EXHIBIT 13(d)(i)
December 10, 1991
The Depository Trust Company
55 Water Street
New York, New York 10041
Attention: General Counsel's Office
Re: Van Kampen Merritt Municipal Trust Auction
Preferred Shares of Beneficial Interest ("APS")
Gentlemen:
The purpose of this letter is to set forth certain matters relating to
the issuance and sale by Van Kampen Merritt Municipal Trust (the "Fund") of 1500
shares of each series of its preferred shares of beneficial interest, par value
$.01 per share, liquidation preference $50,000 per share, designated as Auction
Preferred Shares, Series A ("APS Series A"), Auction Preferred Shares, Series B
("APS Series B"), Auction Preferred shares, series C ("APS Series C"), and
Auction Preferred Shares, Series D ("APS Series D") (collectively, the APS
Series A, APS Series B, APS Series C and APS Series D are referred to herein as
the "APS"), pursuant to the Fund's Declaration of Trust (as defined below).
Pursuant to the auction agency agreement, dated as of December 10, 1991 (the
"Auction Agency Agreement"), between the Fund and Bankers Trust Company
("Bankers Trust"), Bankers Trust will act as the auction agent, transfer agent,
registrar and dividend and redemption price disbursing agent and agent for
certain notifications for the Fund in connection with the shares of each series
of APS (hereinafter referred to, when acting in any such capacity, as the
"Auction Agent").
Pursuant to an underwriting agreement, dated December 5, 1991 ("AB
Underwriting Agreement"), among Goldman, Sachs & Co., Smith Barney, Harris Upham
& Co., PaineWebber Incorporated and Prudential Securities Incorporated (the
"Underwriters"), the Fund and Van Kampen Merritt Investment Advisory Corp. (the
"Adviser"), the Underwriters have agreed to purchase from the Fund, and the Fund
has agreed to issue and sell to the Underwriters, the shares of each of APS
Series A and APS Series B. Pursuant to a separate underwriting agreement, dated
December 5, 1991 ("CD Underwriting Agreement"), among the Underwriters, the Fund
and the Adviser, the Underwriters have agreed to purchase from the Fund, and the
Fund has agreed to issue and sell to the Underwriters, the shares of each of APS
Series C and APS Series D.
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December 10, 1991
Page 2
Pursuant to the requirements of the Securities Act of 1933, as amended, the Fund
has filed with the Securities and Exchange Commission a Registration Statement
on Form N-2 and a prospectus contained therein (the "Prospectus") concerning the
issuance of the APS, which includes, among other things, a description of the
role of The Depository Trust Company ("DTC") with respect to such APS. Attached
hereto is a copy of the Prospectus.
Capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Declaration of Trust (as defined below), a
copy of which is attached hereto, unless the context otherwise requires.
To induce DTC to accept the APS as eligible for deposit at DTC and to
act in accordance with its rules with respect to the APS, the Fund and the
Auction Agent agree with DTC as follows:
1. The Fund shall cause the Underwriters to deliver at the
closings with respect to the AB Underwriting Agreement and the CD
Underwriting Agreement, each of which is scheduled for December 10,
1991, for deposit with DTC one share certificate with respect to each
series of APS (each an "APS Certificate"), which certificate will
represent the total number of shares of each respective series of APS
issued and registered in the name of DTC's nominee, Cede & Co.
("Cede"), and each such APS Certificate shall remain in DTC's custody
as provided herein.
2. The Fund's Declaration of Trust, as amended, including the
Certificate of Vote (sometimes referred to herein together with the
Fund's Declaration of Trust as the "Declaration of Trust") establishing
the rights and preferences of the shares of each series of APS,
provides for the solicitation of consents from and voting by Holders of
the shares of each series of APS under certain circumstances. The Fund
shall establish a record date for such purposes and give DTC notice of
such record date not less than 15 calendar days in advance of such
record date to the extent possible.
