EXHIBIT (H)
Draft of December 9, 1998
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The BlackRock High Yield Trust
4,000,000 Shares/*/
of Beneficial Interest
UNDERWRITING AGREEMENT
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December __, 1998
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The BlackRock High Yield Trust, a Delaware business trust (the
"Company"), BlackRock Financial Management, Inc., a Delaware corporation and the
Company's sub-investment manager and co-administrator (the "Manager"), BlackRock
Advisors, Inc., a Delaware corporation and the parent of the Manager and the
Company's investment manager ("BlackRock") and Prudential Investments Fund
Management L.L.C., a New York limited liability company as co-administrator
("PIFM"), hereby confirm their agreement with the several underwriters named in
Schedule 1 hereto (the "Underwriters"), for whom you have been duly authorized
to act as representatives (in such capacities, the "Representatives"), as set
forth below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
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Company proposes to issue and sell to the Underwriters an aggregate of 4,000,000
(the "Firm Securities") of common shares of beneficial interest in the Company,
par value, $.001 per share (the "Shares"). The Company also proposes to issue
and sell to the Underwriters not more than 600,000
________________________
/*/ Plus an option to purchase from The BlackRock High Yield Trust up to
600,000 additional shares to cover over-allotments.
additional Shares if requested by the Representatives as provided in Section 3
of this Agreement. Any and all Shares to be purchased by the Underwriters
pursuant to such option are referred to herein as the "Option Securities", and
the Firm Securities and any Option Securities are collectively referred to
herein as the "Securities".
2. Representations and Warranties of the Company and the Manager. (a) The
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Company and the Manager jointly and severally represent and warrant to, and
agree with, each of the several Underwriters that:
(i) A registration statement on Form N-2 (File Nos. 333-63145
and 811-8991) with respect to the Securities, including a prospectus
subject to completion, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and one or more
amendments to such registration statement may have been so filed. A
notification of registration on Form N-8A (the "Notification of
Registration") has also been filed with the Commission pursuant to
Section 8(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"). After the execution of this Agreement, the
Company will file with the Commission either (A) if such registration
statement, as it may have been amended, has been declared by the
Commission to be effective under the Act, a prospectus in the form
most recently included in an amendment to such registration statement
(or, if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule
430A under the Act or permitted by Rule 497(h) under the Act and as
have been provided to and approved by the Representatives prior to the
execution of this Agreement, or (B) if such registration statement, as
it may have been amended, has not been declared by the Commission to
be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment
has been furnished to and approved by the Representatives prior to the
execution of this Agreement. As used in this Agreement, the term
"Registration Statement" means such registration statement, as amended
at the time when it was or is declared effective, including all
financial schedules and exhibits thereto and including any information
omitted therefrom pursuant to Rule 430A under the Act and included in
the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed as part
of Pre-Effective Amendment No. 2 to such registration statement or any
amendment thereto (including the prospectus subject to completion, if
any, included in the Registration Statement or any amendment thereto
at the time it was or is declared effective); and the term
"Prospectus" means the prospectus first filed with the Commission
pursuant to Rule 497(b) or (h), as the case may be, under the Act or,
if applicable, as subsequently filed pursuant to Rule 497(d) under the
Act.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any
Preliminary
2
Prospectus was filed with the Commission it (A) contained all
statements required to be stated therein in accordance with, and
complied in all material respects with the requirements of, the Act,
the Investment Company Act and the respective rules and regulations of
the Commission thereunder and (B) did not include any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, it (A) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Act, the
Investment Company Act and the respective rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement thereto is filed with the
Commission pursuant to Rule 497(b) or (h) under the Act, as the case
may be, and, if applicable, when subsequently filed with the
Commission pursuant to Rule 497(d) under the Act (or, if the
Prospectus or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is
declared effective), and on the Firm Closing Date and any Option
Closing Date (both as hereinafter defined), the Prospectus, as amended
or supplemented at any such time, (A) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act, the Investment Company Act and the respective rules and
regulations of the Commission thereunder and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (ii) do not
apply to statements or omissions made in any Preliminary Prospectus,
the Registration Statement or any amendment thereto or the Prospectus
or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by (A)
any Underwriter through the Representatives or (B) PIFM, specifically
for use therein.
(iii) When the Notification of Registration was filed with the
Commission, it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the Investment Company Act and the rules and
regulations of the Commission thereunder and (ii) did not include any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
(iv) The Company has been duly organized and is validly
existing as a business trust in good standing under the laws of the
State of Delaware and is duly qualified to transact business and is in
good standing under the laws of all other
3
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company; and the Company holds all material
licenses, certificates and permits from all governmental authorities
necessary for the conduct of its business as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) (other than, if the Registration Statement is
not effective under the Act, the order of the Commission declaring the
Registration Statement effective under the Act and similar orders as
may be required under state securities laws). The Company has no
subsidiaries.
(v) The Company has full power (corporate and other) (i) to
own or lease its properties and conduct its business as described in
the Registration Statement and the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus; (ii) to
enter into this Agreement, the Investment Advisory Agreement, dated as
of December __, 1998 (the "Investment Advisory Agreement"), between
the Company and BlackRock, the Sub-Investment Advisory Agreement,
dated as of December __, 1998 (the "Sub-Investment Advisory
Agreement"), between the Company, BlackRock and the Manager, the
Administration Agreement, dated as of December __, 1998 (the
"Administration Agreement"), between the Company, the Manager and
PIFM, the Custodian Contract, dated as of December __, 1998 (the
"Custody Agreement"), between the Company and State Street Bank and
Trust Company ("State Street") (in such capacity, the "Custodian"),
the Transfer Agent and Services Agreement, dated as of December __,
1998 (the "Transfer Agent and Services Agreement"), between the
Company and State Street; (iii) to adopt the automatic dividend
reinvestment plan (the "Automatic Dividend Reinvestment Plan")
described in the Prospectus, or, if the prospectus is not in
existence, the most recent Preliminary Prospectus; and (iv) to carry
out all the terms and provisions hereof and of any of the foregoing
agreements and plans to be carried out by it.
(vi) The Company is duly registered with the Commission
pursuant to Section 8 of the Investment Company Act as a closed-end
diversified management investment company; and the Company's
declaration of trust and by-laws comply in all material respects with
the Investment Company Act and the rules and regulations of the
Commission thereunder.
(vii) The Company has authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus. All of the
issued Shares have been duly authorized and validly issued and are
fully paid and nonassessable. The Firm Securities and the Option
Securities have been duly authorized and at the Firm Closing Date or
the related Option Closing Date (as the case may be), after payment
therefor in accordance herewith, will be validly issued, fully paid
and nonassessable. The Securities have been duly authorized for
listing, subject to official notice of
4
issuance, on the New York Stock Exchange, and the Company's
Registration Statement on Form 8-A under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), has become effective. No
holders of outstanding shares of beneficial interest of the Company
are entitled as such to any preemptive or other rights to subscribe
for any of the Securities, and no holder of securities of the Company
has any right which has not been fully exercised or waived to require
the Company to register the offer or sale of any securities owned by
such holder under the Act in the public offering contemplated by this
Agreement.
