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AUCTION AGENT AGREEMENT
between
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
and
BANKERS TRUST COMPANY
Dated as of November 23, 1992
Relating to
Auction Rate Municipal Preferred Stock
(the "Preferred Shares")
Series T7, Series T28, Series R7 and Series R28
of
THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC.
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THIS AUCTION AGENT AGREEMENT dated as of November 23, 1992,
between THE BLACKROCK INSURED MUNICIPAL 2008 TERM TRUST INC., a Maryland
corporation (the "Company"), and BANKERS TRUST COMPANY, a New York banking
corporation.
The Company proposes to duly authorize and issue 1,030 shares of
Auction Rate Municipal Preferred Stock, Series T7, with a par value of $.01
per share and a liquidation preference of $50,000 per share plus an amount
equal to accumulated but unpaid dividends (whether or not earned or
declared) plus the premium, if any, resulting from the designation of a
Premium Call Period ("Series T7 Preferred Shares"); 1,030 shares of Auction
Rate Municipal Preferred Stock, Series T28, with a par value of $.01 per
share and a liquidation preference of $50,000 per share plus an amount
equal to accumulated but unpaid dividends (whether or not earned or
declared) plus the premium, if any, resulting from the designation of a
Premium Call Period ("Series T28 Preferred Shares"); 1,030 shares of
Auction Rate Municipal Preferred Stock, Series R7, with a par value of $.01
per share and a liquidation preference of $50,000 per share plus an amount
equal to accumulated but unpaid dividends (whether or not earned or
declared) plus the premium, if any, resulting from the designation of a
Premium Call Period ("Series R7 Preferred Shares"); and 1,030 shares of
Auction Rate Municipal Preferred Stock, Series R28, with a par value of
$.0l per share and a liquidation preference of $50,000 per share plus an
amount equal to accumulated but unpaid dividends (whether or not earned or
declared) plus the premium, if any, resulting from the designation of a
Premium Call Period ("Series R28 Preferred Shares"), each pursuant to the
Company's Articles Supplementary (as defined below). The Series T7
Preferred Shares, the Series T28 Preferred Shares, the Series R7 Preferred
Shares and the Series R28 Preferred Shares are sometimes herein together
referred to as the "Preferred Shares". A separate Auction (as defined
below) will be conducted for each series of Preferred Shares. The Company
desires that Bankers Trust Company perform certain duties as agent in
connection with each Auction of Preferred Shares (the "Auction Agent") and
as the transfer agent, registrar, dividend disbursing agent and redemption
agent with respect to the Preferred Shares (the "Paying Agent") upon the
terms and conditions of this Agreement, and hereby appoints Bankers Trust
Company as said Auction Agent and Paying Agent in accordance with those
terms and conditions (hereinafter generally referred to as the "Auction
Agent" except in Sections 3 and 4 below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Company and the Auction Agent agree as
follows:
1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Articles Supplementary
Capitalized terms not defined herein shall have the respective
meanings specified in the Articles Supplementary.
1.2 Terms Defined Herein.
As used herein and in the Settlement Procedures (as defined
below), the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Affiliate" shall mean any Person made known to the
Auction Agent to be controlled by, in control of or under common control
with, the Company, or its successors.
(b) "Agent Member" of any Person shall mean such Person's
agent member of the Securities Depository who is identified as such in such
Person's Purchaser's Letter.
(c) "Articles Supplementary" shall mean the Articles
Supplementary of the Company, establishing the powers, preferences and
rights of the Series T7 Preferred Shares, the Series T28 Preferred Shares,
the Series R7 Preferred Shares and the Series R28 Preferred Shares filed on
November 18, 1992 in the Office of the State Department of Assessments and
Taxation of the State of Maryland.
(d) "Auction" shall have the meaning specified in Section
2.1 hereof.
(e) "Auction Procedures" shall mean the Auction
Procedures that are set forth in Paragraph 11 of the Articles
Supplementary.
(f) "Authorized Officer" shall mean each Senior Vice
President, Vice President, Assistant Vice President, Trust Officer and
Assistant Secretary and Assistant Treasurer of the Auction Agent assigned
to its Corporate Trust and Agency Group and every other officer or employee
of the Auction Agent designated as an "Authorized Officer" for purposes
hereof in a communication to the Company.
(g) "Broker-Dealer Agreement" shall mean each agreement
between the Auction Agent and a Broker-Dealer substantially in the form
attached hereto as Annex A.
(h) "Company Officer" shall mean the Chairman, the
President, each Vice President (whether or not designated by a number or
word or words added before or after the title "Vice President"), the
Secretary, the Treasurer, each Assistant Secretary and each Assistant
Treasurer of the Company and every other officer or employee of the Company
designated as a "Company Officer" for purposes hereof in a notice from the
Company to the Auction Agent.
(i) "Holder" shall be a holder of record of one or more
shares of Series T7 Preferred Shares, Series T28 Preferred Shares, Series
R7 Preferred Shares or Series R28 Preferred Shares, as the case may be,
listed as such in the stock register maintained by the Paying Agent
pursuant to Section 4.6.
(j) "Purchaser's Letter" shall mean a letter addressed to
the Company, the Auction Agent and a Broker-Dealer, substantially in the
form attached to the Broker-Dealer Agreement as Exhibit A.
(k) "Settlement Procedures" shall mean the Settlement
Procedures attached to the Broker-Dealer Agreement as Exhibit B.
1.3 Rules of Construction.
Unless the context or use indicates another or different
meaning or intent, the following rules shall apply to the construction of
this Agreement:
(a) Words importing the singular number shall include the
plural number and vice versa.
