EXHIBIT (h)(1)
Municipal Auction Rate Cumulative Preferred Shares
THE BLACKROCK STRATEGIC MUNICIPAL TRUST
______ Shares, Series ______
Liquidation Preference $25,000 Per Share
FORM OF UNDERWRITING AGREEMENT
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__________ ___, 1999
XXXXXXX XXXXX XXXXXX INC.
X.X. XXXXXXX & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the
several Underwriters listed in
Schedule I hereto
c/o XXXXXXX XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The BlackRock Strategic Municipal Trust, a Delaware business trust
(the "Trust"), proposes, upon the terms and conditions set forth herein, to
issue and sell an aggregate of ______ shares of its Municipal Auction Rate
Cumulative Preferred Shares, Series ______, each with a liquidation preference
of $25,000 per share (the "Shares"). The Shares will be authorized by, and
subject to the terms and conditions of, the Statement of Preferences of
Municipal Auction Rate Cumulative Preferred Shares of the Trust (the
"Statement") and the Agreement and Declaration of Trust of the Trust (the
"Declaration") in the forms filed as exhibits to the Registration Statement
referred to in Section 1 of this agreement, as the same may be amended from time
to time. The Trust, its investment adviser, BlackRock Advisors, Inc. ("BAI"),
and its investment sub-adviser, BlackRock Financial Management, Inc. ("BFM")
(each, an "Adviser" and together, the "Advisers"), wish to confirm as follows
their agreement with Xxxxxxx Xxxxx Xxxxxx Inc., X.X. Xxxxxxx & Sons, Inc.,
PaineWebber Incorporated and Prudential Securities Incorporated (the
"Representatives"), as representatives of the several Underwriters listed in
Schedule I hereto (the "Underwriters"), in connection with the purchase of the
Shares by the Underwriters.
Collectively, the Investment Management Agreement dated as of August
24, 1999 between the Trust and BAI (the "Investment Advisory Agreement"), the
Sub-Investment Advisory Agreement dated as of August 24, 1999 between the Trust,
BAI and BFM (the "Sub-Advisory Agreement"), the Custodian Agreement dated as of
August 19, 1999 between the Trust and State Street Bank and Trust Company, the
Transfer Agent and Service Agreement dated as of August 27, 1999 between the
Trust and State Street Bank and Trust Company, the Auction Agency Agreement to
be dated as of ______ __, 1999 between the Trust and Bankers Trust Company and
the Broker-Dealer Agreement to be dated as of ______ __, 1999 between the Trust
and Xxxxxxx Xxxxx Xxxxxx Inc. are hereinafter referred to as the "Trust
Agreements." The Investment Advisory Agreement and the Sub-Advisory Agreement
are hereinafter collectively referred to as the "Advisory Agreements." This
Underwriting Agreement is hereinafter referred to as the "Agreement."
1. Registration Statement and Prospectus. The Trust has prepared and
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filed in accordance with the provisions of the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated under the 1933 Act (the "1933 Act
Rules and Regulations") and the 1940 Act (the "1940 Act Rules and Regulations"
and, together with the 1933 Act Rules and Regulations, the "Rules and
Regulations"), a registration statement on Form N-2, as amended by Pre-Effective
Amendments Nos. (File Nos.___-______ and 811-09417) (the "registration
statement"), including a prospectus relating to the Shares. The Trust also has
filed a notification of registration of the Trust as an investment company under
the 1940 Act on Form N-8A (the "1940 Act Notification"). The term "Registration
Statement" as used in this Agreement means the registration statement (including
all financial schedules and exhibits), as amended at the time it becomes
effective under the 1933 Act or, if the registration statement became effective
under the 1933 Act prior to the execution of this Agreement, as amended or
supplemented at the time it became effective, prior to the execution of this
Agreement, and includes any information deemed to be included by Rule 430A under
the 1933 Act Rules and Regulations. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed under the 1933 Act and must be declared effective before
the offering of the Shares may commence, the term "Registration Statement" as
used in this Agreement means the registration statement as amended by said post-
effective amendment. If the Trust has filed an abbreviated registration
statement to register an additional amount of Shares pursuant to Rule 462(b)
under the 1933 Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall include such Rule 462
Registration Statement. The term "Prospectus" as used in this Agreement means
the prospectus and statement of additional information in the forms included in
the Registration Statement or, if the prospectus and statement of additional
information included in the Registration Statement omit information in reliance
on Rule 430A under the 1933 Act Rules and Regulations and such information is
included in a prospectus and statement of additional information filed with the
Commission pursuant to Rule 497(h) under the 1933 Act, the term "Prospectus" as
used in this Agreement means the prospectus and statement of additional
information in the forms included in the Registration Statement as supplemented
by the addition of the information contained in the prospectus filed with the
Commission pursuant to Rule 497(h). The term "Prepricing Prospectus" as used in
this Agreement means the
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prospectus and statement of additional information subject to completion in the
forms included in the registration statement at the time of filing of [Pre-
Effective Amendment No. 1 to the registration statement with the Commission on
_______ ___, 1999,] and as such prospectus and statement of additional
information shall have been amended from time to time prior to the date of the
Prospectus. The terms "Registration Statement," "Prospectus" and "Prepricing
Prospectus" shall also include any financial statements and other information
incorporated by reference therein.
The Trust has furnished you with copies of such registration
statement, each amendment to such registration statement filed with the
Commission and each Prepricing Prospectus.
2. Agreements to Sell and Purchase. (a) The Trust hereby agrees,
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subject to all the terms and conditions set forth herein, to issue and sell to
the Underwriters and, upon the basis of the representations, warranties and
agreements of the Trust and the Advisers herein contained and subject to all the
terms and conditions set forth herein, each Underwriter agrees severally and not
jointly to purchase from the Trust, at a purchase price of $[__________] per
share, the number of Shares set forth opposite the name of such Underwriter in
Schedule I hereto.