(viii) The Shares conform to the description thereof contained in
the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus.
(ix) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities or obligations of
the Company convertible into or exchangeable for any capital stock of
the Company, (B) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations, or (C)
obligations of the Company to issue any shares of capital stock, any
such convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(x) The Statement of Assets and Liabilities of the Company
included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly presents the financial position of the Company as
of the dates therein specified. Such Statement of Assets and
Liabilities has been prepared in accordance with generally accepted
accounting principles.
(xi) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and delivered their report with
respect to the Statement of Assets and Liabilities of the Company
included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by the
Act, the Investment Company Act and the respective rules and
regulations thereunder.
(xii) The execution and delivery of this Agreement, the
Investment Advisory Agreement, the Sub-Investment Advisory Agreement,
the Administration Agreement, the Custody Agreement and the Transfer
Agent and Services Agreement have been duly authorized by the Company;
this Agreement, the Investment Advisory Agreement, the Sub-Investment
Advisory Agreement, the Administration Agreement, the Custody
Agreement and the Transfer Agent and Services Agreement have been duly
executed and delivered by the Company; and assuming due authorization,
execution and delivery by the other parties
5
thereto, the Investment Advisory Agreement, the Sub-Investment
Advisory Agreement, the Administration Agreement, the Custody
Agreement and the Transfer Agent and Services Agreement are the legal,
valid and binding agreements of the Company, enforceable in accordance
with their respective terms, except that enforceability thereof may be
subject to (A) bankruptcy, insolvency, reorganization, moratorium and
other laws whether statutory or decisional now or hereafter in effect
relating to creditors' rights generally and general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (B) as rights to indemnity may be
limited by federal or state securities laws, and this Agreement, the
Investment Advisory Agreement, the Sub-Investment Advisory Agreement
and the Custody Agreement comply in all material respects with the
requirements of the Investment Company Act and the Sub-Investment
Advisory Agreement and Investment Advisory Agreement comply in all
material respects with the requirements of the Investment Advisers Act
of 1940, as amended (the "Adviser's Act") and the respective rules and
regulations of the Commission thereunder; and the Automatic Dividend
Reinvestment Plan has been duly adopted by the Company.
(xiii) No legal or governmental proceedings are pending to which
the Company is a party or to which the property of the Company is
subject that are required to be described in the Registration
Statement or the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and are not
described therein and no such proceedings have been threatened against
the Company or with respect to any of its properties; and no contract
or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) or filed as required.
(xiv) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance
by the Company with the other provisions of this Agreement, the
Investment Advisory Agreement, the Sub-Investment Advisory Agreement,
the Administration Agreement, the Custody Agreement and the Transfer
and Agent Services Agreement and the consummation of the other
transactions herein contemplated do not (A) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, stock exchange or securities association
except such as have been obtained, such as may be required under state
securities laws or the rules of the National Association of Securities
Dealers, Inc. (the "NASD Rules") and, if the registration statement
filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under
the Act or the Investment Company Act, or (B) conflict with or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
lease or other agreement or
6
instrument to which the Company is a party or by which the Company or
any of its properties are bound, or (C) conflict with the declaration
of trust or by-laws of the Company or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company.
(xv) Subsequent to the date of the audited Statement of Assets
and Liabilities included in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), the Company
has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the
ordinary course of business, and there has not been any material
adverse change, or any development involving a prospective material
adverse change (including without limitation a change in management or
control of the Company), in the condition (financial or otherwise),
business prospects, financial position or net worth of the Company,
except in each case as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xvi) The Company has not distributed and prior to the
completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities other than the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, the sales literature (including the prospectus
wrapper and letters to BlackRock and BBT shareholders) or other
materials, if any, permitted by the Act.
(xvii) The Company has not directly or indirectly, (A) taken any
action designed to cause or to result in, or that constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities or (B) since the filing of the
Registration Statement, except as contemplated by any Preliminary
Prospectus, the Prospectus or this Agreement (X) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases
of, the Securities or (Y) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company.
(xviii)Each certificate signed by any officer of the Company in
his or her capacity as such and delivered to the Representatives or
counsel for the Underwriters shall be deemed to be a representation
and warranty by the Company to each Underwriter as to the matters
covered thereby.
(xix) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization and with the investment policies and
restrictions of the Company and the applicable
7
requirements of the Investment Company Act, the rules and regulations
thereunder and the Internal Revenue Code of 1986, as amended; (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles, to calculate net asset value, to maintain accountability
for assets and to maintain material compliance with the books and
records requirements under the Investment Company Act and the rules
and regulations thereunder; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and
(D) the recorded account for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect
to any differences.
(xx) The conduct by the Company of its business (as described
in the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) does not require it to be the owner,
possessor or licensee of any patents, patent licenses, trademarks,
service marks or trade names which it does not own, possess or
license.
(b) The Manager represents and warrants to, and agrees with each of
the Underwriters that:
(i) The Manager has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Manager.
(ii) The Manager has full power (corporate and other) to own or
lease its properties and conduct its business as described in the
Registration Statement and the Prospectus or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus; and the Manager
has full power (corporate and other) to enter into this Agreement and
the Sub-Investment Advisory Agreement and the Administration Agreement
and to carry out all the terms and provisions hereof and thereof to be
carried out by it.
(iii) The Manager is duly registered with the Commission as an
investment adviser under the Advisers Act; and the Manager is not
prohibited by any provision of the Advisers Act or the Investment
Company Act, or the respective rules and regulations of the Commission
thereunder, from performing its obligations under the Sub-Investment
Advisory Agreement.
(iv) The execution and delivery of this Agreement, the Sub-
Investment Advisory Agreement and the Administration Agreement have
been duly authorized by the Manager; this Agreement, the Sub-
Investment Advisory Agreement and the Administration Agreement have
been duly executed and
8
delivered by the Manager; and, assuming due authorization, execution
and delivery by the Company, the Sub-Investment Advisory Agreement and
the Administration Agreement are the legal, valid and binding
agreements of the Manager enforceable in accordance with their
respective terms, except that enforceability thereof may be subject to
(A) bankruptcy, insolvency, reorganization, moratorium and other laws
whether statutory or decisional now or hereafter in effect relating to
creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity) and (B) as rights to indemnity may be limited by
federal or state securities laws, and comply in all material respects
with the Advisers Act and the Investment Company Act and the
respective rules and regulations of the Commission thereunder.