(b) The captions and headings herein are solely for
convenience of reference and shall not constitute a part of this Agreement
nor shall they affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other
words of similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day
shall be to New York City time.
2. The Auction.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.
(a) The Articles Supplementary provide that the
Applicable Rate on Series T7 Preferred Shares, Series T28 Preferred Shares,
Series R7 Preferred Shares or Series R28 Preferred Shares, as the case may
be, for each Dividend Period therefor after the Initial Dividend Period
shall be the rate per annum that a commercial bank, trust company, or other
financial institution appointed by the Company advises results from
implementation of the Auction Procedures. The Board of Directors of the
Company has adopted a resolution appointing Bankers Trust Company as
Auction Agent for purposes of the Auction Procedures. The Auction Agent
hereby accepts such appointment and agrees that, on each Auction Date, it
shall follow the procedures set forth in this Section 2 and the Auction
Procedures for the purpose of determining the Applicable Rate for the
Series T7 Preferred Shares, the Series T28 Preferred Shares, the Series R7
Preferred Shares or the Series R28 Preferred Shares, as the case may be,
for the next Dividend Period therefor. Each periodic operation of such
procedures is hereinafter referred to as an "Auction".
(b) All of the provisions contained in the Auction
Procedures and the Settlement Procedures are incorporated herein by
reference in their entirety and shall be deemed to be a part hereof to the
same extent as if such provisions were fully set forth herein.
2.2 Preparation for Each Auction; Maintenance of Registry of
Beneficial Owners.
(a) At the time of closing of the initial issuance and
sale of the Preferred Shares (the "Closing"), the Company shall provide the
Auction Agent with a list of initial Broker-Dealers previously approved by
the Auction Agent and shall cause to be delivered to the Auction Agent for
execution by the Auction Agent a Broker-Dealer Agreement signed by each
such Broker-Dealer. Subsequent to the Closing and pursuant to Section
2.5(b) and subject to Section 2.5(c) hereof, the Auction Agent may, from
time to time, designate additional Broker Dealers. The Auction Agent shall
keep the list of Broker Dealers current and accurate, and shall indicate
thereon, or on a separate list, the identity of each Existing Holder, if
any, whose most recent Order was submitted by a Broker-Dealer on such list
and resulted in such Existing Holder continuing to hold or purchasing
Preferred Shares. Not later than seven days prior to any Auction Date for
which any change in such list of Broker-Dealers is to be effective, the
Auction Agent shall notify the Company in writing of such change and, if
any such change is the addition of a Broker-Dealer to such list, the
Auction Agent shall have entered into a Broker-Dealer Agreement with such
additional Broker-Dealer prior to the participation of any such
Broker-Dealer in any Auction.
(b) (i) In the event that the Auction Date for any
Auction shall be changed after the Auction Agent shall have given the
notice referred to in clause (vii) of Paragraph (a) of the Settlement
Procedures, the Auction Agent, by such means as the Auction Agent deems
practicable, shall give notice of such change to the Broker-Dealers not
later than the earlier of 9:15 A.M. on the new Auction Date or 9:15 A.M. on
the old Auction Date.
(ii) If, after the date of this Agreement, there is any
change in the prevailing rating of Preferred Shares by either of the rating
agencies (or substitute or successor rating agencies) referred to in
the definition of the Maximum Applicable Rate, thereby resulting in any
change in the corresponding percentage for the Preferred Shares, as set
forth in said definition (the "Percentage"), the Company shall notify the
Auction Agent in writing of such change in the Percentage prior to 9:00
A.M. on the Auction Date for Preferred Shares next succeeding such change.
The Percentage for the Preferred Shares on the date of this Agreement is
110%. The Auction Agent shall be entitled to rely on the last Percentage of
which it has received notice from the Company (or, in the absence of such
notice, the Percentage set forth in the preceding sentence) in determining
the Maximum Applicable Rate as set forth in Section 2.2(e)(i) hereof.
(c) With respect to each Dividend Period that is a
Special Dividend Period, on or prior to the fourth day but not more than
seven days prior to an Auction Date for each series of the Preferred
Shares, the Company may, at its sole option and to the extent permitted by
law, by telephonic and written notice (a "Request for Special Dividend
Period") to the Auction Agent and to each Broker-Dealer, request that the
next succeeding Dividend Period for such series of Preferred Shares will be
a number of days (other than 28 in the case of the Series T28 Preferred
Shares and the Series R28 Preferred Shares or 7 in the case of the Series
T7 Preferred Shares and the Series R7 Preferred Shares) evenly divisible by
7 and specified in such notice, provided that for any Auction occurring
after the initial Auction, the Company may not give a Request for Special
Dividend Period (and any such request shall be null and void) unless
sufficient Clearing Bids were made in the last occurring Auction and unless
full cumulative dividends, any amounts due with respect to mandatory
redemptions and any Additional Dividends payable prior to such date have
been paid in full. Such Request for Special Dividend Period, in the case of
a Dividend Period of 182 days or less, shall be made on or prior to the 4th
day but not more than 7 days prior to an Auction Date for such series of
Preferred Shares and, in the case of a Dividend Period of more than 182
days, shall be given on or prior to the 14th day but not more than 28 days
prior to an Auction Date for such series of Preferred Shares. Upon
receiving such Request for Special Dividend Period, the Broker-Dealer(s)
shall jointly determine whether given the factors set forth in paragraph