3. Terms of Public Offering. The Trust and the Advisers have been
------------------------
advised by you that the Underwriters propose to make a public offering of their
respective Shares as soon after the Registration Statement and this Agreement
have become effective as in your judgment is advisable and initially to offer
the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
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Underwriters of and payment for the Shares shall be made at the office of
Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, or through
the facilities of the Depository Trust Company or another mutually agreeable
facility, at 9:30 A.M., New York City time, on ______ __, 1999 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between you and the Trust.
Certificates for the Shares purchased hereunder shall be registered in
such names and in such denominations as you shall request prior to 9:30 A.M.,
New York City time, on the second business day preceding the Closing Date. Such
certificates shall be made available to you in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date. The certificates evidencing the Shares purchased
hereunder shall be delivered to you on the Closing Date, through the facilities
of The Depository Trust Company, against payment of the purchase price therefor
in immediately available funds.
5. Agreements of the Trust and the Advisers. The Trust and the
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Advisers, jointly and severally, agree with the several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the
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1933 Act before the offering of the Shares may commence, the Trust will endeavor
to cause the Registration Statement or such post-effective amendment to become
effective under the 1933 Act as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing when the
Registration Statement or such post-effective amendment has become effective.
(b) The Trust will advise you promptly and, if requested by you, will
confirm such advice in writing: (i) of any request made by the Commission for
amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus (or any amendment or supplement to any of the
foregoing) or for additional information, (ii) of the issuance by the
Commission, the National Association of Securities Dealers, Inc. (the "NASD"),
any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official of any order suspending the effectiveness
of the Registration Statement, prohibiting or suspending the use of the
Prospectus or any Prepricing Prospectus, or any sales material (as hereinafter
defined), of any notice pursuant to Section 8(e) of the 1940 Act, of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Trust, the Advisers, any affiliate of the Trust or the
Advisers or any representative or attorney of the Trust or the Advisers of any
other material communication adverse to the Trust from the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory, self-regulatory or
administrative agency or any official relating to the Trust (if such
communication relating to the Trust is received by such person within three
years after the date of this Agreement), the Registration Statement, the 1940
Act Notification, the Prospectus, any Prepricing Prospectus, any sales material
(as herein defined) (or any amendment or supplement to any of the foregoing) or
this Agreement or any of the Trust Agreements and (iv) within the period of time
referred to in paragraph (f) below, of any material adverse change in the
condition (financial or other), prospects, assets or results of operations of
the Trust or any event which should reasonably be expected to have a material
adverse effect on the ability of either Adviser to perform its respective
obligations under this Agreement and the Advisory Agreements to which it is a
party (in either case, other than as a result of changes in market conditions
generally or the market for municipal securities generally) or of the happening
of any other event which makes any statement of a material fact made in the
Registration Statement or the Prospectus, or any Prepricing Prospectus (or any
amendment or supplement to any of the foregoing) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus, or any Prepricing Prospectus (or any amendment or supplement to any
of the foregoing) in order to state a material fact required by the 1933 Act,
the 1940 Act or the Rules and Regulations to be stated therein or necessary in
order to make the statements therein (in the case of a prospectus, in light of
the circumstances under which they were made) not misleading, or of the
necessity to amend or supplement the Registration Statement, the Prospectus, or
any Prepricing Prospectus (or any amendment or supplement to any of the
foregoing) to comply with the 1933 Act, the 1940 Act, the Rules and Regulations
or any other law or order of any court or regulatory body. If at any time the
Commission, the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory, self-
regulatory or administrative agency or any official shall issue any order
suspending the
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effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) or suspending the qualification of the
Shares for offering or sale in any jurisdiction, the Trust will use its
reasonable best efforts to obtain the withdrawal of such order at the earliest
possible time.
(c) The Trust will furnish to you, without charge, three signed
copies of the Registration Statement as originally filed with the Commission and
of each amendment thereto, including financial statements and all exhibits
thereto, and will also furnish to you, without charge, such number of conformed
copies of the Registration Statement as originally filed and of each amendment
thereto, but without exhibits, as you may request.
(d) The Trust will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, or any sales
material (as herein defined), of which you shall not previously have been
advised or to which you shall reasonably object after being so advised or (ii)
so long as, in the opinion of counsel for the Underwriters, a Prospectus is
required by the 1933 Act to be delivered in connection with sales by any
Underwriter or any dealer, file any information, documents or reports pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"), without
delivering a copy of such information, documents or reports to you, as
Representatives of the several Underwriters, prior to or concurrently with such
filing.
(e) Prior to the execution and delivery of this Agreement, the Trust
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Trust consents to the
use, in accordance with the provisions of the 1933 Act and with the state
securities or blue sky laws of the jurisdictions in which the Shares are offered
by the several Underwriters and by dealers, prior to the date of the Prospectus,
of each Prepricing Prospectus so furnished by the Trust.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales by any Underwriter or any dealer, the Trust
will promptly deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may reasonably request. The Trust consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters and by
all dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the 1933 Act to be delivered in connection with sales by any
Underwriter or any dealer. If during such period of time any event shall occur
that in the judgment of the Trust or in the opinion of counsel for the
Underwriters is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or is required to be set forth
therein in order to make the statements therein (in the case of the Prospectus,
in light of the circumstances under which they were made) not misleading, or if
it is necessary to supplement or amend the
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Registration Statement or the Prospectus to comply with the 1933 Act, the 1940
Act, the Rules and Regulations or any other federal law, rule or regulation, or
any state securities or blue sky disclosure laws, rules or regulations, the
Trust will forthwith prepare and, subject to the provisions of paragraph (d)
above, promptly file with the Commission an appropriate supplement or amendment
thereto, and will promptly furnish to the Underwriters and dealers, without
charge, a reasonable number of copies thereof. In the event that the Trust and
you, as Representatives of the several Underwriters, agree that the Registration
Statement or the Prospectus should be amended or supplemented, the Trust, if in
the opinion of counsel to the Underwriters, is required by law or any national
securities exchange on which the Shares are listed, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement or will otherwise appropriately disseminate the required
information.