(v) The compliance by the Manager with the provisions of this
Agreement, the Sub-Investment Advisory Agreement and the
Administration Agreement and the consummation of the other
transactions herein contemplated do not (A) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, stock exchange or securities association
except such as have been obtained, such as may be required under state
securities laws or the NASD Rules and, if the registration statement
filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under
the Act or the Investment Company Act, or (B) conflict with or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
lease or other material agreement or instrument to which the Manager
is a party or by which the Manager or any of its properties are bound,
or (C) conflict with the charter documents or by-laws of the Manager
or any statute or any judgment, decree, order, rule or regulation of
any court or other governmental authority or any arbitrator, stock
exchange or securities association applicable to the Manager.
(vi) The description of the Manager and its business contained
in the Prospectus (or, if the Prospectus is not yet in existence, the
most recent Preliminary Prospectus) complies in all material respects
with the requirements of the Act, the Investment Company Act and the
respective rules and regulations of the Commission thereunder and does
not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(vii) Subsequent to the date of the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there has not been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Manager),
in the condition (financial or otherwise), business prospects, net
9
worth or results of operations of the Manager or in the ability of the
Manager to fulfill its respective obligations under this Agreement,
the Sub-Investment Advisory Agreement or the Administration Agreement.
(viii) No legal or governmental proceedings are pending to which
the Manager is a party or to which the property of the Manager is
subject that are required to be described in the Registration
Statement or the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and are not
described therein and, to the best knowledge of the Manager, no such
proceedings have been threatened against the Manager or with respect
to any of its properties.
(ix) The Manager has not, directly or indirectly, (A) taken any
action designed to cause or to result in, or that constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities or (B) since the filing of the
Registration Statement, except as contemplated by any Preliminary
Prospectus, the Prospectus or this Agreement (X) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases
of, the Securities or (Y) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company.
(x) The Manager has the financial resources available to it
necessary for the performance of its services and obligations as
contemplated in the Registration Statement and the Prospectus.
(c) BlackRock represents and warrants to, and agrees with each of the
Underwriters that:
(i) BlackRock has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to BlackRock.
(ii) The description of BlackRock in the Prospectus (or, if the
Prospectus is not yet in existence, the most recent Preliminary
Prospectus) does not contain any untrue statement of material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) This Agreement has been duly authorized, executed and
delivered by BlackRock; and neither the execution and delivery of this
Agreement nor the performance by BlackRock of its obligations
hereunder will (A) require the consent, approval, authorization,
registration or qualification of or with any
10
governmental authority, except such as have been obtained, or (B)
conflict with, or result in a breach of any of the terms and
provisions of, or constitute, with or without giving notice or lapse
of time or both, a default under, any material agreement or instrument
to which BlackRock is a party or by which it is bound, or (C) conflict
with any law, order, rule or regulation applicable to it of any
jurisdiction, court, federal or state regulatory body, administrative
agency or other governmental body, stock exchange or securities
association having jurisdiction over it or its properties or
operations.
(iv) BlackRock has the financial resources available to it
necessary for the performance of its obligations as contemplated in
the Registration Statement and the Prospectus.
(d) [NOTE: SUBJECT TO REVIEW BY PRUDENTIAL.] [PIFM represents and
warrants to, and agrees with each of the Underwriters that:
(i) PIFM has been duly organized as a limited liability
company under the laws of the State of New York with power and
authority to conduct its business as described in the Prospectus.
(ii) The description of PIFM in the Prospectus (or, if the
Prospectus is not yet in existence, the most recent Preliminary
Prospectus) does not contain any untrue statement of material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) The Administration Agreement has been duly authorized,
executed and delivered by it, and assuming due authorization,
execution and delivery by the other parties thereto, constitutes a
legal, valid and binding obligation of PIFM, enforceable in accordance
with its terms, subject to (A) bankruptcy, insolvency, reorganization,
moratorium and other laws whether statutory or decisional now or
hereafter in effect relating to creditors' rights generally and
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (B) as rights to
indemnity may be limited by federal or state securities laws; and
neither the execution and delivery of the Administration Agreement nor
the performance by PIFM of its obligations thereunder will conflict
with, or result in a breach of any of the terms and provisions of, or
constitute, with or without giving notice or lapse of time or both, a
default under, any material agreement or instrument to which it is a
party or by which it is bound, or any law, order, rule or regulation
applicable to it of any jurisdiction, court, federal or state
regulatory body, administrative agency or other governmental body,
stock exchange or securities association having jurisdiction over it
or its properties or operations.
(iv) There is not pending any action, suit or proceeding, or,
to the best knowledge of PIFM, threatened any action, suit,
proceeding, inquiry or
11
investigation, to which PIFM is a party, or to which the property of
PIFM is subject, before or brought by any court or governmental agency
or body, that if determined adversely to PIFM, would result in any
material adverse change in the business, financial position or results
of operations, or materially adversely affect the property or assets,
of PIFM.]
3. Purchase, Sale and Delivery of the Securities. (a) On the basis of the
---------------------------------------------
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of $15.00 per share, the number of Firm Securities set forth opposite the
name of such Underwriter in Schedule 1 hereto. One or more certificates in
definitive form for the Firm Securities that the several Underwriters have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Representatives request upon notice to
the Company at least 48 hours prior to the Firm Closing Date, shall be delivered
by or on behalf of the Company to the Representatives for the respective
accounts of the Underwriters, against payment by or on behalf of the
Underwriters of the purchase price therefor by wire transfer, certified or
official bank check or checks drawn upon or by a New York Clearing House bank
and payable in same day funds to the order of the Company. Such delivery of and
payment for the Firm Securities shall be made at the offices of Cleary,
Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 11:00
A.M., New York time, on December 23, 1998, or at such other place, time or date
as the Representatives and the Company may agree upon or as the Representatives
may determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date". The
Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Representatives at the offices in
New York, New York of the Company's transfer agent or registrar or of Prudential
Securities Incorporated at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of this
Section 3, plus, if the purchase and sale of any Option Securities takes place
after the Firm Closing Date and after the Firm Securities are trading "ex-
dividend", an amount equal to the dividends payable on such Option Securities.
The option granted hereby may be exercised as to all or any part of the Option
Securities from time to time, but not more than three times, within forty-five
days after the date of the Prospectus (or, if such 45th day shall be a Saturday
or Sunday or holiday, on the next business day thereafter when the New York
Stock Exchange is open for trading). The Underwriters shall not be under any
obligation to purchase any of the Option Securities prior to the exercise of
such option. The Representatives may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option Securities
as to which the several Underwriters are then exercising the option and the date
and time for delivery of and
12
payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two business
days or later than seven business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Upon exercise of the option as
provided herein, the Company shall become obligated to sell to each of the
several Underwriters, and, subject to the terms and conditions herein set forth,
each of the Underwriters (severally and not jointly) shall become obligated to
purchase from the Company, the same percentage of the total number of the Option
Securities as to which the several Underwriters are then exercising the option
as such Underwriter is obligated to purchase of the aggregate number of Firm
Securities, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares. If the option is exercised as to all or
any portion of the Option Securities, one or more certificates in definitive
form for such Option Securities, and payment therefor, shall be delivered on the
related Option Closing Date in the manner, and upon the terms and conditions,
set forth in paragraph (a) of this Section 3, except that reference therein to
the Firm Securities and the Firm Closing Date shall be deemed, for purposes of
this paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) Simultaneous with delivery to the Underwriters of and payment by
the Underwriters for (i) the Firm Securities on the Firm Closing Date and (ii)
any Option Securities on the related Option Closing Date, the Manager and
BlackRock jointly and severally agree to pay (or cause to be paid) to the
Underwriters an amount equal to four and one-half percent (4.5%) of the purchase
price per Share for each Share to be purchased by the Underwriters on such date
by certified or official bank check or checks drawn upon or by a New York
Clearing House Bank and payable in same day funds on such Firm Closing Date or
Option Closing Date, as the case may be, to the order of Prudential Securities
Incorporated for the respective accounts of the Underwriters purchasing the
Shares on such date.