2(c)(iii) of the Articles Supplementary it is advisable that the Company
issue a Notice of Special Dividend Period for the particular series of
Preferred Shares as contemplated by such Request for Special Dividend
Period and shall give the Company and the Auction Agent written notice (a
"Response") of such determination by no later than the third day prior to
such Auction Date. If the Broker-Dealer(s) shall not give the Company and
the Auction Agent a Response by such third day or if the Response states
that given the factors referred to above it is not advisable that the
Company give a Notice of Special Dividend Period (as defined below) for the
particular series of Preferred Shares, the Company may not give a Notice of
Special Dividend Period in respect of such Request for Special Dividend
Period. In the event the Response indicates that it is advisable that the
Company give a Notice of Special Dividend Period for the particular series
of Preferred Shares, the Company will by no later than the second day prior
to such Auction Date give a notice (a "Notice of Special Dividend Period")
to the Auction Agent, the Securities Depository and each Broker-Dealer,
which notice will specify the duration of the Special Dividend Period, the
Maximum Applicable Rate therefor and Specific Redemption Provisions, if
any. The Company shall not give a Notice of Special Dividend Period or
convert to a Special Dividend Period, or, if such Notice of Special
Dividend Period shall have already been given, shall give telephonic and
written notice of revocation (a "Notice of Revocation") to the Auction
Agent, each Broker-Dealer, and the Securities Depository on or prior to the
Business Day prior to the relevant Auction Date if (i) it has not obtained
the advice in writing of ▇▇▇▇▇'▇ and S&P or any Substitute Rating Agency
that the proposed Special Dividend Period will not adversely affect their
then-current rating on the Preferred Shares, (ii) either the 1940 Act
Preferred Shares Coverage is not satisfied or the Company shall fail to
maintain S&P Eligible Assets and ▇▇▇▇▇'▇ Eligible Assets each with an
aggregate Discounted Value at least equal to the Preferred Shares Basic
Maintenance Amount in each case on each of the two Valuation Dates
immediately preceding the Business Day prior to the relevant Auction Date
on an actual basis and on a pro forma basis giving effect to the proposed
Special Dividend Period (using as a pro forma dividend rate with respect to
such Special Dividend Period the dividend rate which the Broker-Dealers
shall advise the Company is an approximately equal rate for securities
similar to the Preferred Shares with an equal dividend period, (iii)
sufficient funds for the payment of dividends payable on the immediately
succeeding Dividend Payment Date have not been irrevocably deposited with
the Auction Agent by the close of business on the third Business Day
preceding the related Auction Date or (iv) the Broker-Dealer(s) jointly
advise the Company that after consideration of the factors referred to
above they have concluded that it is advisable to give a Notice of
Revocation. If the Company is prohibited from giving a Notice of Special
Dividend Period as a result of the factors enumerated in clause (i), (ii),
(iii) or (iv) of the preceding sentence or if the Company gives a Notice of
Revocation with respect to a Notice of Special Dividend Period, the next
succeeding Dividend Period will be a 28-day Dividend Period in the case of
the Series T28 Preferred Shares and the Series R28 Preferred Shares and a
7-day Dividend Period in the case of the Series T7 Preferred Shares and the
Series R7 Preferred Shares, provided that if the then-current Dividend
Period in the case of the Series T28 Preferred Shares and the Series R28
Preferred Shares is a Special Dividend Period of less than 28 days, the
next succeeding Dividend Period will be the same length as the current
Dividend Period. In addition, in the event sufficient Clearing Bids are not
made in any Auction or an Auction is not held for any reason, the next
succeeding Dividend Period will be a 28-day Dividend Period (in the case of
Series T28 Preferred Shares and Series R28 Preferred Shares) or a 7-day
Dividend Period (in the case of Series T7 Preferred Shares and Series R7
Preferred Shares) and the Company may not again give a Notice of Special
Dividend Period (and any such attempted notice shall be null and void)
until sufficient Clearing Bids have been made in an Auction with respect to
a 28-day Dividend Period (in the case of Series T28 Preferred Shares and
Series R28 Preferred Shares or a 7-day Dividend Period (in the case of
Series T7 Preferred Shares and Series R7 Preferred Shares).
(d) (i) Whenever the Company intends to include any net
capital gains or other taxable income in any dividend on Preferred Shares,
the Company will in the case of a Dividend Period of 28 days or fewer, and
may, in the case of a Dividend Period of 35 days or more, notify the
Auction Agent of the amount to be so included at least five Business Days
prior to the Auction Date on which the Applicable Rate for such dividend is
to be established. Whenever the Auction Agent receives such notice from the
Company, it will in turn notify each Broker Dealer, who, on or prior to
such Auction Date, in accordance with its Broker-Dealer Agreement, will
notify its Existing Holders and Potential Holders believed to be interested
in submitting an Order in the Auction to be held on such Auction Date.
(ii) If the Company makes a Retroactive Taxable
Allocation, the Company will, within 90 days (and generally within 60 days)
after the end of its fiscal year for which a Retroactive Taxable Allocation
is made provide notice thereof to the Auction Agent and to each holder of
Preferred Shares (initially the Securities Depository) during such fiscal
year at such holder's address as the same appears or last appeared on the
stock books of the Company. The Company will, within 30 days after such
notice is given to the Auction Agent, pay to the Auction Agent (who will
then distribute to such holders of Preferred Shares), a cash amount equal
to the aggregate Additional Dividend with respect to all Retroactive
Taxable Allocations made to such holders during the fiscal year in
question.