(g) The Trust will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or blue sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Trust be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(h) The Trust will make generally available to its security holders
an earnings statement, which need not be audited, covering a twelve-month period
ending not later than 17 months after the effective date of the Registration
Statement as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Rules and Regulations.
(i) During the period of three years hereafter, the Trust will
furnish to you (i) as soon as available, a copy of each proxy statement, annual
and semi-annual report of the Trust mailed to shareholders or filed with the
Commission or furnished to the New York Stock Exchange (the "NYSE") other than
reports on Form N-SAR, and (ii) from time to time such other information
concerning the Trust as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 11 hereof or by notice given by you terminating this
Agreement pursuant to Section 12 hereof) or if this Agreement shall be
terminated by the Underwriters because of any failure or refusal on the part of
the Trust or the Advisers to comply with any material term or fulfill any
material condition of this Agreement required to be complied with or fulfilled
by them, the Trust and the Advisers, jointly and severally, agree to reimburse
the Representatives for all out-of-pocket expenses (including reasonable fees
and expenses of counsel for the Underwriters) incurred by the Underwriters in
connection herewith.
(k) The Trust will apply the net proceeds from the sale of the Shares
in accordance with the description set forth in the Prospectus and in such a
manner as to comply
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with the investment objectives, policies and restrictions of the Trust as
described in the Prospectus, as the same may be amended from time to time.
(l) The Trust will timely file the requisite copies of the Prospectus
with the Commission pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules
and Regulations, whichever is applicable or, if applicable, will timely file the
certification permitted by Rule 497(j) of the 1933 Act Rules and Regulations and
will advise you of the time and manner of such filing.
(m) Except as provided in this Agreement, the Trust will not sell,
contract to sell or otherwise dispose of any senior securities (as defined in
the 1940 Act) of the Trust or any securities convertible into or exercisable or
exchangeable for senior securities of the Trust, or grant any options or
warrants to purchase senior securities of the Trust, for a period of 180 days
after the date of the Prospectus, without the prior written consent of Xxxxxxx
Xxxxx Xxxxxx Inc.
(n) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, neither the Trust nor the Advisers have taken, nor
will any of them take, directly or indirectly, any action designed to or that
might reasonably be expected to cause or result in stabilization or manipulation
of the price of the Shares or any other securities issued by the Trust to
facilitate the sale or resale of the Shares.
(o) The Trust will use its reasonable best efforts to cause the
Shares, prior to the Closing Date, to be assigned a rating of `aaa' by Xxxxx'x
Investors Service, Inc. ("Moody's").
(p) The Trust will comply with the requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") to qualify as a
regulated investment company under the Code.
(q) The Trust and the Advisers will use their reasonable best efforts
to perform all of the agreements required of them and discharge all conditions
of theirs to closing as set forth in this Agreement.
6. Representations and Warranties of the Trust and the Advisers. The
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Trust and the Advisers, jointly and severally, represent and warrant to each
Underwriter that:
(a) Each Prepricing Prospectus complied when filed with the
Commission in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus or the Prospectus.
(b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 497 of the 1933
Act Rules and Regulations and the 1940 Act Notification when originally filed
with the Commission and any amendment or supplement
7
thereto when filed with the Commission, complied or will comply in all material
respects with the requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations, as applicable, and did not or will not at any such times contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made) not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the registration statement or the Prospectus
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Trust in writing by or on behalf of any Underwriter
through you expressly for use therein.
(c) All the shares of beneficial interest of the Trust outstanding as
of the date hereof have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights; the Shares
have been duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights that entitle or will entitle any person to acquire any Shares upon the
issuance thereof by the Trust, and will conform in all material respects to the
description thereof in the Registration Statement and the Prospectus (and any
amendment or supplement to either of them); and the capitalization of the Trust
conforms in all material respects to the description thereof in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them).
(d) Except for shares to be issued pursuant to the Trust's dividend
reinvestment plan and as otherwise described in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of, or
any commitment, plan or arrangement to issue, any shares of beneficial interest
of the Trust or any security convertible into or exchangeable or exercisable for
shares of beneficial interest of the Trust.
(e) The Trust is a business trust duly organized and validly existing
in good standing under the laws of the State of Delaware with full business
trust power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or qualify does not have a material adverse effect on the
condition (financial or other), prospects, assets or results of operations of
the Trust; and the Trust has no subsidiaries.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust or the Advisers, threatened, against the Trust, or to
which the Trust or any of its properties is subject, that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) but are not described as required, and there are
no agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the Prospectus (and
any amendment or supplement to either of them) or to be filed as an exhibit to
the Registration Statement that are not described or filed as required by the
1933 Act, the 1940 Act or the Rules and Regulations.
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(g) The Trust is not in violation of the Statement, the Declaration
or its bylaws (the "Bylaws"), or other organizational documents or of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Trust or of any decree of the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or
governmental agency, body or official having jurisdiction over the Trust, or in
default in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Trust is a party or by which it or any of its properties may be bound, except
where such violation or default does not have a material adverse effect on the
condition (financial or other), prospects, assets or results of operations of
the Trust.