(d) It is understood that any of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make payment on behalf
of any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of the release of
----------------------------
the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants. (a) The Company covenants and agrees with each of the
---------
Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto to become effective as
promptly as possible. If required, the
13
Company will file the Prospectus and any amendment or supplement
thereto with the Commission in the manner and within the time period
required by Rule 497(b), (d) or (h), as the case may be, under the
Act. During any time when a prospectus relating to the Securities is
required to be delivered under the Act, the Company (A) will comply
with all requirements imposed upon it by the Act, the Investment
Company Act and the respective rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales
of or dealings in the Securities in accordance with the provisions
hereof and of the Prospectus, as then amended or supplemented, and (B)
will not file with the Commission the prospectus or the amendment
referred to in the third sentence of Section 2(a)(i) hereof, any
amendment or supplement to such prospectus or any amendment to the
Registration Statement of which the Representatives shall not
previously have been advised and furnished with a copy for a
reasonable period of time prior to the proposed filing and as to which
filing the Representatives shall not have given their consent, which
consent shall not be unreasonably withheld. The Company will prepare
and file with the Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by the
Representatives or counsel for the Underwriters, any amendments to the
Registration Statement or amendments or supplements to the Prospectus
that may be necessary or advisable in connection with the distribution
of the Securities by the several Underwriters, and will use its best
efforts to cause any such amendment to the Registration Statement to
be declared effective by the Commission as promptly as possible. The
Company will advise the Representatives, promptly after receiving
notice thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed and
will provide evidence satisfactory to the Representatives of each such
filing or effectiveness.
(ii) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (A) the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any amendment thereto
or any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
(B) the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, (C) the institution, threatening or
contemplation of any proceeding for any such purpose or (D) any
request made by the Commission for amending the Registration
Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its best efforts to
prevent the issuance of any such stop order and, if any such stop
order is issued, to obtain the withdrawal thereof as promptly as
possible.
(iii) The Company will arrange for the qualification of the
Securities for offering and sale under the securities laws of such
jurisdictions as the Representatives may designate and will continue
such qualifications in effect for
14
as long as may be necessary to complete the distribution of the
Securities; provided, however, that in connection therewith the
-------- -------
Company shall not be required to qualify as a foreign business trust
or to execute a general consent to service of process in any
jurisdiction.
(iv) If, at any time prior to the later of (A) the final date
when a prospectus relating to the Securities is required to be
delivered under the Act or (B) the Option Closing Date, any event
occurs as a result of which the Prospectus, as then amended or
supplemented, would include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Prospectus to comply with the
Act, the Investment Company Act or the respective rules or regulations
of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 5(a)(i) hereof, will
prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement
to the Prospectus that corrects such statement or omission or effects
such compliance.
(v) The Company will, without charge, provide (A) to the
Representatives and to counsel for the Underwriters (X) a signed copy
of the Notification of Registration and (Y) a signed copy of the
registration statement originally filed with respect to the Securities
and each amendment thereto (in each case including exhibits thereto),
a conformed copy of the registration statement originally filed with
respect to the Securities and each amendment thereto (in each case
including exhibits thereto), certified by the Secretary or an
Assistant Secretary of the Company to be true and complete copies
thereof as filed with the Commission by electronic transmission, (B)
to each other Underwriter, a conformed copy of such Notification of
Registration and such registration statement and each amendment
thereto (in each case without exhibits thereto) and (C) so long as a
prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request.
(vi) The Company, as soon as practicable but in no event later
than 60 days after the period covered thereby, will make generally
available to its security holders and to the Representatives a
consolidated earnings statement of the Company that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(vii) The Company will apply the net proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Prospectus.
15
(viii) The Company will use its best efforts to list, subject to
notice of issuance, the Securities to be sold by it on the New York
Stock Exchange simultaneously with the effectiveness of the
Registration Statement.
(ix) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to the
Representatives copies of all reports and other communications
(financial or other) furnished by the Company to its shareholders and,
as soon as available, copies of any reports or financial statements
furnished or filed by the Company to or with the Commission or any
national securities exchange on which any class of securities of the
Company may be listed.
(x) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf
of the Underwriters, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge,
grant of any option to purchase or other sale or disposition) of any
Shares or any securities convertible into, or exchangeable or
exercisable for, Shares for a period of 180 days after the date
hereof, except pursuant to this Agreement and to the Automatic
Dividend Reinvestment Plan.
(xi) The Company will not, directly or indirectly, (A) take any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities or (B) (1) sell, bid for,
purchase, or pay anyone any compensation for soliciting purchases of,
the Securities or, except as contemplated by any Preliminary
Prospectus, the Prospectus or this Agreement, (2) pay or agreed to pay
to any person any compensation for soliciting another to purchase any
other securities of the Company.
(xii) If at any time during the 25-day period after the
Registration Statement becomes effective or the period prior to the
Option Closing Date, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion
the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus),
the Company will, after written notice from you advising the Company
to the effect set forth above, forthwith prepare, consult with you
concerning the substance of, and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(b) The Manager covenants and agrees with each of the Underwriters that:
(i) The Manager will not, directly or indirectly, (A) take any
action designed to cause or to result in, or that has constituted or
which might reasonably
16
be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities or (B) (1) sell, bid for, purchase, or pay anyone
any compensation for soliciting purchases of, the Securities or,
except as contemplated by any Preliminary Prospectus, the Prospectus
or this Agreement, (2) pay or agreed to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company.
(ii) In the event that the Company offers the opportunity to
request to subscribe for Shares of the Company to employees and
customers of the Manager and its affiliates, the Manager shall use its
best efforts to communicate and explain to such employees and
customers the appropriate risk profile that an investor should have in
order to make an investment in the Shares.
(iii) The Manager will use its best efforts to insure that the
1998 BlackRock Term Trust consummates its liquidation and redemption
on or before December 23, 1998.
