EXHIBIT G.1
INVESTMENT MANAGEMENT AGREEMENT
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AGREEMENT, dated August ___ , 1999, between The BlackRock Pennsylvania
Strategic Municipal Trust (the "Trust"), a Delaware business trust, and
BlackRock Advisors, Inc. (the "Adviser"), a Delaware corporation.
WHEREAS, Adviser has agreed to furnish investment advisory services to
The BlackRock Pennsylvania Strategic Municipal Trust (the "Trust"), a closed-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, this Agreement allows the Adviser to sub-contract invest ment
advisory services with respect to the Trust to an affiliate or third party sub-
adviser pursuant to a sub-investment advisory agreement agreeable to the Trust
and approved in accordance with the provisions of the Act;
WHEREAS, it is contemplated that the Adviser will engage BlackRock
Financial Management, Inc. (the "Sub-Adviser") as sub-adviser to provide it with
sub-advisory services as described in the Sub-Investment Advisory Agreement by
and among the Trust, the Adviser and the Sub-Adviser dated August ___, 1999 and
that the Adviser, from the investment advisory fee it receives from the Trust,
will pay a portion of such fee to the Sub-Adviser for serving as sub-adviser to
the Trust; and
WHEREAS, this Agreement has been approved in accordance with the
provisions of the Act, and the Adviser is willing to furnish such services upon
the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General. The Adviser agrees, all as more fully set forth
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herein, to act as investment adviser to the Trust with respect to the investment
of the Trust's assets and to supervise and arrange for the day-to-day operations
of the Trust and the purchase of securities for and the sale of securities held
in the investment portfolio of the Trust.
2. Duties and Obligations of the Adviser with Respect to Investment
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of Assets of the Trust. Subject to the succeeding provisions of this section
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and subject to the direction and control of the Trust's Board of Trustees, the
Adviser shall (i) act as investment adviser for and supervise and manage the
investment and reinvestment of the Trust's assets and in connection therewith
have complete discretion in purchasing and selling securities and other assets
for the Trust and in voting, exercising consents and exercising
all other rights appertaining to such securities and other assets on behalf of
the Trust; (ii) supervise continuously the investment program of the Trust and
the composition of its investment portfolio; (iii) arrange, subject to the
provisions of paragraph 4 hereof, for the purchase and sale of securities and
other assets held in the investment portfolio of the Trust; (iv) provide
investment research to the Trust and (v) engage an affiliate or third party sub-
adviser to serve as sub-investment adviser for all or a portion of the Trust's
assets, pursuant to a sub-investment advisory agreement agreeable to the Trust
and approved in accordance with the provisions of the Act.
3. Duties and Obligations of Adviser with Respect to the
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Administration of the Trust. The Adviser also agrees to furnish office
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facilities and equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Trust's Custodian Transfer
Agent and other service providers) for the Trust. To the extent requested by the
Trust, the Adviser agrees to provide the following administrative services:
(a) Oversee the determination and publication of the
Trust's net asset value in accordance with the Trust's policy as adopted from
time to time by the Board of Trustees;
(b) Oversee the maintenance by [State Street Bank and Trust
Company] of certain books and records of the Trust as required under Rule 31a-
1(b)(4) of the Act and maintain (or oversee maintenance by such other persons as
approved by the Board of Trustees) such other books and records required by law
or for the proper operation of the Trust;
(c) Oversee the preparation and filing of the Trust's
federal, state and local income tax returns and any other required tax returns;
(d) Review the appropriateness of and arrange for payment
of the Trust's expenses;
(e) Prepare for review and approval by officers of the
Trust financial information for the Trust's semi-annual and annual reports,
proxy statements and other communications with shareholders required or
otherwise to be sent to Trust shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
(f) Prepare for review by an officer of the Trust the
Trust's periodic financial reports required to be filed with the Securities and
Exchange Commission ("SEC") on Form N-SAR and such other reports, forms and
filings, as may be mutually agreed upon;
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(g) Prepare reports relating to the business and affairs of
the Trust as may be mutually agreed upon and not otherwise appropriately
prepared by the Trust's custodian, counsel or auditors;
(h) Prepare such information and reports as may be required
by any stock exchange or exchanges on which the Trust's shares are listed;
(i) Make such reports and recommendations to the Board of
Trustees concerning the performance of the independent accountants as the Board
of Trustees may reasonably request or deems appropriate;
(j) Make such reports and recommendations to the Board of
Trustees concerning the performance and fees of the Trust's custodian and
transfer and dividend disbursing agent as the Board of Trustees may reasonably
request or deems appropriate;
(k) Oversee and review calculations of fees paid to the
Trust's service providers;
(l) Oversee the Trust's portfolio and perform necessary
calculations as required under Section 18 of the Act;
(m) Consult with the Trust's officers, independent
accountants, legal counsel, custodian, accounting agent and transfer and
dividend disbursing agent in establishing the accounting policies of the Trust
and monitor financial and shareholder accounting services;
(n) Review implementation of any share purchase programs
authorized by the Board of Trustees;
(o) Determine the amounts available for distribution as
dividends and distributions to be paid by the Trust to its shareholders; prepare
and arrange for the printing of dividend notices to shareholders; and provide
the Trust's dividend disbursing agent and custodian with such information as is
required for such parties to effect the payment of dividends and distributions
and to implement the Trust's dividend reinvestment plan;
(p) Prepare such information and reports as may be required
by any banks from which the Trust borrows funds;
(q) Provide such assistance to the custodian and the
Trust's counsel and auditors as generally may be required to properly carry on
the business and operations of the Trust;
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(r) Assist in the preparation and filing of Forms 3, 4, and
5 pursuant to Section 16 of the Securities Exchange Act of 1934, as amended,
and Section 30(f) of the Act for the officers and trustees of the Trust, such
filings to be based on information provided by those persons;
(s) Respond to or refer to the Trust's officers or transfer
agent, shareholder (including any potential shareholder) inquiries relating to
the Trust.