(h) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Trust Agreements by the
Trust, nor the consummation by the Trust of the transactions contemplated hereby
or thereby (A) requires any consent, approval, authorization or other order of,
or registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official having jurisdiction over the Trust (except such as may have been
obtained prior to the date hereof and such as may be required for compliance
with the state securities or blue sky laws of various jurisdictions which have
been or will be effected in accordance with this Agreement) or conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
the Statement, the Declaration, the Bylaws or other organizational documents of
the Trust or (B) conflicts or will conflict with or constitutes or will
constitute a material breach of, or a default under, any material agreement,
indenture, lease or other instrument to which the Trust is a party or by which
it or any of its properties may be bound, or materially violates or will
materially violate any material statute, law, regulation or judgment,
injunction, order or decree applicable to the Trust or any of its properties, or
will result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Trust pursuant to the terms of
any agreement or instrument to which it is a party or by which it may be bound
or to which any of its property or assets is subject. The Trust is not subject
to any order of any court or of any arbitrator, governmental authority or
administrative agency.
(i) The accountants, Deloitte & Touche LLP, who have certified or
shall certify the financial statements included or incorporated by reference in
the Registration Statement and the Prospectus (or any amendment or supplement to
either of them) are independent public accountants as required by the 1933 Act,
the 1940 Act and the Rules and Regulations.
(j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly the financial position of the Trust on the basis stated or incorporated
by reference in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and
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statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) are accurately
presented.
(k) The execution and delivery of, and the performance by the Trust
of its obligations under, this Agreement and the Trust Agreements have been duly
and validly authorized by the Trust, and this Agreement and the Trust Agreements
have been duly executed and delivered by the Trust and, assuming due
authorization, execution and delivery by the other parties thereto, each
constitutes the valid and legally binding agreement of the Trust, enforceable
against the Trust in accordance with its terms, except as rights to indemnity
and contribution hereunder and thereunder may be limited by federal or state
securities laws, and subject to the qualification that the enforceability of the
Trust's obligations hereunder and thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general equitable
principles whether enforcement is considered in a proceeding in equity or at
law.
(l) Except as disclosed in or contemplated by the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or supplement to
either of them), the Trust has not incurred any material liability or material
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Trust, and there has not
been any change in the capitalization, or material increase in the short-term
debt or long-term debt, of the Trust, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
prospects, assets or results of operations of the Trust, whether or not arising
in the ordinary course of business (other than as a result of changes in market
conditions generally or the market for municipal securities generally).
(m) The Trust has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials permitted by the 1933 Act, the 1940 Act or the
Rules and Regulations.
(n) The Trust has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus; the Trust has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Trust under any such permit, subject in each
case to such qualification as may be set forth in the Prospectus (and any
amendment or supplement thereto), and except where the revocation, termination
or impairment of the Trust's rights under such permits should not reasonably be
expected to have a material adverse effect on the condition (financial or
other), prospects, assets or results of
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operations of the Trust; and, except as described in the Prospectus (and any
amendment or supplement thereto), none of such permits contains any restriction
that should reasonably be expected to have a material adverse effect on the
condition (financial or other), prospects, assets or results of operations of
the Trust.
(o) The Trust maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization and with the
applicable requirements of the 1940 Act, the 1940 Act Rules and Regulations and
the Code; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets and to maintain compliance with the
books and records requirements under the 1940 Act and the 1940 Act Rules and
Regulations; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(p) The Trust has filed all tax returns required to be filed, which
returns are complete and correct in all material respects, and the Trust is not
in material default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.
(q) No holder of any security of the Trust has any right to require
registration of any security of the Trust because of the filing of the
registration statement or consummation of the transactions contemplated by this
Agreement.
(r) The Trust, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
1933 Act Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.
(s) The conduct by the Trust of its business (as described in the
Prospectus) does not require it to be the owner, possessor or licensee of any
patents, patent licenses, trademarks, service marks or trade names
(collectively, "Intellectual Property") which it does not own, possess or
license, except where the failure to own, possess or license such Intellectual
Property should not reasonably be expected to have a material adverse effect on
the condition (financial or other), prospects, assets or results of operations
of the Trust.
(t) The Trust is registered under the 1940 Act and the 1940 Act Rules
and Regulations as a closed-end, diversified management investment company and
the 1940 Act Notification has been duly filed with the Commission and, at the
time of filing thereof and any amendment or supplement thereto, conformed in all
material respects with all applicable provisions of the 1940 Act and the 1940
Act Rules and Regulations; no order of suspension or revocation of such
registration under the 1940 Act and the 1940 Act Rules and Regulations has been
issued or proceedings therefor initiated or, to the knowledge of the Trust or
either of the
11
Advisers, threatened by the Commission. The provisions of the Statement, the
Declaration and Bylaws, and the investment policies and restrictions described
in the Registration Statement and the Prospectus, comply in all material
respects with the requirements of the 1940 Act and the 1940 Act Rules and
Regulations. The Trust is, and at all times through the completion of the
transactions contemplated hereby, will be, in compliance in all material
respects with the terms and conditions of the 1933 Act and the 1940 Act. No
person serving or acting as an officer, trustee or investment adviser of the
Trust is prohibited from so serving or acting by, and the composition of the
Trust's Board of Trustees is in compliance with, the provisions of the 1940 Act
and the 1940 Act Rules and Regulations and the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and the rules and regulations of the Commission
promulgated under the Advisers Act (the "Advisers Act Rules and Regulations").
(u) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Trust has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Trust to facilitate the sale or resale of the Shares,
and the Trust is not aware of any such action taken or to be taken by any
affiliates of the Trust who are not underwriters or dealers participating in the
offering of the Shares.