6. Expenses. The Company agrees to pay all costs and expenses incident to the
--------
performance of the Company's obligations under this Agreement, to the extent
such expenses in the aggregate do not exceed $0.02 per Share, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions
(including the prospectus wrapper and letters to BlackRock and BBT shareholders
and any other written materials prepared by the Company or authorized in writing
by the Company), including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, the
Notification of Registration, any Preliminary Prospectus (including without
limitation, the expenses of printing the mailing folder for any Preliminary
Prospectus and the expenses of attaching the mailing folder to each Preliminary
Prospectus and of packaging each Preliminary Prospectus for distribution) and
the Prospectus and any amendment or supplement thereto, this Agreement, the Sub-
Investment Advisory Agreement, the Administration Agreement, the Custody
Agreement, the Transfer Agent and Services Agreement and the Soliciting Dealer
Agreement, (ii) all arrangements relating to the delivery to the Underwriters of
copies of the foregoing documents, (iii) the fees and disbursements of the
Manager, the Custodian and the counsel, the accountants and any other experts or
advisors retained by the Company, the Manager or BlackRock (iv) the preparation,
issuance and delivery to the Underwriters of any certificates evidencing the
Securities, including transfer agent's and registrar's fees, (v) the
qualification of the Securities under state securities laws, including filing
fees and fees and disbursements of counsel for the Underwriters relating
thereto, (vi) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Securities, (vii) any listing of the
Securities on the New York Stock Exchange, (viii) any meetings with prospective
investors in the Securities (other than as shall have been specifically approved
by the Representatives to be paid for by the Underwriters) and (ix) advertising
relating to the offering of the Securities (other than shall have been
specifically approved by the Representatives to be paid for by the
Underwriters). To the extent the foregoing
17
costs and expenses incident to the performance of the Company's obligations
under this Agreement exceed in the aggregate $0.02 per Share, the Manager and
BlackRock jointly and severally agree to pay, or cause to be paid, all such
excess costs and expenses. If the sale of the Securities provided for herein is
not consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because this Agreement is terminated
pursuant to Section 11 hereof or because of any failure, refusal or inability on
the part of the Company, the Manager or BlackRock to perform all obligations and
satisfy all conditions on its respective part to be performed or satisfied
hereunder other than by reason of a default by any of the Underwriters, the
Company, the Manager and BlackRock jointly and severally agree to reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
counsel fees and disbursements) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities. Neither the
Company, the Manager nor BlackRock shall in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company, the Manager, BlackRock and PIFM
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's, the Manager's, BlackRock's and PIFM's officers made pursuant to
the provisions hereof, to the performance by the Company, the Manager and
BlackRock of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Registration Statement or any amendment thereto filed prior
to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Registration Statement or such amendment shall have been
declared effective not later than 11:00 A.M., New York time, on the date on
which the amendment to the registration statement originally filed with respect
to the Securities or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of the
Securities has been filed with the Commission, or such later time and date as
shall have been consented to by the Representatives; the Prospectus and any
amendment or supplement thereto shall have been filed with the Commission in the
manner and within the time period required by Rule 497(b), (d) or (h), as the
case may be, under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Company, to the effect that:
18
(i) the Company has been organized and is validly existing as a
business trust in good standing under the laws of the State of
Delaware and is qualified to transact business and is in good standing
under the laws of each jurisdiction specifically identified to such
counsel by the Company as a jurisdiction in which the Company owns or
leases real property or conducts material business operations;
(ii) the Company has the necessary power to own or lease its
properties and conduct its business as described in the Prospectus,
and the Company has the necessary power to enter into this Agreement,
the Sub-Investment Advisory Agreement, the Investment Advisory
Agreement, the Administration Agreement, the Custody Agreement and the
Transfer Agent and Services Agreement to carry out all the terms and
provisions hereof and thereof to be carried out by it;
(iii) the Company is registered with the Commission pursuant to
Section 8 of the Investment Company Act as a closed-end diversified
management investment company; and the Company's declaration of trust
and by-laws comply in all material respects with the Investment
Company Act and the rules and regulations of the Commission
thereunder;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the outstanding
Shares have been duly authorized and validly issued and are fully paid
and nonassessable; the Firm Securities have been duly authorized by
all necessary corporate action of the Company and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be validly issued, fully paid and nonassessable; the
Securities have been duly authorized for listing, subject to official
notice of issuance, on the New York Stock Exchange; no holders of
outstanding Shares are entitled as such to any preemptive or other
rights to subscribe for any of the Securities under any material
indenture, mortgage, deed or trust, lease or other agreement or
instrument, known to such counsel after due inquiry, to which the
Company is a party or by which the Company or any of its properties
are bound or under the Declaration of Trust or by-laws of the Company
or under the State of Delaware Business Trust Act; and no holders of
securities of the Company are entitled to have such securities
registered under the Registration Statement under any material
indenture, mortgage, deed or trust, lease or other agreement or
instrument, known to such counsel after due inquiry, to which the
Company is a party or by which the Company or any of its properties
are bound or under the Declaration of Trust or by-laws of the Company
or under the State of Delaware Business Trust Act;
(v) the statements set forth under the heading "Description of
Shares" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the Shares or the Company's
Declaration of Trust, provide a fair
19
summary of such provisions; the statements set forth under the heading
"Taxes" in the Prospectus, insofar as such statements purport to
summarize certain United States federal income tax considerations
relating to the Company and to acquisition, ownership and disposition
of shares, provide a fair summary of such considerations; and the
statements set forth under the headings "The Trust", "Investment
Restrictions", "Management of the Trust", "Dividends and
Distributions" ,"Automatic Dividend Reinvestment Plan", "Custodian and
Transfer Agent and Dividend Disbursing Agent" and "Underwriting" in
the Prospectus, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, provide a
fair summary of such legal matters, documents and proceedings;
(vi) the execution and delivery of this Agreement have been duly
authorized by all necessary action of the Company, and this Agreement
has been duly executed and delivered by the Company;
(vii) the execution and delivery of each of the Investment
Advisory Agreement, the Sub-Investment Advisory Agreement, the
Administration Agreement, the Custody Agreement and the Transfer Agent
and Services Agreement have been duly authorized by all necessary
action of the Company and the Investment Advisory Agreement, the Sub-
Investment Advisory Agreement, the Administration Agreement, the
Custody Agreement and the Agent Transfer and Administration Agreement
comply in all material respects with all applicable provisions of the
Investment Company Act and the Investment Advisory Agreement and the
Sub-Investment Advisory Agreement comply in all material respects with
all applicable provisions of the Advisers Act, and, assuming due
authorization, execution and delivery by the other parties thereto,
the Investment Advisory Agreement, the Sub-Investment Advisory
Agreement, the Administration Agreement, the Custody Agreement and the
Transfer Agent and Services Agreement are the legal, valid and binding
agreements of the Company, enforceable in accordance with their
respective terms, except that enforceability thereof may be subject to
(A) bankruptcy, insolvency, reorganization, moratorium and other laws
whether statutory or decisional now or hereafter in effect relating to
creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity) and (B) as rights to indemnity may be limited by
federal or state securities laws;
(viii) (A) no legal or governmental proceedings are pending to
which the Company is a party or to which the property of the Company
is subject that are required to be described in the Registration
Statement or the Prospectus and are not described therein, and, to the
best knowledge of such counsel, no such proceedings have been
threatened against the Company or with respect to any of its
properties and (B) no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that is not
described therein or filed as required;
20
(ix) subject to the qualification set forth in the following
paragraph, no consent or approval of or other action, authorization,