(t) Supervise any other aspects of the Trust's
Administration as may be agreed to by the Trust and the Adviser.
All services are to be furnished through the medium of any directors,
officers or employees of the Adviser or its affiliates as the Adviser deems
appropriate in order to fulfill its obligations hereunder.
The Trust will reimburse the Adviser or its affiliates for all out-of-
pocket expenses incurred by them in connection with the performance of the
administrative services described in this paragraph 3.
4. Covenants. In the performance of its duties under this Agreement,
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the Adviser shall at all times conform to, and act in accordance with, any
requirements imposed by:
(a) (i) the provisions of the Act and the Investment
Advisers Act of 1940, as amended, and all applicable Rules and Regulations of
the Securities and Exchange Commission (the "SEC"); (ii) any other applicable
provision of law; (iii) the provisions of the Agreement and Declaration of
Trust and By-Laws of the Trust, as such documents are amended from time to time;
(iv) the investment objectives and policies of the Trust as set forth in its
Registration Statement on Form N-2; and (v) any policies and determinations of
the Board of Trustees of the Trust;
(b) will place orders either directly with the issuer or
with any broker or dealer. Subject to the other provisions of this paragraph, in
placing orders with brokers and dealers, the Adviser will attempt to obtain the
best price and the most favorable execution of its orders. In placing orders,
the Adviser will consider the experience and skill of the firm's securities
traders as well as the firm's financial responsibility and administrative
efficiency. Consistent with this obligation, the Adviser may select brokers on
the basis of the research, statistical and pricing services they provide to the
Trust and other clients of the Adviser or any sub-adviser. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by the Adviser hereunder. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same trans-
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action, provided that the Adviser determines in good faith that such commission
is reasonable in terms either of the transaction or the overall responsibility
of the Adviser and any sub-adviser to the Trust's and their other clients and
that the total commissions paid by the Trust will be reasonable in relation to
the benefits to the Trust over the long-term. In addition, the Adviser is
authorized to take into account the sale of shares of the Trust in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser or any sub-
adviser), provided that the Adviser believes that the quality of the transaction
and the commission are comparable to what they would be with other qualified
firms. In no instance, however, will the Trust's securities be purchased from or
sold to the Adviser, any sub-adviser or any affiliated person thereof, except to
the extent permitted by the SEC or by applicable law;
(c) will maintain or cause the Sub-Adviser to maintain
books and records with respect to the Trust's securities transactions and will
render to the Sub-Ad viser and the Trust's Board of Trustees such periodic and
special reports as they may request;
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Adviser makes investment recommendations
for the Trust, its investment advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale for
the Trust's account are customers of the commercial department of its
affiliates; and
(e) will treat confidentially and as proprietary
information of the Trust all records and other information relative to the
Trust, and the Trust's prior, current or potential shareholders, and will not
use such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Trust.
5. Services Not Exclusive. Nothing in this Agreement shall prevent
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the Adviser or any officer, employee or other affiliate thereof from acting as
investment adviser for any other person, firm or corporation, or from engaging
in any other lawful activity, and shall not in any way limit or restrict the
Adviser or any of its officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the Adviser
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations under this Agreement.
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6. Books and Records. In compliance with the requirements of Rule
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31a-3 under the Act, the Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the Act the records required to be maintained by Rule 31a-1 under the Act.
