M. on such second Business Day (or, if such Auction
Agent has agreed to a later time or date, as promptly as practicable
thereafter).
(d) If any Trust shall deliver to its Auction Agent a notice not later
than 11:00 A.M. on the second Business Day next preceding the first day of any
Rate Period (or by such later time or date, or both, as may be agreed to by such
Auction Agent) stating that such Trust has determined not to exercise its option
to
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designate such succeeding Subsequent Rate Period as a Special Rate Period, in
the form of Exhibit F to the Auction Agency Agreement, or shall fail to timely
deliver either such notice or a notice in the form of Exhibit E to the Auction
Agency Agreement, and BD is a Broker-Dealer for such series, such Auction Agent
shall deliver a notice in the form of Exhibit F to the Auction Agency Agreement
to BD not later than 3:00 P.M. on such second Business Day (or, if such Auction
Agent has agreed to a later time or date, as promptly as practicable
thereafter).
2.6 Allocation of Taxable Income.
If any Trust delivers to its Auction Agent a notice in the form of Exhibit I
to the Auction Agency Agreement designating all or a portion of any dividend on
shares of any series of Preferred Shares of such Trust to consist of net capital
gains or other income taxable for Federal income tax purposes, and BD is a
Broker-Dealer for such series, such Auction Agent shall deliver such notice to
BD on the Business Day following its receipt of such notice from such Trust. On
or prior to the Auction Date referred to in such notice, BD will contact each of
its customers that is a Beneficial Owner of shares of such series of Preferred
Shares or a Potential Beneficial Owner of shares of such series of Preferred
Shares interested in submitting an Order in the Auction to be held on such
Auction Date, and BD will notify such Beneficial Owners and Potential Beneficial
Owners of the contents of such notice. BD will be deemed to have notified such
Beneficial Owners and Potential Beneficial Owners if, for each of them, (i) BD
makes a reasonable effort to contact such Beneficial Owner or Potential
Beneficial Owner by telephone, and (ii) upon failing to contact such Beneficial
Owner or Potential Beneficial Owner by telephone BD mails written notification
to such Beneficial Owner or Potential Beneficial Owner at the mailing address
indicated in the account records of BD.
The Auction Agent for any series of Preferred Shares shall be required to
notify BD if it is a Broker-Dealer for such series within two Business Days
after each Auction of such series of the Auction Agent's receipt of notice from
the Trust that such Auction involves an allocation of income taxable for Federal
income tax purposes as to the dollar amount per share of such taxable income and
income exempt from Federal income taxation included in the related dividend.
2.7 Failure to Deposit.
(a) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of any series of Preferred Shares of any Trust during any Rate Period
thereof (other than any Special Rate Period of
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more than 364 Rate Period Days or any Rate Period succeeding any Special
Rate Period of more than 364 Rate Period Days during which a Failure to
Deposit occurred that has not been cured), but, prior to 12:00 Noon, New
York City time, on the third Business Day next succeeding the date on which
such Failure to Deposit occurred, such Failure to Deposit shall have been
cured in accordance with Section 2.7 of the Auction Agency Agreement and
such Trust shall have paid to the Auction Agent for such series the
applicable Late Charge as described in Section 2.7 of the Auction Agency
Agreement,
then, if BD is a Broker-Dealer for such series, such Auction Agent shall
deliver a notice in the form of Exhibit G to the Auction Agency Agreement
by first-class mail, postage prepaid, to BD not later than one Business Day
after its receipt of the payment from such Trust curing such Failure to
Deposit and such Late Charge.