(e) (i) On each Auction Date, the Auction Agent shall
determine the Maximum Applicable Rate from the higher of the 30-day "AA"
Composite Commercial Paper Rate and the Taxable Equivalent of the
Short-Term Municipal Bond Rate (except in the case of a Special Dividend
Period in which case the Maximum Applicable Rate shall be determined from
the higher of the Special Dividend Period Reference Rate and the Taxable
Equivalent of the Short-Term Municipal Bond Rate). If any such rate on
which the Maximum Applicable Rate is to be based is not quoted on an
interest basis but is quoted on a discount basis, the Auction Agent shall
convert the quoted rate to an Interest Equivalent, as set forth in
Paragraph 1 of the Articles Supplementary; or, if the rate obtained by the
Auction Agent is not quoted on an interest or discount basis, the Auction
Agent shall convert the quoted rate to an interest rate after consultation
with the Company as to the method of such conversion. Not later than 9:30
A.M. on each Auction Date for each series of Preferred Shares, the Auction
Agent shall notify the Company and the Broker-Dealers of the applicable
rate so determined and the Maximum Applicable Rate.
(ii) If the rate on which the Maximum Applicable Rate is
to be based is the 30-day "AA" Composite Commercial Paper Rate and such
rate is to be based on rates supplied by Commercial Paper Dealers and one
or more of the Commercial Paper Dealers shall not provide a quotation for
the determination of the 30-day "AA" Composite Commercial Paper Rate, the
Auction Agent shall immediately notify the Company so that the Company can
determine whether to select a Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers to provide the quotation or quotations
not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers. The Company shall promptly advise the Auction Agent of any such
selection. If the Company does not select any such Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, then the rates shall
be supplied by the remaining Commercial Paper Dealer or Commercial Paper
Dealers.
(f) (i) The Auction Agent shall maintain by series a
current registry of the beneficial owners of the shares of both series of
Preferred Shares who shall constitute the Existing Holders for purposes of
each Auction. The Company shall use its best efforts to provide or cause to
be provided to the Auction Agent within ten days following the date of
Closing a list of the initial Existing Holders of Series T7 Preferred
Shares, Series T28, Series R7 and Series R28 Preferred Shares and the
respective Broker-Dealer of each such Existing Holder through which such
Existing Holder purchased such shares. The Auction Agent may rely upon, as
evidence of the identities of the Existing Holders, such list, the results
of each Auction and notices from any Existing Holder, the Agent Member of
any Existing Holder or the Broker-Dealer of any Existing Holder with
respect to such Existing Holder's transfer of any Preferred Shares to
another Person.
(ii) In the event of any partial redemption of any Series
T7 Preferred Shares, Series T28 Preferred Shares, Series R7 Preferred
Shares or Series R28 Preferred Shares, as the case may be, upon notice by
the Company to the Auction Agent of such partial redemption, the Auction
Agent shall promptly request the Securities Depository to notify the
Auction Agent of the identities of the Agent Members (and the respective
numbers of Preferred Shares) from the accounts of which Preferred Shares
have been called for redemption and the person or department at such Agent
Member to contact regarding such redemption and, at least two Business Days
prior to the next Auction with respect to Preferred Shares of the series
being partially redeemed, the Auction Agent shall request each Agent Member
so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose Preferred Shares are to be
redeemed) the number of Preferred Shares of such series of Preferred Shares
of each such Existing Holder, if any, to be redeemed by the Company;
provided that the Auction Agent has been furnished with the name and
telephone number of a person or department at such Agent Member from which
it is to request such information. If necessary to procure such
information, the Auction Agent shall deliver to each Agent Member a
facsimile copy of the Purchaser's Letter of each Existing Holder
represented by such Agent Member, which authorizes and instructs such Agent
Member to release such information to the Auction Agent. In the absence of
receiving any such information with respect to an Existing Holder, from
such Existing Holder's Agent Member or otherwise, the Auction Agent may
continue to treat such Existing Holder as the beneficial owner of the
number of Series T7 Preferred Shares, Series T28 Preferred Shares, Series
R7 Preferred Shares or Series R28 Preferred Shares shown in the Auction
Agent's registry of beneficial owners.
(iii) The Auction Agent shall register a transfer of the
beneficial ownership of Series T7 Preferred Shares, Series T28 Preferred
Shares, Series R7 Preferred Shares or Series R28 Preferred Shares from an
Existing Holder to another Person only if such transfer is made to a Person
that has delivered a signed Purchaser's Letter to the Auction Agent and
only if (A) such transfer is pursuant to an Auction or (B) if such transfer
is made other than pursuant to an Auction, the Auction Agent has been
notified in writing in a notice substantially in the form of Exhibit D to
the Broker-Dealer Agreement, by such Existing Holder, the Agent Member of
such Existing Holder, or the Broker-Dealer of such Existing Holder of such
transfer. The Auction Agent is not required to accept any notice of
transfer delivered for an Auction unless it is received by the Auction
Agent by 3:00 P.M. on the Business Day next preceding the applicable
Auction Date. The Auction Agent shall rescind a transfer made on the
registry of the beneficial owners of any Preferred Shares if the Auction
Agent has been notified in writing in a notice substantially in the form of
Exhibit E to the Broker-Dealer Agreement by the Agent Member or the
Broker-Dealer of any Person that (i) purchased any Preferred Shares and the
seller failed to deliver such shares or (ii) sold any Preferred Shares and
the purchaser failed to make payment to such Person upon delivery to the
purchaser of such shares.
(g) The Auction Agent may request that the
Broker-Dealers, as set forth in Section 3.2(c) of the Broker-Dealer
Agreements, provide the Auction Agent with a list of their respective
customers that such Broker-Dealers believe are Existing Holders of shares
of either series of Preferred Shares. The Auction Agent shall keep
confidential any such information and shall not disclose any such
information so provided to any Person other than the relevant Broker-Dealer
and the Company provided that the Auction Agent reserves the right to
disclose any such information if it is advised by its counsel that its
failure to do so would be unlawful.