(v) The Trust has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(w) All advertising, sales literature or other promotional material
(including "prospectus wrappers") intended for public distribution and
authorized in writing by or prepared by the Trust or the Advisers for use in
connection with the offering and sale of the Shares (collectively, "sales
material") complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, the Rules and Regulations and the
rules and interpretations of the NASD and no such sales material, when read
together with the Prospectus, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No advertising, sales
literature or other promotional material (including "broker kits," "road show
slides" and "road show scripts") not intended for public distribution and
authorized in writing by or prepared by the Trust or the Advisers for use in
connection with the offering and sale of the Shares was or is, when read
together with the Prospectus, materially false or misleading.
(x) Each of the Trust Agreements and the Trust's and the Advisers'
obligations under this Agreement and each of the Trust Agreements to which it is
a party comply in all material respects with all applicable provisions of the
1933 Act, the 1940 Act, the Rules and Regulations, the Advisers Act and the
Advisers Act Rules and Regulations.
12
(y) As required by Subchapter M of the Code, the Trust is currently
in compliance with the requirements to qualify as a regulated investment company
under the Code.
(z) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee of the
Trust is an "interested person" (as defined in the 1940 Act) of the Trust or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter.
(aa) The Trust's common shares are duly listed on the NYSE.
(ab) The Trust believes, after reasonable inquiry, that each counter-
party to the Trust Agreements and each other person with whom the Trust engages
in material transactions has a program reasonably designed to address on a
timely basis the risk that its computer hardware and software may be unable to
recognize and properly execute date-sensitive functions involving certain dates
prior to and any dates after December 31, 1999 (the "Year 2000 Problem"), except
to the extent that a failure by any such person to have such a program should
not reasonably be expected to have a material adverse effect on the condition
(financial or other), prospects, assets or results of operations of the Trust.
The Trust is in compliance in all material respects with the Commission's
Release No. 33-7558 dated July 29, 1998 related to Year 2000 compliance.
7. Representations and Warranties of the Advisers. BAI and BFM,
----------------------------------------------
jointly and severally, represent and warrant to each Underwriter that:
(a) Each of the Advisers is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and each is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or to qualify does not have a material adverse effect on the
ability of such Adviser to perform its obligations under this Agreement and the
Advisory Agreements to which it is a party.
(b) Each of the Advisers is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Advisory Agreements to which it is a party
for the Trust as contemplated by the Prospectus (or any amendment or supplement
thereto). There does not exist any proceeding which should reasonably be
expected to have a material adverse affect on the registration of either Adviser
with the Commission.
(c) There are no legal or governmental proceedings pending or, to the
knowledge of each Adviser, threatened against such Adviser, that are required to
be described in the Registration Statement or the Prospectus (or any amendment
or supplement to either of them) but
13
are not described as required or that should reasonably be expected to have a
material adverse effect on the ability of such Adviser to perform its
obligations under this Agreement and the Advisory Agreements to which it is a
party.
(d) Neither the execution, delivery or performance of this Agreement
or the Advisory Agreements by each Adviser which is a party thereto, nor the
consummation by each Adviser of the transactions contemplated hereby or thereby
(A) requires either Adviser to obtain any consent, approval, authorization or
other order of, or registration or filing with, the Commission, the NASD, any
state securities commission, any national securities exchange, any arbitrator,
any court, regulatory body, administrative agency or other governmental body,
agency or official having jurisdiction over either Adviser or conflicts or will
conflict with or constitutes or will constitute a breach of or a default under,
the certificate of incorporation or bylaws, or other organizational documents,
of such Adviser or (B) conflicts or will conflict with or constitutes or will
constitute a material breach of or a default under, any material agreement,
indenture, lease or other instrument to which either Adviser is a party or by
which either Adviser or any of its properties may be bound, or materially
violates or will materially violate any material statute, law, regulation or
judgment, injunction, order or decree applicable to either Adviser or any of its
properties or will result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of either Adviser pursuant to
the terms of any agreement or instrument to which it is a party or by which it
may be bound or to which any of the property or assets of either Adviser is
subject, except in any case under clause (A) or (B) as should not reasonably be
expected to have a material adverse effect on the ability of each Adviser to
perform its obligations under this Agreement and the Advisory Agreements to
which it is a party. Neither Adviser is subject to any order of any court or of
any arbitrator, governmental authority or administrative agency.
(e) The execution and delivery of, and the performance by each
Adviser of its respective obligations under, this Agreement and the Advisory
Agreements to which it is a party have been duly and validly authorized by such
Adviser, and this Agreement and the Advisory Agreements have been duly executed
and delivered by such Adviser and, assuming due authorization, execution and
delivery by the other parties thereto, each constitutes the valid and legally
binding agreement of such Adviser, enforceable against such Adviser in
accordance with its terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws, and subject to the
qualification that the enforceability of the Trust's obligations hereunder and
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles whether enforcement is
considered in a proceeding in equity or at law.
(f) Each Adviser has the financial resources necessary for the
performance of its services and obligations as contemplated in the Prospectus
(or any amendment or supplement thereto) and under this Agreement and the
Advisory Agreements to which it is a party.
(g) The description of each Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them) complied and
comply in all
14
material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(h) Each of the Advisory Agreements complies in all material respects
with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations.
(i) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
there has not occurred any event which should reasonably be expected to have a
material adverse effect on the ability of either Adviser to perform its
respective obligations under this Agreement and the Advisory Agreements to which
it is a party.
(j) Each of the Advisers has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), except to
the extent that the failure to so have should not reasonably be expected to have
a material adverse effect on the ability of such Adviser to perform its
obligations under the Advisory Agreements to which it is a party; each of the
Advisers has fulfilled and performed all its material obligations with respect
to such permits and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any other
material impairment of the rights of either Adviser under any such permit,
except where the revocation, termination or impairment of such Adviser's rights
under such permits should not reasonably be expected to have a material adverse
effect on the ability of such Adviser to perform its obligations under the
Advisory Agreements to which it is a party.