(b) If:
(i) any Failure to Deposit shall have occurred with respect to
shares of any series of Preferred Shares of any Trust during any Rate
Period thereof (other than any Special Rate Period of more than 364 Rate
Period Days or any Rate Period succeeding any Special Rate Period of more
than 364 Rate Period Days during which a Failure to Deposit occurred but
has not been cured), and, prior to 12:00 Noon, New York City time, on the
third Business Day next succeeding the date on which such Failure to
Deposit occurred, such Failure to Deposit shall not have been cured as
described in Section 2.7 of the Auction Agency Agreement or such Trust
shall not have paid to the Auction Agent for such series the applicable
Late Charge described in Section 2.7 of the Auction Agency Agreement; or
(ii) any Failure to Deposit shall have occurred with respect to
shares of any series of Preferred Shares of any Trust during a Special Rate
Period thereof of more than 364 Rate Period Days, or during any Rate Period
thereof succeeding any Special Rate Period of more than 364 Rate Period
Days during which a Failure to Deposit occurred that has not been cured,
and, prior to 12:00 noon, New York City time, on the fourth Business Day
preceding the Auction Date for the Rate Period subsequent to such Rate
Period, such Failure to Deposit shall not have been cured as described in
Section 2.7 of the Auction Agency Agreement or such Trust shall not
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have paid to the Auction Agent for such series the applicable Late Charge
described in Section 2.7 of the Auction Agency Agreement; then such Auction
Agent shall deliver a notice in the form of Exhibit H to the Auction Agency
Agreement to the Broker-Dealers for such series not later than one Business
Day after the receipt of the payment from such Trust curing such Failure to
Deposit and such Late Charge.
2.8 Service Charge to be Paid to BD.
On the Business Day next succeeding each Auction Date for any series
of Preferred Shares specified in, or on Schedule A to, the Request Letter of any
Trust, the Auction Agent for such series shall pay to BD from monies received
from such Trust an amount equal to the product of (a) (i) in the case of any
Auction Date immediately preceding a Rate Period of such series consisting of
364 Rate Period Days or fewer, 1/4 of 1%, or (ii) in the case of any Auction
Date immediately preceding a Rate Period of such series consisting of more than
364 Rate Period Days, such percentage as may be agreed upon by such Trust and BD
with respect to such Rate Period, times (b) a fraction, the numerator of which
is the number of Rate Period Days in the Rate Period therefor beginning on such
Business Day and the denominator of which is 365 if such Rate Period consists of
7 Rate Period Days and 360 for all other Rate Periods, times (c) $25,000 times
(d) the sum of (i) the aggregate number of shares of such series placed by BD in
such Auction that were (A) the subject of Submitted Bids of Existing Holders
submitted by BD and continued to be held as a result of such submission and (B)
the subject of Submitted Bids of Potential Holders submitted by BD and purchased
as a result of such submission plus (ii) the aggregate number of shares of such
series subject to valid Hold Orders (determined in accordance with paragraph (d)
of Section 2 of the Auction Procedures) submitted to the Auction Agent by BD
plus (iii) the number of Preferred Shares deemed to be subject to Hold Orders of
Existing Holders pursuant to paragraph (c) of Section 2 of the Auction
Procedures of such Trust that were acquired by BD for its own account or were
acquired by BD for its customers who are Beneficial Owners.
For purposes of subclause (d)(iii) of the foregoing paragraph, if any
Existing Holder or Beneficial Owner who acquired shares of any series of
Preferred Shares through BD transfers of those shares to another Person other
than pursuant to an Auction, then the Broker-Dealer for the shares so
transferred shall continue to be BD; provided, however, that if the transfer was
effected by, or if the transferee is, a Broker-Dealer other than BD, then such
Broker-Dealer shall be the Broker-Dealer for such shares.
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2.9 Settlement.
(a) If any Existing Holder or Beneficial Owner with respect to whom BD
has submitted a Bid or Sell Order for Preferred Shares of any series that was
accepted in whole or in part fails to instruct its Agent Member to deliver the
Preferred Shares subject to such Bid or Sell Order against payment therefor, BD,
if it knows the identity of such Agent Member, shall instruct such Agent Member
to deliver such shares against payment therefor and, if such Agent Member fails
to comply with such instructions, BD may deliver to the Potential Holder or
Potential Beneficial Owner with respect to whom BD submitted a Bid for Preferred
Shares of such series that was accepted in whole or in part a number of
Preferred Shares of such series that is less than the number of Preferred Shares
of such series specified in such Bid to be purchased by such Potential Holder or
Potential Beneficial Owner.
(b) Neither the Auction Agent nor the Trust shall have any
responsibility or liability with respect to the failure of an Existing Holder,
Beneficial Owner, Potential Holder or Potential Beneficial Owner or its
respective Agent Member to deliver Preferred Shares of any series or to pay for
Preferred Shares of any series sold or purchased pursuant to the Auction
Procedures or otherwise.