registration or qualification of or with any governmental authority
which has not been obtained, taken or made (except such as may be
required under state securities laws in connection with the purchase
and distribution of the Securities by the Underwriters) is required
under the laws of the State of Delaware, the Act, the Investment
Company Act, the Advisers Act or the rules and regulations of the
Commission thereunder, for the Company to execute and deliver this
Agreement, the Investment Advisory Agreement, the Sub-Investment
Advisory Agreement, the Administration Agreement, the Custody
Agreement and the Transfer Agent and Services Agreement and the
Automatic Dividend Reinvestment Plan and to consummate the
transactions provided for therein. Such counsel need not express an
opinion as to any such consent, approval, action or filing (A) which
may be required solely as a result of your involvement in the
transactions contemplated by this Agreement because of your legal or
regulatory status or because of any other facts specifically
pertaining to you; (B) the absence of which does not have any material
adverse affect on you and does not deprive you of any material benefit
under this Agreement; or (C) which can be readily obtained without
significant delay or expense to you, without loss to you of any
material benefit under this Agreement and without any material adverse
effect on you during the period such consent, approval, action or
filing was not obtained or effected;
such counsel's opinion shall relate only to consents,
approval, actions and filings required under (i) the laws, rules and
regulations that are specifically referred to in such opinion and (ii)
laws, rules and regulations that are normally applicable to
transactions of the type provided for in this Agreement, the
Investment Advisory Agreement, the Sub-Investment Advisory Agreement,
the Administration Agreement, the Custody Agreement and the Transfer
Agent and Services Agreement and the Automatic Dividend Reinvestment
Plan; the Registration Statement is effective under the Act; the
filing of the Prospectus pursuant to Rule 497(b), (d) or (h), as the
case may be, has been made in the manner and within the time period
required by Rule 497(b), (d) or (h), as the case may be; and, no stop
order suspending the effectiveness of the Registration Statement or
any amendment thereto has been issued, and no proceedings for that
purpose have been instituted or threatened or, to the best knowledge
of such counsel, are contemplated by the Commission;
(x) subject to the qualification set forth in the following
paragraph, the execution and delivery by the Company of this
Agreement, the Investment Advisory Agreement, the Sub-Investment
Advisory Agreement, the Administration Agreement, the Custody
Agreement and the Transfer Agent and Services Agreement and the
Automatic Dividend Reinvestment Plan and the consummation by the
Company of the transactions provided for therein will not cause the
Company to violate (A) any law of the State of Delaware, the
Investment Company Act, the Advisers Act or the rules and regulations
of the
21
Commission under each, (B) the declaration of trust or by-laws of the
Company or any material indenture, mortgage, deed of trust, lease or
other agreement or instrument, specifically identified to such counsel
by the Company as being material to the business of the Company or (C)
any other statute, judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator to which the
Company is subject; such counsel need not express an opinion as to any
such violation (A) that may have become applicable to the Company
solely as a result of the involvement of you in the transactions
contemplated by this Agreement, because of your legal or regulatory
status or because of any other facts specifically pertaining to you;
(B) that does not have any material adverse effect on you and does not
deprive you of any material benefit under this Agreement; or (C) which
can be readily cured without significant delay or expense to you,
without loss to you of any material benefit under this Agreement and
without any material adverse effect on you during the period of such
violation;
such counsel's opinion shall relate only to (i) the laws,
rules and regulations that are specifically referred to in such
opinion and (ii) laws, rules and regulations that are normally
applicable to transactions of the type provided for in this Agreement,
the Investment Advisory Agreement, the Sub-Investment Advisory
Agreement, the Administration Agreement, the Custody Agreement and the
Transfer Agent and Services Agreement and the Automatic Dividend
Reinvestment Plan and (iii) other statutes, judgments, decrees,
orders, rules and regulations of courts or other governmental
authorities or arbitrators specifically identified to such counsel by
the Company as being material to the business or financial condition
of the Company;
(xi) the Registration Statement originally filed with respect to
the Securities and each amendment thereto and the Prospectus (in each
case, other than the financial statements and other financial and/or
statistical information contained therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act, the Investment Company
Act and the respective rules and regulations of the Commission
thereunder;
(xii) The Shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, and the
Company's Registration Statement on Form 8-A under the Exchange Act is
effective;
(xiii) The form of the certificates for the Shares conform to the
requirements of Delaware law; and
Such counsel shall state that they have participated in conferences
with officers and other representatives of, and counsel for, the Company, the
Manager and BlackRock, representatives of the independent public accountants for
the Company and the Underwriters at
22
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and, such counsel need not pass upon, and need not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and need have made no
independent check or verification thereof, on the basis of the foregoing, such
counsel shall state that no facts have come to their attention that have led
them to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its date and the
date of such opinion, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that such counsel need express no opinion or belief
with respect to the financial statements, schedules and other statistical or
financial data included in or excluded from the Registration Statement or the
Prospectus or the exhibits to the Registration Statement or incorporated by
reference therein.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company, the Manager and BlackRock and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representatives shall have received an opinion, dated the Firm
Closing Date, of [ ], Esq., [general counsel] of the Manager, to the effect
that:
(i) the Manager is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Delaware
and is duly qualified to transact business as a foreign corporation
and is in good standing under the laws of all other jurisdictions
where the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be
so qualified does not amount to a material liability or disability to
the Manager;
(ii) the Manager has corporate power to own or lease its
properties and conduct its business as described in the Registration
Statement and the Prospectus, and the Manager has corporate power to
enter into this Agreement, the sub-Investment Advisory Agreement and
the Administration Agreement and to carry out all the terms and
provisions hereof and thereof to be carried out by it;
(iii) the Manager is duly registered with the Commission as an
investment adviser under the Advisers Act; and the Manager is not
prohibited by any provision of the Advisers Act or the Investment
Company Act, or the respective rules and regulations of the Commission
thereunder, from performing its obligations under the Sub-Investment
Advisory Agreement as contemplated by the Registration Statement and
the Prospectus;
23
(iv) the execution and delivery of this Agreement, the Sub-
Investment Advisory Agreement and the Administration Agreement have
been duly authorized by all necessary corporate action of the Manager;
this Agreement, the Sub-Investment Advisory Agreement and the
Administration Agreement have been duly executed and delivered by the
Manager; and, assuming due authorization, execution and delivery by
the Company, the Sub-Investment Advisory Agreement and the
Administration Agreement are the legal, valid and binding agreements
of the Manager enforceable against the Manager in accordance with
their respective terms, except that enforceability thereof may be
subject to (A) bankruptcy, insolvency, reorganization, moratorium and
other laws whether statutory or decisional now or hereafter in effect
relating to creditors' rights generally and general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (B) as rights to indemnity may be
limited by federal or state securities laws, and comply in all
material respects with the Advisers Act and the Investment Company Act
and the respective rules and regulations of the Commission thereunder;
(v) the compliance by the Manager with the provisions of this
Agreement, the Sub-Investment Advisory Agreement and the
Administration Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, or (ii)
conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which the Manager is a party or by which the Manager or any of its
properties are bound, or the charter documents or by-laws of the
Manager or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator, stock exchange or securities association known to such
counsel and applicable to the Manager; and
(vi) no legal or governmental proceedings are pending to which the
Manager is a party or to which the property of the Manager is subject
that are required to be described in the Registration Statement or the
Prospectus and are not described therein and, to the best knowledge of
such counsel after due inquiry, no such proceedings have been
threatened against the Manager or with respect to any of its
properties.