(k) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), neither Adviser has taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any securities issued by the Trust to facilitate the sale or resale of the
Shares, and neither Adviser is aware of any such action taken or to be taken by
any affiliates of the Advisers who are not underwriters or dealers participating
in the offering of the Shares.
8. Indemnification and Contribution. (a) The Trust and the
--------------------------------
Advisers, jointly and severally, agree to indemnify and hold harmless you and
each other Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation), joint or several, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Prepricing Prospectus or in the Registration Statement or
the Prospectus or in any amendment or
15
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with information relating to any Underwriter furnished in writing to the Trust
by or on behalf of any Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the 1933 Act and the 1933 Act Rules and Regulations, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such Prepricing Prospectus was corrected in the
Prospectus, provided that the Trust has delivered the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit such delivery or
sending. The foregoing indemnity agreement shall be in addition to any liability
which the Trust or the Advisers may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Trust or the Advisers, such Underwriter or
such controlling person shall promptly notify the Trust or the Advisers, and the
Trust or the Advisers shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the Trust or the Advisers have agreed in
writing to pay such fees and expenses, (ii) the Trust and the Advisers have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Trust or the Advisers
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Trust or the
Advisers by the same counsel would be inappropriate under applicable standards
of professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the Trust and the Advisers shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Trust and the Advisers
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by the Representatives, and that all such fees and expenses shall be
reimbursed as they are incurred. The Trust and the Advisers shall not be liable
for any settlement of any such action, suit or proceeding effected without their
16
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Trust and the Advisers agree to indemnify and hold harmless any Underwriter, to
the extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Trust and the Advisers, their trustees and directors, any
officers who sign the Registration Statement, and any person who controls the
Trust or the Advisers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity from
the Trust and the Advisers to each Underwriter, but only with respect to
information relating to such Underwriter furnished in writing by or on behalf of
such Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the Trust
or the Advisers, any of their trustees and directors, any such officer, or any
such controlling person based on the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Trust and the Advisers by paragraph (b) above (except that if the Trust or
the Advisers shall have assumed the defense thereof such Underwriter shall not
be required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Trust and the Advisers, their trustees and
directors, any such officer, and any such controlling person shall have the
rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Trust and the Advisers on the one hand (treated jointly for this purpose as one
person) and the Underwriters on the other hand from the offering of the Shares,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Trust and the Advisers on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Trust and the Advisers on the one hand (treated jointly
for this purpose as one person) and the Underwriters on the other 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 underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The Trust and the
Advisers agree that
17
as between the Trust, BAI and BFM (and solely for the purpose of allocating
among such parties the total amount to be contributed by each of them to one
another and without prejudice to the right of the Underwriters to receive
contributions from the Trust and the Advisers under this Section 8(d) on a joint
and several basis) the relative benefits received by the Trust, on the one hand,
and BAI and BFM, on the other hand, shall be deemed to be in the same proportion
that the total net proceeds from the offering (before deducting expenses)
received by the Trust bear to the present value of the future revenue stream to
be generated by the advisory fee to be paid by the Trust to BAI pursuant to the
Investment Advisory Agreement. The relative fault of the Trust and the Advisers
on the one hand (treated jointly for this purpose as one person) and the
Underwriters on the other hand shall be determined by reference to, among other
things, 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 and the Advisers on the one hand (treated jointly for this
purpose as one person) or by the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Trust, the Advisers and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d) above.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which such
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to the respective number of Shares set forth opposite their names
in Schedule I hereto (or such numbers of Shares increased as set forth in
Section 11 hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or
18
expenses are incurred. The indemnity and contribution agreements contained in
this Section 8 and the representations and warranties of the Trust and the
Advisers set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Trust, the Advisers,
their trustees, directors or officers, or any person controlling the Trust or
the Advisers, (ii) acceptance of any Shares and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any Underwriter or any
person controlling any Underwriter, or to the Trust, the Advisers, their
trustees, directors or officers, or any person controlling the Trust or the
Advisers, shall be entitled to the benefits of the indemnity, contribution, and
reimbursement agreements contained in this Section 8.
9. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase the Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 497 and 430A under the 1933 Act and the 1933
Act Rules and Regulations shall have been timely made; no stop order suspending
the effectiveness of the Registration Statement or order pursuant to Section
8(e) of the 1940 Act shall have been issued and no proceeding for those purposes
shall have been instituted or, to the knowledge of the Trust, the Advisers or
any Underwriter, threatened by the Commission, and any request of the Commission
for additional information (to be included in the registration statement or the
prospectus or otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), business, prospects,
properties, net assets, or results of operations of the Trust or the Advisers
not contemplated by the Prospectus, which in your opinion, as Representatives of
the several Underwriters, would materially adversely affect the market for the
Shares, or (ii) any event or development relating to or involving the Trust or
the Advisers or any officer, trustee or director of the Trust or the Advisers
which makes any statement made in the Prospectus untrue or which, in the opinion
of the Trust and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the 1933 Act, the 1940 Act or the Rules and
Regulations or any other law to be stated therein or necessary in order to make
the statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in your opinion, as
Representatives of the several Underwriters, materially adversely affect the
market for the Shares.
(c) You shall have received on the Closing Date an opinion of
Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Trust, dated the
Closing Date and addressed to you, as Representatives of the several
Underwriters, in the form attached hereto as Exhibit A.