(c) Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event BD is an Existing Holder
with respect to shares of a series of Preferred Shares and the Auction
Procedures provide that BD shall be deemed to have submitted a Sell Order in an
Auction with respect to such shares if BD fails to submit an Order in that
Auction with respect to such shares, BD shall have no liability to any Person
for failing to sell such shares pursuant to such a deemed Sell Order if (i) such
shares were transferred by the beneficial owner thereof without notification of
such transfer in compliance with the Auction Procedures or (ii) BD has indicated
to the Auction Agent pursuant to Section 2.2(e) of this Agreement that,
according BD's records, BD is not the Existing Holder of such shares.
(d) Notwithstanding any provision of the Auction Procedures or the
Settlement Procedures to the contrary, in the event an Existing Holder or
Beneficial Owner of shares of a series of Preferred Shares with respect to whom
a Broker-Dealer submitted a Bid to the Auction Agent for such shares that was
accepted in whole or in part, or submitted or is deemed to have submitted a Sell
Order for such shares that was accepted in whole or in part, fails to instruct
its Agent Member to deliver such shares against payment therefor, partial
deliveries of Preferred Shares that have been made in respect of Potential
Holders' or Potential Beneficial Owners' Submitted Bids for shares of such
series that have been accepted
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in whole or in part shall constitute good delivery to such Potential Holders and
Potential Beneficial Owners.
(e) Notwithstanding the foregoing terms of this Section, any delivery
or non-delivery of Preferred Shares of any series which represents any departure
from the results of an Auction for shares of such series, as determined by the
Auction Agent, shall be of no effect for purposes of the registry of Existing
Holders maintained by the Auction Agent pursuant to the Auction Agency Agreement
unless and until the Auction Agent shall have been notified of such delivery or
non-delivery.
(f) The Auction Agent shall have no duty or liability with respect to
enforcement of this Section 2.9.
3. The Auction Agent.
3.1 Duties and Responsibilities.
(a) Each Auction Agent is acting solely as agent for the Trusts with
whom such Auction Agent has entered into Request Letters and owes no fiduciary
duties to any other Person, other than such Trusts, by reason of the Agreements
to which such Auction Agent is a party.
(b) Each Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth in the Agreements to which it is a party,
and no implied covenants or obligations shall be read into such Agreements
against such Auction Agent.
(c) In the absence of bad faith or negligence on its part, each
Auction Agent shall not be liable for any action taken, suffered, or omitted or
for any error of judgment made by it in the performance of its duties under the
Agreements to which it is a party. Each Auction Agent shall not be liable for
any error of judgment made in good faith unless such Auction Agent shall have
been negligent in ascertaining the pertinent facts.
3.2 Rights of the Auction Agents.
(a) Each Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby and upon any
written instruction, notice, request, direction, consent, report, certificate,
share certificate or other instrument, paper or document believed in good faith
by it
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to be genuine. Each Auction Agent shall not be liable for acting upon any
telephone communication authorized by the Agreements to which it is a party that
such Auction Agent believes in good faith to have been given by the appropriate
Trust, by the Adviser or by a Broker-Dealer. Each Auction Agent may record
telephone communications with the Broker-Dealers.
(b) Each Auction Agent may consult with counsel of its choice and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) Each Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.
3.3 Auction Agents' Disclaimers. Each Auction Agent makes no
representation as to the validity or adequacy of the Agreements to which it is a
party, the Auction Agency Agreements to which it is a party or the Preferred
Shares of any series.
4. Miscellaneous.
4.1 Termination.
Any party to any Agreement may terminate such Agreement at any time on five
days' notice to the other parties to such Agreement, provided that the Trust
party to such Agreement shall not terminate the Agreement unless at least one
Broker-Dealer Agreement would be in effect for each series of Preferred Shares
of such Trust after such termination. Each Agreement shall automatically
terminate with respect to any series of Preferred Shares with respect to which
the relevant Auction Agency Agreement has terminated.
4.2 Participant in Securities Depository; Payment of Dividends in Same-Day
Funds.
(a) BD is, and shall remain for the term of the Agreements, a member
of, or participant in, the Securities Depository (or an affiliate of such a
member or participant).
(b) BD represents that it (or if BD does not act as Agent Member, one
of its affiliates) shall make all dividend payments on the Preferred
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Shares available in same-day funds on each Dividend Payment Date to customers
that use BD or affiliate as Agent Member.