2.3 Auction Schedule.
The Auction Agent shall conduct Auctions for both series of
Preferred Shares in accordance with the schedule set forth below. Such
schedule may be changed by the Auction Agent with the consent of the
Company, which consent shall not be unreasonably withheld. The Auction
Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.
Time Event
---- -----
By 9:30 A.M. Auction Agent advises the Company and the
Broker-Dealers of the Maximum Applicable Rate as
determined from the higher of the 30-day "AA"
Composite Commercial Paper Rate and the Taxable
Equivalent of the Short-Term Municipal Bond Rate
(except in the case of a Special Dividend Period
in which case the Maximum Applicable Rate shall
be the higher of the Special Dividend Period
Reference Rate and the Taxable Equivalent of the
Short-Term Municipal Bond Rate) as set forth in
Section 2.2(e)(i) hereof.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information communicated
to it by Broker-Dealers as provided in Paragraph
11(c)(i) of the Articles Supplementary.
Submission deadline is 1:00 P.M.
Not earlier than Auction Agent makes determination pursuant to 1:00 P.M.
Paragraph 11(d)(i) of the Articles Supplementary.
By approximately Auction Agent advises Company of results of
3:00 P.M. Auction as provided in Paragraph 11(d)(ii) of
the Articles Supplementary.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part and
shares of Preferred Shares allocated as
provided in Paragraph 11(e) of the Articles
Supplementary.
Auction Agent gives notice of Auction results
as set forth in Section 2.4 hereof.
2.4 Notice of Auction Results.
On each Auction Date, the Auction Agent shall notify
Broker-Dealers of the results of the Auction held on such date by telephone
or through the Auction Agent's Auction Processing System as set forth in
Paragraph (a) of the Settlement Procedures.
2.5 Broker-Dealers.
(a) Not later than 12:00 noon on each Auction Date for
both series of Preferred Shares, the Company shall pay to the Auction Agent
in New York Clearing House or similar next-day funds an amount in cash
equal to, (i) in the case of any Auction Date immediately preceding any
Dividend Period of 28 days or less, the product of (A) a fraction the
numerator of which is the number of days in such Dividend Period
(calculated by counting the first day of such Dividend Period but excluding
the last day thereof) and the denominator of which is 365, times (B) 1/4 of
1%, times (C) $50,000, times (D) the sum of the aggregate number of
outstanding shares of such series of Preferred Shares for which the Auction
is conducted and (ii) in the case of any Auction Date immediately preceding
any Dividend Period of more than 28 days, the amount determined by mutual
consent of the Company and the Broker-Dealer or Broker-Dealers pursuant to
Section 3.5 of the Broker-Dealer Agreements. The Auction Agent shall apply
such monies as set forth in Section 3.5 of the Broker-Dealer Agreements and
shall thereafter remit to the Company any remaining funds paid to the
Auction Agent pursuant to this Section 2.5(a).
(b) Subject to Section 2.5(c) hereof, the Auction Agent
is hereby authorized by the Company to designate at any time or from time
to time any Person to act as a Broker-Dealer without the prior written
approval of the Company. The Auction Agent may designate an Affiliate of
the Company or of itself to act as a Broker-Dealer subject to Section
2.5(c) hereof.
(c) The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed by the Company.
(d) Notwithstanding Section 2.5(b) hereof, no person may
act as a Broker-Dealer unless such person shall have entered into a
Broker-Dealer Agreement with the Auction Agent.
(e) The Auction Agent shall maintain a list of
Broker-Dealers.
2.6 Ownership of Series T7
Preferred Shares, Series T28 Preferred Shares, Series R7
Preferred Shares and Series R28 Preferred Shares and Submission
of Bids by Company and Affiliates.
Neither the Company nor any Affiliate of the Company may submit
any Sell Order or Bid, directly or indirectly, in any Auction, except that
an Affiliate of the Company that is a Broker-Dealer may submit a Sell Order
or Bid on behalf of an Existing Holder or Potential Holder. The Company
shall notify the Auction Agent if the Company or, to the best of the
Company's knowledge, any Affiliate of the Company becomes an Existing
Holder of any Preferred Shares. Any Preferred Shares redeemed, purchased or
otherwise acquired (i) by the Company shall not be reissued or (ii) by its
Affiliates shall not be transferred (other than to the Company). The
Auction Agent shall have no duty or liability with respect to enforcement
of this Section 2.6.
2.7 Access to and Maintenance of Auction Records.
The Auction Agent shall afford to the Company, its agents,
independent public accountants and counsel, access at reasonable times
during normal business hours to review and make extracts or copies (at the
Company's sole cost and expense) of all books, records, documents and other
information concerning the conduct and results of Auctions, provided that
any such agent, accountant, or counsel shall furnish the Auction Agent with
a letter from the Company requesting that the Auction Agent afford such
person access. The Auction Agent shall maintain records relating to any
Auction for a period of two years after such Auction (unless requested by
the Company to maintain such records for such longer period not in excess
of four years, then for such longer period), and such records shall, in
reasonable detail, accurately and fairly reflect the actions taken by the
Auction Agent hereunder. The Company agrees to keep any information
regarding the customers of any Broker-Dealer received from the Auction
Agent in connection with this Agreement or any Auction confidential and
shall not disclose such information or permit the disclosure of such
information without the prior written consent of the applicable
Broker-Dealer to anyone except such agent, accountant or counsel engaged to
audit or review the results of Auctions as permitted by this Section 2.7.
Any such agent, accountant or counsel, before having access to such
information, shall agree to keep such information confidential and not to
disclose such information or permit disclosure of such information without
the prior written consent of the applicable Broker-Dealer.