Such counsel shall also state that the description of the Manager and
its business contained in the Prospectus complies in all material respects with
the requirements of the Act and the Investment Company Act and the respective
rules and regulations of the Commission thereunder and, to the best knowledge of
such counsel after due inquiry, that the Registration Statement with respect to
the statements regarding the Manager, as of its effective date, does not include
an untrue statement of a material fact or omit to state any 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 or that
the Prospectus, as of its date and the date of such
24
opinion, does not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates and other
statements and representations, oral and written, of responsible officers of the
Company, the Manager and BlackRock and public officials and others.
References to the Registration Statement and the Prospectus in this
paragraph (c) shall include any amendment or supplement thereto at the date of
such opinion.
(d) The Representatives shall have received an opinion, dated the Firm
Closing Date, of [ ], Esq., [general counsel] of BlackRock, to the effect
that:
(i) BlackRock is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Delaware
and has corporate power to enter into this Agreement and to carry out
all the terms and provisions hereof to be carried out by it;
(ii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of BlackRock; this
Agreement has been duly executed and delivered by BlackRock; and
(iii) the description of BlackRock and its business contained in
the Prospectus complies in all material respects with the requirements
of the Act and the Investment Company Act and the respective rules and
regulations of the Commission thereunder and, to the best knowledge of
such counsel after due inquiry, that the Registration Statement with
respect to the statements regarding BlackRock, as of its effective
date, does not include an untrue statement of a material fact or omit
to state any 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 or that the Prospectus, as of its
date and the date of such opinion, does not include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company, the Manager and BlackRock and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the date of
such opinion.
(e) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Underwriters, with respect to the
25
issuance and sale of the Firm Securities, the Registration Statement and the
Prospectus, and such other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Representatives shall have received from Deloitte & Touche LLP
a letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to the Company
within the meaning of the Act, the Investment Company Act and the
respective rules and regulations thereunder;
(ii) in their opinion, the Statement of Assets and Liabilities
examined by them and included in the Registration Statement and the
Prospectus complies in form in all material respects with the
applicable accounting requirements of the Act, the Investment Company
Act and the respective rules and regulations of the Commission
thereunder;
(iii) on the basis of a reading of the latest available interim
financial statements of the Company, carrying out certain specified
procedures (which do not constitute an examination made in accordance
with generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
shareholders, the board of trustees and any committees thereof of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that at a specific date
not more than five business days prior to the date of such letter,
there were any changes in the shares of beneficial interest or long-
term debt of the Company or any decreases in stockholders' equity of
the Company, in each case compared with amounts shown on the Statement
of Assets and Liabilities included in the Registration Statement and
the Prospectus; and
(iv) they have recalculated certain data of a statistical or
financial nature identified by the Representatives and appearing in
the Prospectus, including without limitation, under the captions
"Trust Expenses" and "Other Investment Practices" and agree with the
Company's calculation of such data as set forth in the Prospectus.
In the event that the letters referred to above set forth any such
changes or decreases, it shall be a further condition to the obligations of the
Underwriters that (A) such letters shall be accompanied by a written explanation
of the Company as to the significance thereof, unless the Representatives deem
such explanation unnecessary, and (B) such changes or decreases do not, in the
sole judgment of the Representatives, make it impractical or inadvisable
26
to proceed with the purchase and delivery of the Securities as contemplated by
the Registration Statement, as amended as of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(g) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of the Firm Closing Date, does not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Firm Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or threatened or,
to the best of the Company's knowledge, are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the Company
has not sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and
there has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise), management, business prospects, net worth or
results of operations of the Company, except in each case as described
in or contemplated by the Prospectus (inclusive of any amendment or
supplement thereto prior to date of such certificate).
(h) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of each of the Manager and BlackRock to the
effect that:
(i) the representations and warranties of the Manager in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the
27
description of the Manager and BlackRock and their businesses
contained in the Prospectus, as amended or supplemented as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and
(ii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the
Manager nor BlackRock has sustained any material loss or interference
with its business or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), business prospects, net worth or results of operations of
the Manager or BlackRock, except in each case as described in or
contemplated by the Prospectus (inclusive of any amendment or
supplement thereto prior to the date of such certificate).
(i) On or before the Firm Closing Date, the Representatives shall have
received from each Trustee and officer of the Company a letter, dated the Firm
Closing Date, containing the agreement of such Trustee and officer not to,
directly or indirectly, without the prior written consent of Prudential
Securities Incorporated, on behalf of the Underwriters, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose (or announce any offer, sale, offer to sell, contract of sale,
pledge, grant of any option to purchase or other sale or disposition) of any
Shares or any securities convertible into, or exchangeable or exercisable for,
Shares for a period of 180 days after the date hereof.
(j) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(k) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company, the Manager and BlackRock shall
furnish to the Representatives such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representatives
and counsel for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm
28
Closing Date shall be deemed to refer to such Option Securities and the related
Option Closing Date, respectively.