4.3 Communications.
Except for (i) communications authorized to be by telephone by the
Agreement of any Trust or the Auction Procedures of such Trust and (ii)
communications in connection with Auctions (other than those expressly required
to be in writing), all notices, requests and other communications to any party
under such Agreement shall be in writing (including telecopy or similar writing)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to a Trust, [Name of Trust]
addressed: c/o BlackRock Financial Management, Inc.
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: [ ]
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Adviser, BlackRock Advisors, Inc.
addressed: 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: [ ]
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to BD, to the
address or telecopy number
as set forth in the Acceptance
Letter,
If to an Auction
Agent, to the address
or telecopy number as set
forth in the Request Letter,
or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other parties. Each such notice, request or
15
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
an Auction Agent by an Authorized Officer of such Auction Agent. BD may record
telephone communications with any Auction Agent.
4.4 Entire Agreement.
Each Agreement contains the entire agreement among the parties thereto
relating to the subject matter thereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
among the parties thereto relating to the subject matter thereof. Each Agreement
supersedes any prior agreement to which BD was a party in respect of any Trust.
16
4.5 Benefits.
Nothing in any Agreement, express or implied, shall give to any person,
other than the Trust party to such Agreement, the Adviser, the Auction Agent
party to such Agreement and BD and their respective successors and assigns, any
benefit or any legal or equitable right, remedy or claim under such Agreement.
4.6 Amendment; Waiver.
(a) Each Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.
(b) Failure of any party to any Agreement to exercise any right or
remedy thereunder in the event of a breach thereof by any other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
(c) Notwithstanding any provision hereof to the contrary, the Trust
may (a) upon five business days' notice to the Auction Agent and you, amend,
alter or repeal any of the provisions contained herein, it being understood and
agreed that you shall be deemed to have accepted any such amendment, alteration
or repeal if, after the expiration of such five business day period, you submit
an Order to the Auction Agent in respect of the Preferred Shares of the Trust to
which such amendment, alteration or repeal relates, and (b) upon two business
days' notice to the Auction Agent and you, exclude you from participating as a
Broker-Dealer in any particular auction for any particular series of Preferred
Shares.
4.7 Successors and Assigns.
Each Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and assigns of the Trust party to such
Agreement, the Adviser, the Auction Agent party to such Agreement and BD.
4.8 Severability.
If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.
4.9 Governing Law.
Each Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
17
4.10 Declaration of Trust.
Each Agreement to which a Trust that is a Delaware business trust is a
party has been executed on behalf of such Trust by the Vice President and
Treasurer of such Trust acting in such capacity and not individually, and the
obligations of such Trust set forth in such Agreement are not binding upon any
of such Trust's trustees, officers or shareholders individually, but are binding
only upon the assets and property of such Trust.
18
EXHIBIT A
SETTLEMENT PROCEDURES
Capitalized terms used herein have the respective meanings specified in the
forepart of this Prospectus or the Glossary, as the case may be.
(a) On each Auction Date for the Preferred Shares, the Auction Agent shall
notify by telephone the Broker-Dealers that participated in the Auction for such
shares held on such Auction Date and submitted an Order to the Auction Agent for
such shares as or on behalf of an Existing Holder or Potential Holder of:
(i) the Applicable Rate for such shares fixed for the next succeeding Rate
Period of such shares;
(ii) whether Sufficient Clearing Bids existed for the determination of the
Applicable Rate for such shares;
(iii) if such Broker-Dealer submitted a Bid or a Sell Order to the Auction
Agent for such shares as or on behalf of an Existing Holder, whether such Bid
or Sell Order was accepted or rejected, in whole or in part, and the number of
shares, if any, of the Preferred Shares then outstanding to be sold by such
Existing Holder;
(iv) if such Broker-Dealer submitted a Bid in the Auction Agent for such
shares as or on behalf of a Potential Holder, whether such Bid was accepted or
rejected, in whole or in part, and the number of shares, if any, of the
Preferred Shares to be purchased by such Potential Holder;
(v) if the aggregate number of Preferred Shares to be sold by all Existing
Holders with respect to whom such Broker-Dealer submitted Bids or Sell Orders
to the Auction Agent for such shares is different than the aggregate number of
Preferred Shares to be purchased by all Potential Holders with respect to whom
such Broker-Dealer submitted Bids to the Auction Agent for such shares, the
name or names of one or more other Broker-Dealers (and the Agent Member, if
any, of each such other Broker-Dealer) and the number of Preferred Shares to
be (x) purchased from one or more Existing Holders with respect to whom such
other Broker-Dealers submitted Bids or Sell Orders to the Auction Agent for
such shares, or (y) sold to one or more Potential Holders with respect to whom
such other Broker-Dealers submitted Bids to the Auction Agent for such shares;
and
(vi) the scheduled Auction Date of the next succeeding Auction for such
shares.