3. The Auction Agent as Paying Agent.
3.1 Paying Agent.
The Board of Directors of the Company has adopted a resolution
appointing Bankers Trust Company as transfer agent, registrar, dividend
disbursing agent and redemption agent for the Company in connection with
any Preferred Shares (the "Paying Agent"). The Paying Agent hereby accepts
such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Articles Supplementary which are
specified herein as Paying Agent with respect to the Preferred Shares and
as set forth in this Section 3.
3.2 The Company's Notices to Paying Agent.
Whenever any Preferred Shares are to be redeemed, the Company
shall promptly deliver to the Paying Agent the Notice of Redemption, which
will be mailed by the Company to each Holder, at least five days prior to
the date such Notice of Redemption is required to be mailed by the Articles
Supplementary. The Paying Agent shall have no responsibility to confirm or
verify the accuracy of any such notice.
3.3 Company to Provide Funds for Dividends and Redemptions and
Additional Dividends
(a) Not later than noon, on the Business Day immediately
preceding each Dividend Payment Date, the Company shall deposit with the
Paying Agent an aggregate amount of New York Clearing House or similar
next-day funds equal to the declared dividends to be paid to Holders on
such Dividend Payment Date and shall give the Paying Agent irrevocable
instructions to apply such funds to the payment of such dividends on such
Dividend Payment Date.
(b) If the Company shall give the Notice of Redemption
then, by noon of the Business Day immediately preceding the date fixed for
redemption, the Company shall deposit in trust with the Paying Agent an
aggregate amount of New York Clearing House or similar next day funds
sufficient to redeem such Preferred Shares called for redemption and shall
give the Paying Agent irrevocable instructions and authority to pay the
redemption price to the Holders of Preferred Shares called for redemption
upon surrender of the certificate or certificates therefor.
(c) If the Company provides notice to the Auction Agent
of a Retroactive Taxable Allocation, the Company shall, within 30 days
after such notice is given and by noon of the Business Day immediately
preceding the date fixed for payment of an Additional Dividend, deposit in
trust with the Paying Agent an aggregate amount of New York Clearing House
or similar next-day funds equal to such Additional Dividend and shall give
the Paying Agent irrevocable instructions and authority to pay the
Additional Dividends to Holders (or former Holders) of Preferred Shares
entitled thereto.
3.4 Disbursing Dividends, Redemption Price and Additional Dividends.
After receipt of the New York Clearing House or similar
next-day funds and instructions from the Company described in Sections
3.3(a), (b) and (c) above, the Paying Agent shall pay to the Holders (or
former Holders) entitled thereto (i) on each corresponding Dividend Payment
Date, dividends on the Series T7 Preferred Shares, Series T28 Preferred
Shares, Series R7 Preferred Shares or Series R28 Preferred Shares, as the
case may be, (ii) on any date fixed for redemption, the redemption price of
any Preferred Shares called for redemption and (iii) on the date fixed for
payment of an Additional Dividend, such Additional Dividend. The amount of
dividends for any Dividend Period to be paid by the Paying Agent to Holders
will be determined by the Company as set forth in Paragraph 2 of the
Articles Supplementary. The redemption price to be paid by the Paying Agent
to the Holders of any Preferred Shares called for redemption will be
determined as set forth in Paragraph 4 of the Articles Supplementary. The
amount of Additional Dividends to be paid by the Paying Agent in the event
of a Retroactive Taxable Allocation to Holders will be determined by the
Company pursuant to paragraph 2(e) of the Articles Supplementary. The
Company shall notify the Paying Agent in writing of a decision to redeem
any Preferred Shares on or prior to the date specified in Section 3.2
above, and such notice by the Company to the Paying Agent shall contain the
information required to be stated in the Notice of Redemption required to
be mailed by the Company to such Holders. The Paying Agent shall have no
duty to determine the redemption price and may rely on the amount thereof
set forth in the Notice of Redemption.
4. The Paying Agent as Transfer Agent and Registrar.
4.1 Original Issue of Stock Certificates.
On the Date of Original Issue, one certificate for all Series
T7 Preferred Shares, one certificate for all Series T28 Preferred Shares,
one certificate for all Series R7 Preferred Shares and one certificate for
all Series R28 Preferred Shares shall be issued by the Company and
registered in the name of Cede & Co., as nominee of the Securities
Depository, and countersigned by the Paying Agent.
4.2 Registration of Transfer or Exchange of Preferred Shares.
Except as provided in this Section 4.2, the shares of each
series of Preferred Shares shall be registered solely in the name of the
Securities Depository or its nominee. If the Securities Depository shall
give notice of its intention to resign as such, and if the Company shall
not have selected a substitute Securities Depository acceptable to the
Paying Agent prior to such resignation, then upon such resignation, the
shares of each series of Preferred Shares may, at the Company's request, be
registered for transfer or exchange, and new certificates thereupon shall
be issued in the name of the designated transferee or transferees, upon
surrender of the old certificates in form deemed by the Paying Agent
properly endorsed for transfer with (a) all necessary endorsers' signatures
guaranteed in such manner and form as the Paying Agent may require by a
guarantor reasonably believed by the Paying Agent to be responsible, (b)
such assurances as the Paying Agent shall deem necessary or appropriate to
evidence the genuineness and effectiveness of each necessary endorsement
and (c) satisfactory evidence of compliance with all applicable laws
relating to the collection of taxes or funds necessary for the payment of
such taxes. If the certificates for Preferred Shares are not held by the
Securities Depository or its nominee, payments upon transfer of shares in
an Auction shall be made in same-day funds to the Auction Agent against
delivery of certificates therefor.