7. Agency Cross Transactions. From time to time, the Adviser or
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brokers or dealers affiliated with it may find themselves in a position to buy
for certain of their brokerage clients (each an "Account") securities which the
Adviser's investment advisory clients wish to sell, and to sell for certain of
their brokerage clients securities which advi sory clients wish to buy. Where
one of the parties is an advisory client, the Adviser or the affiliated broker
or dealer cannot participate in this type of transaction (known as a cross
transaction) on behalf of an advisory client and retain commissions from one or
both parties to the transaction without the advisory client's consent. This is
because in a situation where the Adviser is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Adviser or an affiliate is receiving commissions from both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Adviser's part regarding the advisory client. The
Securities and Exchange Commission has adopted a rule under the Investment
Advisers Act of 1940, as amended, which permits the Adviser or its affiliates to
participate on behalf of an Account in agency cross transactions if the advisory
client has given written consent in advance. By execution of this Agreement, the
Trust authorizes the Adviser or its affiliates to participate in agency cross
transactions involving an Account. The Trust may revoke its consent at any time
by written notice to the Adviser.
8. Expenses. During the term of this Agreement, the Adviser will
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bear all costs and expenses of its employees and any overhead incurred in
connection with its duties hereunder (including the fees and expenses of the
Sub-Adviser) and shall bear the costs of any salaries or trustees fees of any
officers or trustees of the Trust who are affiliated persons (as defined in the
Act) of the Adviser; provided that the Board of Trustees of the Trust may
approve reimbursement to the Adviser of the pro rata portion of the salaries,
bonuses, health insurance, retirement benefits and all similar employment costs
for the time spent on Trust operations (other than the provision of investment
advice and administrative services required to be provided hereunder) of all
personnel employed by the Adviser who devote substantial time to Trust
operations or the operations of other investment companies advised by the
Adviser.
9. Compensation of the Adviser. (a) The Trust agrees to pay to the
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Adviser and the Adviser agrees to accept as full compensation for all services
rendered by the Adviser as such, a monthly fee (the "Investment Advisory Fee")
in arrears at an annual rate equal to .60% of the average weekly value of the
Trust's Managed Assets. "Managed Assets" means the total assets of the Trust
minus the sum of accrued liabilities
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(other than the aggregate indebtedness constituting financial leverage). For any
period less than a month during which this Agreement is in effect, the fee shall
be prorated according to the proportion which such period bears to a full month
of 28, 29, 30 or 31 days, as the case may be.
(b) The Trust hereby acknowledges that from such Investment
Advisory Fee the Adviser will pay the Sub-Adviser, for serving as sub-adviser, a
fee equal to [an annual rate of 0.35% of the average weekly value of the Trust's
Managed Assets].
(c) For purposes of this Agreement, the Managed Assets of
the Trust shall be calculated pursuant to the procedures adopted by resolutions
of the Trustees of the Trust for calculating the value of the Trust's assets or
delegating such calculations to third parties.
10. Indemnity. (a) The Trust hereby agrees to indemnify the Adviser,
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any sub-adviser and each of the Adviser's or sub-adviser's directors, officers,
employees, agents, associates and controlling persons and the directors,
partners, members, officers, employees and agents thereof (including any
individual who serves at the Adviser's or sub-adviser's request as director,
officer, partner, member, trustee or the like of another entity) (each such
person being an "Indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees (all as provided in accordance with applicable state
law) reasonably incurred by such Indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or investigative body in which such
Indemnitee may be or may have been involved as a party or otherwise or with
which such Indemnitee may be or may have been threatened, while acting in any
capacity set forth herein or thereafter by reason of such Indemnitee having
acted in any such capacity, except with respect to any matter as to which such
Indemnitee shall have been adjudicated not to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of the
Trust and furthermore, in the case of any criminal proceeding, so long as such
Indemnitee had no reasonable cause to believe that the conduct was unlawful;
provided, however, that (1) no Indemnitee shall be indemnified hereunder against
any liability to the Trust or its shareholders or any expense of such Indemnitee
arising by reason of (i) willful misfeasance, (ii) bad faith, (iii) gross
negligence or (iv) reckless disregard of the duties involved in the conduct of
such Indemnitee's position (the conduct referred to in such clauses (i) through
(iv) being some times referred to herein as "disabling conduct"), (2) as to any
matter disposed of by settlement or a compromise payment by such Indemnitee,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of the
Trust and that such Indemnitee appears to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of the
Trust and did not involve disabling conduct by such Indemnitee and (3) with
respect to any action, suit or other proceeding voluntarily prosecuted by any
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Indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such Indemnitee was
authorized by a majority of the full Board of Trustees of the Trust.