8. Indemnification and Contribution. (a) The Company, the Manager and
--------------------------------
BlackRock jointly and severally agree to indemnify and hold harmless each
Underwriter and each other broker-dealer or financial institution that has
signed that certain Soliciting Dealer Agreement, dated November 23, 1998 (each,
a "Soliciting Dealer") and each person, if any, who controls any Underwriter or
Soliciting Dealer within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter, such Soliciting Dealer or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company, the Manager or BlackRock in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other
document, including the Notification of Registration, or any amendment
or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities
laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio, visual or written materials,
including without limitation, slides, videos, films and tape
recordings used in connection with the marketing of the Securities,
provided that such materials were prepared by or provided by the
Company, or including without limitation, communications by the
Company to securities analysts employed by the Underwriters and will
reimburse, as incurred, each Underwriter, each Soliciting Dealer and
each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter, such Soliciting Dealer or
such controlling person in connection with investigating, defending
against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that
-------- -------
neither the Company, the Manager nor BlackRock will be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out
29
of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or any Application in reliance
upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically
for use therein and provided, further, that neither the Company nor
-------- --------
BlackRock will be Liable to any Underwriter, any Soliciting Dealer or
any person controlling such Underwriter or such Soliciting Dealer with
respect to any such untrue statement or omission made in any
Preliminary Prospectus that is corrected in the Prospectus (or any
amendment or supplement thereto) if the person asserting any such
loss, claim, damage or liability purchased Securities from such
Underwriter or such Soliciting Dealer but was not sent or given a copy
of the Prospectus (as amended or supplemented) at or prior to the
written confirmation of the sale of such Securities to such person in
any case where such delivery of the Prospectus (as amended or
supplemented) is required by the Act, unless such failure to deliver
the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5(a)(iv) and (v) of this
Agreement. This indemnity agreement will be in addition to any
liability which the Company, the Manager or BlackRock may otherwise
have. Neither the Company, the Manager or BlackRock will, without the
prior written consent of the Underwriter or Underwriters purchasing,
in the aggregate more than fifty percent (50%) of the Securities,
settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not any such
Underwriter or any person who controls any such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of
all of the Underwriters, all of the Soliciting Dealers and such
controlling persons from all liability arising out of such claim,
action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, the Manager or BlackRock, each of the Company's
trustees, each of the Company's officers who signed the Registration Statement
and each person, if any, who controls the Company, the Manager or BlackRock
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company or any
such trustee, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application or (ii) the omission
or the alleged omission to state therein a material fact required to be stated
in the Registration Statement or any amendment thereto any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue
30
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company, the Manager or BlackRock or any such trustee, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or any action in respect thereof. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
-------- -------
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 8, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold
31
harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Company, the Manager and BlackRock on the one hand (it being understood that for
such purpose, the Company, the Manager and BlackRock shall be treated as one
entity) and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting commissions received by
the Underwriters. The relative fault of the parties 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 Company, the Manager, BlackRock or the
Underwriters, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company, the
Manager, BlackRock and the Underwriters agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per capita
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Prudential Securities Incorporated Master Agreement Among Underwriters.
For purposes of this paragraph (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each trustee of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company, the
Manager or BlackRock within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, shall have the same rights to contribution as the Company,
the Manager or BlackRock, as the case may be.
9. Default of Underwriters. If one or more Underwriters default in their
-----------------------
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such
32
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase is ten percent or less of the aggregate number of Firm Securities or
Option Securities to be purchased by all of the Underwriters at such time
hereunder, the other Underwriters may make arrangements satisfactory to the
Representatives for the purchase of such Securities by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representatives), but if no such arrangements are made by the Firm Closing Date
or the related Option Closing Date, as the case may be, the other Underwriters
shall be obligated severally in proportion to their respective commitments
hereunder to purchase the Firm Securities or Option Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If one or
more Underwriters so default with respect to an aggregate number of Securities
that is more than ten percent of the aggregate number of Firm Securities or
Option Securities, as the case may be, to be purchased by all of the
Underwriters at such time hereunder, and if arrangements satisfactory to the
Representatives are not made within 36 hours after such default for the purchase
by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter, the Company, the Manager or
BlackRock other than as provided in Section 10 hereof. In the event of any
default by one or more Underwriters as described in this Section 9, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 3
hereof for not more than seven business days in order that any necessary changes
may be made in the arrangements or documents for the purchase and delivery of
the Firm Securities or Option Securities, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
10. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company, the Manager and
BlackRock and the officers of the Company, the Manager and BlackRock and the
several Underwriters set forth in this Agreement or made by or on behalf of them
pursuant to this Agreement shall remain in full force and effect, regardless of
(i) any investigation made by or on behalf of the Company, the Manager,
BlackRock, any of their officers or trustees, any Underwriter or any controlling
person referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated with respect to the
-----------
Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company or
the Manager shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder at
or prior thereto or, if at or prior to the Firm Closing Date or such Option
Closing Date, respectively,
33
(i) the Company, the Manager or BlackRock shall have, in the sole
judgment of the Representatives, sustained any material loss or
interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or
any development involving a prospective material adverse change
(including without limitation a change in management or control of the
Company, the Manager or BlackRock, as the case may be), in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company the Manager or BlackRock, except
in each case as described in or contemplated by the Prospectus
(exclusive of any amendment or supplement thereto);
(ii) trading in the Shares shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities
generally on the New York Stock Exchange shall have been suspended or
minimum or maximum prices shall have been established;
(iii) a banking moratorium shall have been declared by New York or
United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political of financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The statements set forth in the
------------------------------------
last paragraph on the front cover page and under the heading "Underwriting" in
any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(a)(ii) and 8 hereof. The Underwriters confirm that such statements
(to such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if sent
-------
to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity
Transactions Group; if sent to the Company, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to the Company at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; if sent to the Manager, shall be mailed,
delivered or telegraphed and confirmed in writing to the Manager at BlackRock
Financial Management, Inc.,
34
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and if sent to BlackRock, shall be
mailed, delivered or telegraphed and confirmed to it in writing to BlackRock at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
14. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company, the Manager, BlackRock and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company, the Manager and BlackRock contained in Section 8
of this Agreement shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the trustees of the
Company, the officers of the Company who have signed the Registration Statement
and any person or persons who control the Company, the Manager or BlackRock
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Securities from any Underwriter shall be deemed a successor
because of such purchase.
15. Limitation of Liability of Trustees and Shareholders. A copy of the
----------------------------------------------------
Company's Declaration of Trust is on file with the Secretary of State of
Delaware, and notice is hereby given that this Agreement is executed on behalf
of the Company's Trustees as Trustees under the Declaration of Trust and not
individually. The Underwriters acknowledge and agree that the obligations of
the Company hereunder are not personally binding upon any of the Trustees or
shareholders of the Company are binding only upon property of the Company.
16. Applicable Law. The validity and interpretation of this Agreement,
--------------
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the law of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
17. Counterparts. This Agreement may be executed in two or more counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. If signed in counterparts, the Agreement
shall not become effective unless at least one counterpart hereof shall have
been executed and delivered on behalf of each party hereto.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company, the
Manager, BlackRock and each of the several Underwriters.
Very truly yours,
THE BLACKROCK HIGH YIELD TRUST
35
By __________________________
Name:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By __________________________
Name:
Title:
BLACKROCK ADVISORS, INC.
By __________________________
Name:
Title:
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT L.L.C.
By __________________________
Name:
Title:
36
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
By PRUDENTIAL SECURITIES INCORPORATED
By _________________________________
Name: ▇▇▇▇-▇▇▇▇▇▇ Canfin
Title: Managing Director
For itself and on behalf of the Representatives.
37
SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
Prudential Securities Incorporated
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
PaineWebber Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Total [ ]
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