4.3 Removal of Legend.
Any request for removal of a legend indicating a restriction on
transfer from certificates evidencing Series T7 Preferred Shares, Series
T28 Preferred Shares, Series R7 Preferred Shares or Series R28 Preferred
Shares shall be accompanied by an opinion of counsel stating that such
legend may be removed and such shares transferred free of the restriction
described in such legend, said opinion to be delivered under cover of a
letter from a Company Officer authorizing the Paying Agent to remove the
legend on the basis of said opinion.
4.4 Lost Stock Certificates.
The Paying Agent shall issue and register replacement
certificates for certificates represented to have been lost, stolen or
destroyed, upon the fulfillment of such requirements as shall be deemed
appropriate by the Company and the Paying Agent, subject at all times to
provisions of law, the By-Laws of the Company governing such matters and
resolutions adopted by the Company with respect to lost securities. The
Paying Agent may issue new certificates in exchange for and upon the
cancellation of mutilated certificates. Any request by the Company to the
Paying Agent to issue a replacement or new certificate pursuant to this
Section 4.4 shall be deemed to be a representation and warranty by the
Company to the Paying Agent that such issuance will comply with such
provisions of applicable law and the By-Laws and resolutions of the
Company.
4.5 Disposition of Cancelled Certificates; Record Retention.
The Paying Agent shall retain stock certificates which have
been cancelled in transfer or in exchange and accompanying documentation in
accordance with applicable rules and regulations of the Securities and
Exchange Commission for two calendar years from the date of such
cancellation. The Paying Agent shall afford to the Company, its agents and
counsel access at reasonable times during normal business hours to review
and make extracts or copies (at the Company's sole cost and expense) of
such certificates and accompanying documentation. Upon the expiration of
this two-year period, the Paying Agent shall deliver to the Company the
cancelled certificates and accompanying documentation. The Company shall,
at its expense, retain such records for a minimum additional period of four
calendar years from the date of delivery of the records to the Company and
shall make such records available during this period at any time, or from
time to time, for reasonable periodic, special, or other examinations by
representatives of the Securities and Exchange Commission. The Company
shall also undertake to furnish to the Securities and Exchange Commission,
upon demand, at either the principal office or at any regional office,
complete, correct and current hard copies of any and all such records.
Thereafter such records shall not be destroyed by the Company without the
approval of the Paying Agent, which shall not be unreasonably withheld, but
will be safely stored for possible future reference.
4.6 Stock Register.
The Paying Agent shall maintain the stock register, which shall
contain a list of the Holders, the number of Preferred Shares held by each
Holder and the address of each Holder. The Paying Agent shall record in the
stock register any change of address of a Holder upon notice by such
Holder. In case of any request or demand for the inspection of the stock
register or any other books of the Company in the possession of the Paying
Agent, the Paying Agent will notify the Company and secure instructions as
to permitting or refusing such inspection. The Paying Agent reserves the
right, however, to exhibit the stock register or other records to any
person in case it is advised by its counsel that its failure to do so would
(i) be unlawful or (ii) expose it to liability, unless the Company shall
have offered indemnification satisfactory to the Paying Agent.
4.7 Return of Funds.
Any funds deposited with the Paying Agent by the Company for
any reason under this Agreement, including for the payment of dividends or
the redemption of shares of any series of Preferred Shares, that remain
with the Paying Agent after 12 months shall be repaid to the Company upon
the written request of the Company.
5. Representations and Warranties.
(a) The Company represents and warrants to the Auction
Agent that:
(i) the Company is a duly incorporated and validly
existing corporation in good standing under the laws of the State of
Maryland and has full power to execute and deliver this Agreement and to
authorize, create and issue the Series T7 Preferred Shares, the Series T28
Preferred Shares, the Series R7 Preferred Shares and the Series R28
Preferred Shares;
(ii) the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended,
as a closed-end, diversified management investment company;
(iii) this Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject as to such enforceability to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles;
(iv) the forms of the certificates evidencing the Series
T7 Preferred Shares, the Series T28 Preferred Shares, the Series R7
Preferred Shares and the Series R28 Preferred Shares comply with all
applicable laws of the State of Maryland
(v) the Series T7 Preferred Shares, the Series T28
Preferred Shares, the Series R7 Preferred Shares and the Series R28
Preferred Shares have been duly and validly authorized by the Company and,
upon completion of the initial sale of the shares of each series of
Preferred Shares and receipt of payment therefor, will be validly issued,
fully paid and nonassessable;
(vi) the offering of the shares of Series T7 Preferred
Shares, the shares of Series T28 Preferred Shares, the shares of Series R7
Preferred Shares and the shares of Series R28 Preferred Shares has been
registered under the Securities Act of 1933, as amended, and no action by
or before any governmental body or authority of the United States or of any
state thereof is required in connection with the execution and delivery of
this Agreement or the issuance of the shares of any such series of
Preferred Shares except as required by applicable state securities or
insurance laws, all of which have been taken;
(vii) the execution and delivery of this Agreement and
the issuance and delivery of the Series T7 Preferred Shares, the Series T28
Preferred Shares, the Series R7 Preferred Shares and the Series R28
Preferred Shares do not and will not conflict with, violate, or result in a
breach of, the terms, conditions or provisions of, or constitute a default
under, the Charter or the By-Laws of the Company, any law or regulation
applicable to the Company, any order or decree of any court or public
authority having jurisdiction over the Company, or any mortgage, indenture,
contract, agreement or undertaking to which the Company is a party or by
which it is bound; and
(viii) no taxes are payable upon or in respect of the
execution of this Agreement or the issuance of the shares of any series of
Preferred Shares.
(b) The Auction Agent represents and warrants to the
Company that the Auction Agent is duly organized and is validly existing as
a banking corporation in good standing under the laws of the State of New
York and has the corporate power to enter into and perform its obligations
under this Agreement.