19
(d) You shall have received on the Closing Date an opinion of
Xxxxxx Xxxxxxxx, Esq., counsel for the Advisers, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, in form and
substance satisfactory to you and to the effect that:
(i) Based on certificates of the Secretary of State of the
State of Delaware, each of the Advisers is a corporation duly
incorporated and validly existing in good standing under the laws of
the State of Delaware, with all necessary corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus
(and any amendment or supplement to either of them). Based on
certificates of the applicable secretaries of state, each Adviser is
duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration
or qualification, except where the failure to so register and qualify
does not have a material adverse effect on the ability of such Adviser
to perform its obligations under this Agreement and the Advisory
Agreements to which it is a party;
(ii) Each of the Advisers is duly registered with the
Commission as an investment adviser under the Advisers Act and is not
prohibited by the Advisers Act, the Advisers Act Rules and
Regulations, the 1940 Act or the 1940 Act Rules and Regulations from
acting under the Advisory Agreements to which it is a party for the
Trust as contemplated by the Prospectus (or any amendment or
supplement thereto); and, to the best knowledge of such counsel after
reasonable inquiry, there does not exist any proceeding which should
reasonably be expected to adversely affect the registration of either
Adviser with the Commission;
(iii) Each of the Advisers has corporate power and authority
to enter into this Agreement and the Advisory Agreements to which it
is a party, and this Agreement and the Advisory Agreements to which
each Adviser is a party have been duly authorized, executed and
delivered by each Adviser which is a party thereto and each Advisory
Agreement is a valid and legally binding agreement of such Adviser,
enforceable against such Adviser in accordance with its terms except
as rights to indemnity and contribution hereunder and thereunder may
be limited by Federal or state securities laws or principles of public
policy and subject to the qualification that the enforceability of the
Advisers' obligations thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by
general equitable principles whether enforcement is considered in a
proceeding in equity or at law;
(iv) Neither the execution, delivery or performance of this
Agreement or the Advisory Agreements by each Adviser which is a party
thereto, nor the consummation by each Adviser of the transactions
contemplated hereby and thereby (A) conflicts or will conflict with,
or constitutes or will constitute a breach of or default under, the
certificate of incorporation or bylaws, or other
20
organizational documents, of such Adviser or (B) conflicts or will
conflict with, or constitutes or will constitute a material breach of
or material default under any material agreement, indenture, lease or
other instrument to which either Adviser is a party, or will result in
the creation or imposition of any material lien, charge or encumbrance
upon any material property or material assets of either Adviser, nor
will any such action result in any material violation of any law of
the State of New York, the Delaware General Corporation Law, the 1940
Act, the Advisers Act or any regulation or judgment, injunction, order
or decree applicable to either Adviser or any of its properties;
(v) No consent, approval, authorization or other order of,
or registration or filing with, the Commission, any arbitrator, any
court, regulatory body, administrative agency or other governmental
body, agency, or official of the State of New York is required on the
part of either Adviser for the execution, delivery and performance of
this Agreement or the Advisory Agreements to which it is a party, or
the consummation by such Adviser of the transactions contemplated
hereby and thereby;
(vi) To the best knowledge of such counsel after reasonable
inquiry, there are no legal or governmental proceedings pending or
threatened against either Adviser or to which either Adviser or any of
its properties is subject, which are required to be described in the
Registration Statement or the Prospectus (or any amendment or
supplement to either of them) but are not described as required;
(vii) Each of the Advisers has all material permits, licenses,
franchises and authorizations of governmental or regulatory
authorities as are necessary to own its properties and to conduct its
business in the manner described in the Prospectus (and any amendment
or supplement thereto), and to perform its obligations under the
Advisory Agreements to which it is a party; and
(viii) Such counsel shall also state that the description of
each of the Advisers contained in the Registration Statement (and any
amendment or supplement thereto) does not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein
not misleading and that the description of the Advisers contained in
the Prospectus or any amendment or supplement thereto, as of its issue
date and as of the Closing Date does not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein,
in the light of the circumstances under which they were made, not
misleading.
(e) [Reserved.]
21
(f) You shall have received on the Closing Date an opinion of Xxxxxxx
Xxxxxxx & Xxxxxxxx, counsel for the Underwriters, dated the Closing Date and
addressed to you, with respect to such matters as you may reasonably request.
(g) You shall have received letters addressed to you and dated the
date hereof and the Closing Date from Deloitte & Touche LLP, independent
certified public accountants, substantially in the forms heretofore approved by
the Representatives.
(h) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use of
the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus or any sales material shall have been issued and no proceedings for
such purpose or for the purpose of commencing an enforcement action against the
Trust, the Advisers or with respect to the transactions contemplated by the
Prospectus (or any amendment or supplement thereto) and this Agreement (other
than enforcement actions against any Underwriter with respect to the
transactions contemplated by the Prospectus (or any amendment or supplement
thereto) and this Agreement) may be pending before or, to the knowledge of the
Trust, the Advisers or any Underwriter or in the reasonable view of counsel to
the Underwriters, shall be threatened by the Commission at or prior to the
Closing Date and that any request for additional information on the part of the
Commission (to be included in the Registration Statement, the Prospectus or
otherwise) be complied with to the reasonable satisfaction of the Underwriters;
(ii) there shall not have been any change in the capitalization of the Trust nor
any material increase in the short-term or long-term debt of the Trust (other
than in the ordinary course of business) from that set forth or contemplated in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus
(or any amendment or supplement to either of them), except as may otherwise be
stated in the Registration Statement and Prospectus (or any amendment or
supplement to either of them), any material adverse change (other than as a
result of changes in market conditions generally or the market for municipal
securities generally) in the condition (financial or other), prospects, assets
or results of operations of the Trust; (iv) the Trust shall not have any
liabilities or obligations, direct or contingent (whether or not in the ordinary
course of business), that are material to the Trust, other than those reflected
in or contemplated by the Registration Statement or the Prospectus (or any
amendment or supplement to either of them); and (v) all the representations and
warranties of the Trust and the Advisers contained in this Agreement that are
qualified by a materiality standard shall be true and correct, and all
representations and warranties of the Trust and the Advisers contained in this
Agreement that are not so qualified shall be true and correct in all material
respects, on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received a certificate of
the Trust and the Advisers, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of each of the Trust and the
Advisers (or such other officers as are reasonably acceptable to you), to the
effect set forth in this Section 9(h) and in Section 9(i) hereof.