3. If fewer than all of the shares of any series of APS are to
be redeemed pursuant to Part I, Section 4 of the Certificate of Vote,
the number of shares of such series of APS to be redeemed shall be
determined by the Board of Trustees of the Fund and the Fund shall
notify the Auction Agent and DTC by 1:00 p.m., New York City time, (A)
in the case of an optional redemption at least 30 days prior to the
earliest date on which such redemption shall occur and (B) in the case
of a mandatory redemption, if the Fund shall have received the relief
from the Securities and Exchange Commission described in the Prospectus
with respect to mandatory redemptions, on the second Business Day
preceding the redemption date established by the Board of Trustees and
specified in such notice. By the close of business on the day on which
the Auction Agent receives a Notice of Redemption from the Fund, the
Auction Agent will give telephonic notice to
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December 10, 1991
Page 3
DTC, and the Auction Agent shall give DTC a hand delivered copy of such
notice which will be marked "TIME CRITICAL" and shall include a copy
addressed to Vice President, Reorganization Department (which call
notice shall include the aggregate number of shares of such series of
APS to be redeemed). Unless certificates representing the shares of
such series of APS are held by Holders other than DTC or its nominee,
DTC, upon receipt of a Notice of Redemption from the Auction Agent,
will determine by lot the number of shares of such series of APS to be
redeemed from the account of each Agent Member. DTC shall use its best
efforts to complete such lottery and notify the Auction Agent of the
results of such lottery by 10:00 a.m., New York City time, on the
Business Day following the date on which DTC receives the call notice
from the Auction Agent. DTC shall notify the Auction Agent by such time
of each Agent Member that has credited to its DTC account shares of
such series of APS that are selected for redemption by DTC and shall,
using its best efforts, provide the Auction Agent with the names of the
persons or departments at each such Agent Member to be contacted
regarding such redemption. The Auction Agent will in turn determine by
lot the number of shares of such series of APS to be redeemed from the
accounts of the Existing Holders of shares of such series of APS whose
Agent Members have been selected in sufficient time to enable the
Auction Agent to notify the Broker-Dealer and such Existing Holders as
provided in the Auction Agency Agreement.
4. The Declaration of Trust provides that the dividend rate
for the shares of each series of APS may vary from time to time based
upon the results of the implementation of the Auction Procedures set
forth in Part II of the Certificate of Vote. The Auction Agent shall
telecopy notice to Manager, Announcements, Dividends Department, The
Depository Trust Company, at (212) 709-1264, of the Applicable Rate and
the Dividend Payment Date with respect to the shares of each series of
APS (the "Dividend Rate Notices") no later than the day following each
Auction after implementation of such procedures and shall verify
receipt by DTC of such notice by contacting the Supervisor,
Announcements, Dividends Department, The Depository Trust Company, at
(212) 709-1270. The Auction Agent shall make available, by telecopy,
facsimile or other similar means, to Interactive Data Services, Inc.,
or any other announcement service to which DTC may subscribe, the
Applicable Rate and the Dividend Payment Date on each Auction Date
after implementation of such procedures.
5. The Prospectus indicates that each purchaser of shares of
any series of APS or its Broker-Dealer must sign a Master Purchaser's
Letter which contains provisions restricting transfer of such APS. The
Fund and the Auction Agent acknowledge that so long as Cede is the sole
record owner of shares of any series of APS, it shall be entitled to
all voting rights applicable to such APS and to receive the full amount
of all dividends, liquidation proceeds and redemption proceeds payable
with respect to such APS. The Fund and the Auction Agent acknowledge
that DTC shall treat any Agent Member having shares of any series
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December 10, 1991
Page 4
of APS credited to its DTC account as entitled to the full benefits of
ownership of such APS even if the crediting of shares of such APS to
the DTC accounts of such Agent Member results from transfers or
failures to transfer in violation of the provisions of the Master
Purchaser's Letter. Without limiting the generality of the preceding
sentence, the Fund and the Auction Agent acknowledge that DTC shall
treat any Agent Member having shares of any series of APS credited to
its DTC account as entitled to receive dividends, distributions and
voting rights, if any, in respect of such APS and, subject to section
11 hereof, to receive certificates evidencing such APS if such
certificates are to be issued in accordance with the Fund's Declaration
of Trust. (The treatment by DTC of the effects of the crediting by it
of shares of such series of APS to the accounts of Agent Members
described in the preceding two sentences shall not affect the rights of
the Fund, participants in Auctions relating to shares of such series of
APS or purchasers, sellers or Holders of shares of such series of APS
against any Agent Member.) DTC shall have no responsibility to
ascertain that any transfer of shares of any series of APS is made in
accordance with the provisions of the Master Purchaser's Letter.
6. All notices and payment advices sent to DTC shall contain
the CUSIP number set forth in the respective APS Certificate.
7. Notices to DTC by facsimile transmission shall be sent to
(212) 709-1093 or (212) 709-1094. Notices to DTC by any other means
shall be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004
8. Dividend payments shall be received by Cede, as nominee of
DTC, or its registered assigns in same-day funds on each payment date
(or the equivalent in accordance with existing arrangements between the
Fund or the Auction Agent and DTC). Such payments shall be made payable
to the order of "Cede & Co." Absent any other existing arrangements
such payments shall be addressed as follows:
Manager, Cash Receipts, Dividends
The Depository Trust Company
7 Hanover Square, 24th Floor
New York, New York 10004
9. Redemption payments shall be made in same-day funds by the
Auction Agent in the manner set forth in the SDFS Paying Agent
Operating Procedures (a copy of which previously has been furnished to
the Auction Agent).
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December 10, 1991
Page 5
10. DTC may direct the Auction Agent to use any other
telephone number for facsimile transmission, address or department of
DTC as the number, address or department to which payments of
dividends, redemption proceeds or notices may be sent.