6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent for the
Company hereunder and owes no fiduciary duties to any Person except as
provided by this Agreement.
(b) The Auction Agent undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this Agreement
against the Auction Agent.
(c) In the absence of bad faith or negligence on its
part, the Auction Agent shall not be liable for any action taken, suffered
or omitted or for any error of judgment made by it in the performance of
its duties under this Agreement. The Auction Agent shall not be liable for
any error of judgment made in good faith unless the Auction Agent shall
have been negligent in ascertaining (or failing to ascertain) the pertinent
facts.
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in
acting or refraining from acting upon any communication authorized hereby
and upon any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or
document reasonably believed by it to be genuine. The Auction Agent shall
not be liable for acting upon any telephone communication authorized hereby
which the Auction Agent believes in good faith to have been given by the
Company or by a Broker-Dealer. The Auction Agent may record telephone
communications with the Company or with the Broker-Dealers or both.
(b) The Auction Agent may consult with counsel of its
choice, and the written advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance,
expend or risk its own funds or otherwise incur or become exposed to
financial liability in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise
its rights hereunder either directly or by or through agents or attorneys.
6.3 Auction Agent's Disclaimer.
The Auction Agent makes no representation as to the validity or
adequacy of this Agreement, the Broker-Dealer Agreements or the Preferred
Shares.
6.4 Compensation, Expenses and Indemnification.
(a) The Company shall pay the Auction Agent from time to
time reasonable compensation for all services rendered by it under this
Agreement and the Broker-Dealer Agreements.
(b) The Company shall reimburse the Auction Agent upon
its request for all reasonable expenses, disbursements and advances
incurred or made by the Auction Agent in accordance with any provision of
this Agreement and the Broker-Dealer Agreements (including the reasonable
compensation, expenses and disbursements of its agents and counsel), except
any expense, disbursement and advances attributable to its negligence or
bad faith.
(c) The Company shall indemnify the Auction Agent for,
and hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with its agency under this Agreement and the Broker-Dealer
Agreements, including the costs and expenses of defending itself against
any claim or liability in connection with its exercise or performance of
any of its duties hereunder and thereunder, except such as may result from
its negligence or bad faith.
7. Miscellaneous.
7.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless it
shall be terminated as provided in this Section 7.1. The Company may
terminate this Agreement at any time by so notifying the Auction Agent,
provided that if any Preferred Shares remain outstanding the Company has
entered into an agreement in substantially the form of this Agreement with
a successor auction agent. The Auction Agent may terminate this Agreement
upon prior notice to the Company on the date specified in such notice,
which shall be no earlier than 60 days after the delivery of such notice.
If the Auction Agent resigns while any shares of Preferred Shares remain
outstanding, the Company shall use its best efforts to enter into an
agreement with a successor auction agent containing substantially the same
terms and conditions as this Agreement.
(b) Except as otherwise provided in this Section 7.1(b),
the respective rights and duties of the Company and the Auction Agent under
this Agreement shall cease upon termination of this Agreement. The
Company's representations, warranties, covenants and obligations to the
Auction Agent under Sections 5 and 6.4 hereof shall survive the termination
hereof. Upon termination of this Agreement, the Auction Agent shall (i)
resign as Auction Agent under the Broker-Dealer Agreements, (ii) at the
Company's request, promptly deliver to the Company copies of all books and
records maintained by it in connection with its duties hereunder, and (iii)
at the request of the Company, promptly transfer to the Company or any
successor auction agent any funds deposited by the Company with the Auction
Agent (whether in its capacity as Auction Agent or Paying Agent) pursuant
to this Agreement which have not previously been distributed by the Auction
Agent in accordance with this Agreement.
7.2 Communications.
Except for (i) communications authorized to be made by
telephone pursuant to this Agreement or the Auction Procedures and (ii)
communications in connection with Auctions (other than those expressly
required to be in writing), all notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given to such party addressed to it at its address,
or telecopy number set forth below:
If to the Company, The BlackRock Insured Municipal
addressed: 2008 Term Trust Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Auction Bankers Trust Company
Agent, addressed: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Auction Rate Securities
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or telecopy number as such party may hereafter
specify for such purpose by notice to the other party. Each such notice,
request or communication shall be effective when delivered at the address
specified herein. Communications shall be given on behalf of the Company by
a Company Officer and on behalf of the Auction Agent by an Authorized
Officer.
7.3 Entire Agreement.
This Agreement contains the entire agreement between the
parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings,
oral, written or inferred between the parties relating to the subject
matter hereof except for agreements relating to the compensation of the
Auction Agent.
7.4 Benefits.
Nothing herein, express or implied, shall give to any Person,
other than the Company, the Auction Agent and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim
hereunder.
7.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part,
except by a written instrument signed by a duly authorized representative
of the party to be charged. The Company shall notify the Auction Agent of
any change in the Articles Supplementary prior to the effective date of any
such change.
(b) Failure of either party hereto to exercise any right
or remedy hereunder in the event of a breach hereof by the other party
shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.
7.6 Successor and Assigns.
This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of
each of the Company and the Auction Agent. This Agreement may not be
assigned by either party hereto absent the prior written consent of the
other party, which consent shall not be unreasonably withheld.
7.7 Severability.
If any clause, provision or section hereof shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision or section shall
not affect any of the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts.
This Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and
the same instrument.
7.9 Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to
be performed in said state.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the date first above written.
THE BLACKROCK INSURED
MUNICIPAL 2008 TERM TRUST INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
President
BANKERS TRUST COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇,
Assistant Treasurer