(b) The Trust shall make advance payments in connection
with the expenses of defending any action with respect to which indemnification
might be sought hereunder if the Trust receives a written affirmation of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse the Trust
unless it is subsequently determined that such Indemnitee is entitled to such
indemnification and if the trustees of the Trust determine that the facts then
known to them would not preclude indemnification. In addition, at least one of
the following conditions must be met: (A) the Indemnitee shall provide a
security for such Indemnitee-undertaking, (B) the Trust shall be insured against
losses arising by reason of any lawful advance, or (C) a majority of a quorum
consisting of trust ees of the Trust who are neither "interested persons" of the
Trust (as defined in Section 2(a)(19) of the Act) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
the Indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to indemnification
hereunder shall be made (1) by a final decision on the merits by a court or
other body before whom the proceeding was brought that such Indemnitee is not
liable or is not liable by reason of disabling conduct, or (2) in the absence of
such a decision, by (i) a majority vote of a quorum of the Disinterested Non-
Party Trustees of the Trust, or (ii) if such a quorum is not obtainable or, even
if obtainable, if a majority vote of such quorum so directs, independent legal
counsel in a written opinion. All determinations that advance payments in
connection with the expense of defending any proceeding shall be authorized
shall be made in accordance with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these provisions
shall not exclude any other right to which such Indemnitee may be lawfully
entitled.
11. Limitation on Liability. (a) The Adviser will not be liable for
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any error of judgment or mistake of law or for any loss suffered by Adviser or
by the Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the parties hereto acknowledge and agree that, as provided in
Section 5.1 of Article V of the Declaration of Trust, this Agreement is executed
by the Trustees and/or officers of the Trust,
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not individually but as such Trustees and/or officers of the Trust, and the
obligations hereunder are not binding upon any of the Trustees or Shareholders
individually but bind only the estate of the Trust.
12. Duration and Termination. This Agreement shall become effective
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as of the date hereof and, unless sooner terminated with respect to the Trust as
provided herein, shall continue in effect for a period of two years. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to the
Trust for successive periods of 12 months, provided such continuance is
specifically approved at least annually by both (a) the vote of a majority of
the Trust's Board of Trustees or the vote of a majority of the outstanding
voting securities of the Trust at the time outstanding and entitled to vote, and
(b) by the vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval. Notwithstanding
the foregoing, this Agreement may be terminated by the Trust at any time,
without the payment of any penalty, upon giving the Adviser 60 days' notice
(which notice may be waived by the Adviser), provided that such termination by
the Trust shall be directed or approved by the vote of a majority of the
Trustees of the Trust in office at the time or by the vote of the holders of a
majority of the voting securities of the Trust at the time outstanding and
entitled to vote, or by the Adviser on 60 days' written notice (which notice may
be waived by the Trust). This Agreement will also immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings of such terms in the Act.)
13. Notices. Any notice under this Agreement shall be in writing to
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the other party at such address as the other party may designate from time to
time for the receipt of such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth day after the postmark
if such notice is mailed first class postage prepaid.
14. Amendment of this Agreement. No provision of this Agreement may
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be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. Any amendment of this Agreement shall be
subject to the Act.
15. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New York for contracts to be
performed entirely therein without reference to choice of law principles
thereof and in accordance with the applicable provisions of the Act.
16. Miscellaneous. The captions in this Agreement are included for
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convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
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17. Counterparts. This Agreement may be executed in counterparts by
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the parties hereto, each of which shall constitute an original counterpart, and
all of which, together, shall constitute one Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
THE BLACKROCK PENNSYLVANIA
STRATEGIC MUNICIPAL TRUST
By:_________________________________
Name:
Title:
BLACKROCK ADVISORS, INC.
By:_________________________________
Name:
Title:
BlackRock Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
August ___, 1999
The BlackRock Pennsylvania Strategic Municipal Trust
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We are writing to confirm our understanding that The BlackRock
Pennsylvania Strategic Municipal Trust (the "Trust") has a nonexclusive,
revocable license to use the word "BlackRock" in its name and that if BlackRock
Advisors, Inc. (the "Adviser") or BlackRock Financial Management Inc. ceases to
be the investment adviser to the Trust, the Trust will cease using such name as
promptly as practicable, making all reasonable efforts to remove "BlackRock"
from its name including calling a special meeting of stockholders.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Trust, has
informed us that the provision described above is implied in the Trust's
investment advisory agreement, and that continued use of the name "BlackRock"
if the Adviser ceases to be the investment adviser would probably violate those
provisions of the Investment Company Act of 1940, as amended, that require that
the Trust's name not be misleading.
Execution of this letter agreement on behalf of the Trust will signify
that the Trust understands that it has a nonexclusive, revocable license to the
use of the name "BlackRock."
BLACKROCK ADVISORS, INC.
By:_________________________________________
Name:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By:______________________________________
Name:
Title:
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THE BLACKROCK PENNSYLVANIA
STRATEGIC MUNICIPAL TRUST
By:_______________________________________
Name:
Title:
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