11. In the event of a partial redemption necessitating a
reduction in the number of outstanding shares of any series of APS,
DTC, in its discretion, (a) may request the Fund to direct the Auction
Agent to issue and authenticate a new APS Certificate with respect to
the shares of the respective series of APS in exchange for surrender of
the old APS Certificate with respect to such series or (b) shall make
an appropriate notation on the APS Certificate with respect to such
series indicating the date and amounts of such reduction in the
outstanding shares of such series of APS, except in the case of a final
redemption of shares of such series of APS in which case the APS
Certificate with respect to such series must be surrendered to the
Auction Agent prior to payment.
12. In the event that beneficial owners of shares of any
series of APS shall be able to obtain certified shares, the Auction
Agent may notify DTC of the availability of certificates representing
the ownership of shares of such series of APS. In such event, the
Auction Agent will issue, transfer and exchange APS Certificates with
respect to such series as required by DTC and others in appropriate
amounts.
13. Whenever DTC requests the Fund and the Auction Agent to do
so, the Auction Agent and the Fund will cooperate with DTC in taking
appropriate action to make available one or more separate certificates
evidencing shares of any series of APS to any Agent Member having
shares of such series of APS credited to its DTC account.
14. DTC may determine to discontinue providing its services as
securities depository with respect to shares of any series of APS at
any time by giving 90 days written notice to the Fund and the Auction
Agent (at which time DTC will confirm with the Auction Agent the
aggregate amount of outstanding shares of such series of APS). Under
such circumstances, at DTC's request the Fund or the Auction Agent will
cooperate with DTC in taking appropriate action to make available one
or more separate certificates evidencing shares of such series of APS
to any Agent Member having shares of such series of APS credited to its
DTC account.
15. The Fund hereby authorizes DTC to provide to the Auction
Agent position listings of its Agent Members with respect to shares of
any series of APS from time to time at the request of the Auction
Agent, and also authorizes DTC in the event of a partial redemption of
shares of any series of APS to provide the Auction Agent, upon request,
with the names of those Agent Members whose position in such APS has
been selected for redemption by DTC. DTC agrees to
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December 10, 1991
Page 6
use its best efforts to notify the Auction Agent of those Agent Members
whose position in shares of such series of APS has been selected for
redemption by DTC and to provide the Auction Agent with the names of
the person or department at such Agent Members to contact regarding
such redemption. The Fund authorizes the Auction Agent to provide DTC
with such signatures, examples of signatures and authorizations to act
as may be deemed necessary to DTC to permit DTC to discharge its
obligations to its Agent Members and appropriate regulatory
authorities.
This authorization, unless revoked by the Fund, shall continue
with respect to shares of each series of APS while shares of each such
series of APS are on deposit at DTC, until and unless the Auction Agent
shall no longer be acting. In such event, the Fund shall provide DTC
with similar evidence of authorization of any successor thereto to so
act.
16. (a) The Prospectus indicates that the Fund may at any time
designate a Special Dividend Period with respect to shares of any
series of APS prior to the commencement of such Special Dividend
Period. In the event of such designation, the Fund will notify DTC in
writing at least seven days prior to the Auction Date relating to such
Special Dividend Period of all details concerning the Special Dividend
Period. If the new dividend for a Special Dividend Period is to be
payable on more than one Dividend Payment Date, such notice shall state
all such Dividend Payment Dates and payment factors associated with
such Dividend Period. The Auction Agent shall also notify DTC of each
upcoming Dividend Payment Date on the business day after the preceding
Dividend Payment Date.
(b) The Fund will notify DTC, at least 10 business days
prior to the payment date for an Additional Dividend (as
defined in the Prospectus) in respect of shares of any series
of APS, of (i) the record date for Holders of shares of such
series of APS entitled to receive Additional Dividends, (ii)
the amount of Additional Dividends payable on a per share
basis to such Holders and (ii) the CUSIP number set forth on
the share certificate representing shares of such series of
APS.
The Depository Trust Company
December 10, 1991
Page 7
If you are in agreement with the terms of this Letter Agreement, please
execute the Letter Agreement in the space provided below.
Very truly yours,
VAN KAMPEN MERRITT
MUNICIPAL TRUST
By:/s Dennis J. McDonnell
-----------------------------------
Name: Dennis J. McDonnell
Title: President
BANKERS TRUST COMPANY
as auction agent
By:/s/ Anne Hartnett
-----------------------------------
Name: Anne Hartnett
Title: Assistant Treasurer
Accepted as of the date first written above
THE DEPOSITORY TRUST COMPANY
By: /s/ Richard B. Nesson
---------------------------------
Name: Richard B. Nesson
Title:
(enclosures)
cc: Goldman, Sachs & Co.
Smith Barney, Harris Upham & Co.
PaineWebber Incorporated
Prudential Securities Incorporated