(b) On each Auction Date for any Preferred Shares, each Broker-Dealer that
submitted an Order to the Auction Agent for such shares as or on behalf of any
Existing Holder or Potential Holder shall:
(i) advise each Existing Holder and Potential Holder (and each Beneficial
Owner and Potential Beneficial Owner) with respect to whom such Broker-Dealer
submitted a Bid or Sell Order to the Auction Agent for such shares whether
such Bid or Sell Order was accepted or rejected, in whole or in part;
(ii) instruct each Potential Holder (and each Potential Beneficial Owner)
with respect to whom such Broker-Dealer submitted a Bid to the Auction Agent
for such shares that was accepted, in whole or in part, to instruct such
Bidder's Agent Member to pay to such Broker-Dealer (or its Agent Member)
through the Securities Depository the amount necessary to purchase the number
of Preferred Shares to be purchased pursuant to such Bid against receipt of
such shares;
(iii) instruct each Existing Holder (and each Beneficial Owner) with
respect to whom such Broker-Dealer submitted a Bid to the Auction Agent for
such shares that was accepted, in whole or in part, or a Sell Order for such
shares that was accepted, in whole or in part, to instruct such Bidder's Agent
Member to deliver to such Broker-Dealer (or its Agent Member) through the
Securities Depository the number of Preferred Shares to be sold pursuant to
such Bid or Sell Order against payment therefor;
(iv) advise each Existing Holder (and each Beneficial Owner) with respect
to whom such Broker-Dealer submitted an Order to the Auction Agent for such
shares and each Potential Holder (and each Potential Beneficial Owner) with
respect to whom such Broker-Dealer submitted a Bid to the Auction Agent for
such shares of the Applicable Rate for such shares for the next succeeding
Rate Period of such shares;
(v) advise each Existing Holder (and each Beneficial Owner) with respect to
whom such Broker-Dealer submitted an Order to the Auction Agent for such
shares of the Auction Date of the next succeeding Auction for such shares; and
(vi) advise each Potential Holder (and each Potential Beneficial Owner) with
respect to whom such Broker-Dealer submitted a Bid to the Auction Agent for
such shares that was accepted, in whole or in part, of the Auction Date of the
next succeeding Auction for such shares.
(c) On the basis of the information provided to it pursuant to paragraph (a)
above, each Broker-Dealer that submitted a Bid or Sell Order to the Auction
Agent for any Preferred Shares shall allocate any funds received by it (or its
Agent Member) in respect of such shares pursuant to paragraph (b)(ii) above and
any Preferred Shares received by it (or its Agent Member) pursuant to paragraph
(b)(iii) above among the Potential Holders and Potential Beneficial Owners, if
any, with respect to whom such Broker-Dealer submitted Bids to the Auction Agent
for such shares, the Existing Holders and Beneficial Owners, if any, with
respect to whom such Broker-Dealer submitted Bids or Sell Orders to the Auction
Agent for such shares, and any Broker-Dealers identified to it by the Auction
Agent pursuant to paragraph (a)(v) above.
(d) On the Business Day after the Auction Date, the Securities Depository
shall execute the transactions described above, debiting and crediting the
accounts of the respective Agent Members as necessary to effect the purchases
and sale of Preferred Shares as determined in the Auction for such shares.