(i) Neither the Trust nor either of the Advisers shall have failed at
or prior to the Closing Date to have performed or complied in all material
respects with any of its agreements
22
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date.
(j) The Trust shall have delivered and you shall have received
evidence satisfactory to you that the Shares are rated `aaa' by Moody's as of
the Closing Date, and there shall not have been given any notice of any intended
or potential downgrading, or of any review for a potential downgrading, in the
rating accorded to the Shares by Moody's.
(k) The Trust shall have furnished to you a report showing compliance
with the asset coverage requirements of the 1940 Act and a Preferred Shares
Basic Maintenance Report (as defined in the Statement), each dated the Closing
Date and in form and substance satisfactory to you. Each such report may use
portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Date, provided, however, that
the Trust represents in such report that its total net assets as of the Closing
Date have not declined by 5% or more from such valuation date.
(l) The Trust and the Advisers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the Trust or the
Advisers and delivered to you, or to your counsel, shall be deemed a
representation and warranty by the Trust or the Advisers, as applicable, to each
Underwriter as to the statements made therein.
10. Expenses. The Trust agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the 1940 Act
Notification, the Prospectus and each amendment or supplement to any of them
(including, without limitation, the filing fees prescribed by the 1933 Act, the
1940 Act and the Rules and Regulations); (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, each Prepricing
Prospectus, the Prospectus, any sales material and all amendments or supplements
to any of them as may be reasonably requested for use in connection with the
offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp taxes in connection with the original issuance and sale of the Shares;
(iv) the reproduction and delivery of this Agreement, any dealer agreements and
all other agreements or documents reproduced and delivered in connection with
the offering of the Shares; (v) the registration or qualification of the Shares
for offer and sale under the securities or blue sky laws of the several states
as provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and
23
supplemental blue sky memoranda and such registration and qualification, which
fees, expenses and disbursements shall not exceed $5,000); (vi) the filing fees
and the fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the NASD (which fees and expenses of counsel
for the Underwriters (exclusive of filing fees) shall not exceed $15,000); (vii)
fees paid to Moody's; (viii) the transportation and other expenses incurred by
or on behalf of Trust representatives in connection with presentations to
prospective purchasers of the Shares; and (ix) the fees and expenses of the
Trust's accountants and the fees and expenses of counsel (including local and
special counsel) for the Trust.
11. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when the
registration statement or such post-effective amendment has become effective.
Until such time as this Agreement shall have become effective, it may be
terminated by the Trust, by notifying you, or by you, as Representatives of the
several Underwriters, by notifying the Trust.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the number of Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Shares
set forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase on the Closing Date and the aggregate
number of Shares with respect to which such default occurs is more than one-
tenth of the aggregate number of Shares which the Underwriters are obligated to
purchase on the Closing Date and arrangements satisfactory to you and the Trust
for the purchase of such Shares by one or more non-defaulting Underwriters or
other party or parties approved by you and the Trust are not made within 36
hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter, the Trust or the Advisers. In any such
case which does not result in termination of this Agreement, either you or the
Trust shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Trust,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
24
Any notice under this Section 11 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
12. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Trust or the Advisers, by notice to the Trust or the
Advisers, if prior to the Closing Date (i) trading in the Trust's common shares
or securities generally on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market or the Nasdaq Stock Market shall have been
suspended or materially limited, (ii) additional material governmental
restrictions not in force on the date of this Agreement have been imposed upon
trading in securities generally or a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which is to
make it, in your judgment, impracticable or inadvisable to commence or continue
the offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Trust or either Adviser by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
13. Information Furnished by the Underwriters. The statements set
-----------------------------------------
forth in the [last paragraph on the cover page, and the statements in the first
and third paragraphs under the caption "Underwriting"] in any Prepricing
Prospectus and in the Prospectus, constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred to
in Sections 6(b) and 8 hereof.
14. Miscellaneous. Except as otherwise provided in Sections 5, 11
-------------
and 12 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Trust or the Advisers, at the
office of BlackRock Financial Management, Inc. at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxx X. Xxxxxxxxxxx; or (ii) if to you, as
Representatives of the several Underwriters, to Xxxxxxx Xxxxx Xxxxxx Inc., 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Manager, Investment
Banking Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Trust, the Advisers, their trustees, directors and
officers, and the other controlling persons referred to in Section 8 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any Underwriter of any
of the Shares in his status as such purchaser.
15. Applicable Law; Counterparts. This Agreement shall be governed
----------------------------
by and construed in accordance with the laws of the State of New York.
25
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
26
Please confirm that the foregoing correctly sets forth the agreement among
the Trust, the Advisers and the several Underwriters.
Very truly yours,
THE BLACKROCK STRATEGIC
MUNICIPAL TRUST
By:__________________________
BLACKROCK ADVISORS, INC.
By:__________________________
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By:__________________________
Confirmed as of the date first
above mentioned on behalf of themselves and the
other several Underwriters named in Schedule I hereto.
XXXXXXX XXXXX XXXXXX INC.
X.X. XXXXXXX & SONS, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
As Representatives of the Several Underwriters
By: XXXXXXX XXXXX XXXXXX INC.
By: __________________________
Managing Director
27
SCHEDULE I
THE BLACKROCK STRATEGIC MUNICIPAL TRUST
Number of
Underwriter Shares
----------- ---------
--------
Total........................... --------
EXHIBIT A
FORM OF OPINION OF XXXXXXX, ARPS, SLATE, XXXXXXX & XXXX LLP