A-1
EXHIBIT B
[Name of Trust]
$____ Municipal Auction Rate Cumulative Preferred Shares, Series_____
$____ Municipal Auction Rate Cumulative Preferred Shares, Series_____
AUCTION DATE:
------------
ISSUE: SERIES:
--------------- -------------
THE UNDERSIGNED Broker-Dealer SUBMITS THE FOLLOWING ORDERS ON BEHALF OF THE
BIDDER(S) LISTED BELOW:
================================================================================
ORDERS BY EXISTING HOLDERS -
NUMBER OF PREFERRED SHARES
EXISTING HOLDER HOLD BID/RATE SELL
1. /
------------------------ ---------- -------------------------- ----------------
2. /
------------------------ ---------- -------------------------- ----------------
3. /
------------------------ ---------- -------------------------- ----------------
4. /
------------------------ ---------- -------------------------- ----------------
5. /
------------------------ ---------- -------------------------- ----------------
6. /
------------------------ ---------- -------------------------- ----------------
7. /
------------------------ ---------- -------------------------- ----------------
8. /
------------------------ ---------- -------------------------- ----------------
9. /
------------------------ ---------- -------------------------- ----------------
10. /
------------------------ ---------- -------------------------- ----------------
B-1
ORDERS BY POTENTIAL HOLDERS-
NUMBER OF PREFERRED SHARES
POTENTIAL HOLDER BID/RATE
1. /
----------------------------- -------------------------------------------
2. /
----------------------------- -------------------------------------------
3. /
----------------------------- -------------------------------------------
4. /
----------------------------- -------------------------------------------
5. /
----------------------------- -------------------------------------------
6. /
----------------------------- -------------------------------------------
7. /
----------------------------- -------------------------------------------
8. /
----------------------------- -------------------------------------------
9. /
----------------------------- -------------------------------------------
10. /
----------------------------- -------------------------------------------
11. /
----------------------------- -------------------------------------------
12. /
----------------------------- -------------------------------------------
13. /
----------------------------- -------------------------------------------
14. /
----------------------------- -------------------------------------------
15. /
----------------------------- -------------------------------------------
B-2
NOTES:
1. If one or more Orders covering in the aggregate more than the number of
outstanding Preferred Shares held by any Existing Holder are submitted, such
Orders shall be considered valid in the order of priority set forth in the
Auction Procedures.
2. A Hold Order or Sell Order may be placed only by an Existing Holder covering
a number of Preferred Shares not greater than the number of Preferred Shares
currently held by such Existing Holder.
3. Potential Holders may make Bids only, each of which must specify a rate. If
more than one Bid is submitted on behalf of any Potential Holder, each Bid
submitted shall be a separate Bid with the rate specified.
4. Bids may contain no more than three figures to the right of the decimal point
(.001 of 1%).
B-3
================================================================================
[AUCTION AGENT]
AUCTION BID FORM
NAME OF AUTHORIZED Broker-Dealer:
--------------------------
Submit to:
SIGNATURE:
---------------------------------
TOTAL NUMBER OF ORDERS ON THIS BID FORM:
================================================================================
B-4
EXHIBIT C
(To be used only for transfers made to a Broker-Dealer other than pursuant to an
Auction)
[NAME OF TRUST]
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES,
SERIES
-----
TRANSFER FORM
We are the Broker-Dealer to whom the Existing Holder or Beneficial Owner named
below transferred shares of the above series of Preferred Shares other than
pursuant to an Auction. We hereby notify you that such Existing Holder or
Beneficial Owner has transferred shares of the above series of Preferred
-------
Shares to us.
---------------------------------------------
(Name of Existing Holder or Beneficial Owner)
---------------------------------------------
(Name of Broker-Dealer)
---------------------------------------------
By:
Printed Name:
Title:
C-1
EXHIBIT D
(To be used only for failures to deliver
Preferred Shares sold pursuant to an Auction)
[NAME OF TRUST]
MUNICIPAL AUCTION RATE CUMULATIVE PREFERRED SHARES,
SERIES
-----
NOTICE OF A FAILURE TO DELIVER
Complete either I or II
I. We are a Broker-Dealer for ________________ (the "Purchaser"), which
purchased _______ shares of the above series of Preferred Shares in the Auction
held on _____ from the seller of such shares.
II. We are a Broker-Dealer for ____________ (the "Seller"), which sold ________
shares of the above series of Preferred Shares in the Auction held on ______ to
the purchaser of such shares.
We hereby notify you that (check one) -
[_] the Seller failed to deliver such Preferred Shares to the Purchaser
[_] the Purchaser failed to make payment to the Seller upon delivery of such
Preferred Shares
----------------------------------------
(Name of Broker-Dealer)
----------------------------------------
By:
Printed Name:
Title:
D-1
