File No. 811-07721
As filed with the Securities and Exchange Commission on September 18, 1996
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
(X) REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
BBT SUBSIDIARY INC.
(Exact Name of Registrant as Specified in Charter)
345 PARK AVENUE
NEW YORK, NEW YORK 10154
(Address of Principal Executive Offices) (Zip Code)
(212) 754-5560
(Registrant's Telephone Number, including Area Code)
RALPH L. SCHLOSSTEIN, PRESIDENT
BBT SUBSIDIARY INC.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
(Name and Address of Agent for Service)
Copies to:
RICHARD T. PRINS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
BBT SUBSIDIARY INC.
FORM N-2
CROSS REFERENCE SHEET
Part A
Item No. Caption Prospectus Caption
1. Cover Page . . . . . . . . . Not Applicable
2. Inside Front and Outside Back
Cover Page . . . . . . . . . Not Applicable
3. Fee Table and Synopsis . . . Fee Table and
Synopsis; Expense
Information
4. Financial Highlights . . . . Not Applicable
5. Plan of Distribution . . . . Not Applicable
6. Selling Shareholders . . . . Not Applicable
7. Use of Proceeds . . . . . . . Not Applicable
8. General Description of the
Registrant . . . . . . . . . General Description
of the Registrant;
General; Investment
Objectives and
Policies; Risk Factors
9. Management . . . . . . . . . Management; General
Description of the
Registrant; General
10. Capital Stock, Long-Term Debt,
and Other Securities . . . . Capital Stock, Long-
Term Debt and Other
Securities; Capital
Stock; General
Description of the
Registrant; General;
Taxes; Outstanding
Securities;
11. Defaults and Arrears on Senior
Securities . . . . . . . . . Not Applicable
12. Legal Proceedings . . . . . . Not Applicable
13. Table of Contents of Statement
of Additional Information . .
Not Applicable
Part B Statement of
Item No. Additional Infor-
mation Caption
14. Cover Page . . . . . . . . . Not Applicable
15. Table of Contents . . . . . . Not Applicable
16. General Information and
History . . . . . . . . . . . General Description
of the Registrant;
General
17. Investment Objective and
Policies . . . . . . . . . . Not Applicable
18. Management . . . . . . . . . Management
19. Control Persons and Principal
Holders of Securities . . . . Control Persons
20. Investment Advisory and Other
Services . . . . . . . . . . Management
21. Brokerage Allocation and Other
Practices. . . . . . . . Not Applicable
22. Tax Status . . . . . . . . . Tax Status; Taxation
of the Fund
23. Financial Statements . . . . Not Applicable
Part C
Item No.
Information required to be included in Part C is set forth, under
the appropriate item so numbered, in Part C of this registration
statement.
PART A
ITEM 1. COVER PAGE
Not Applicable.
ITEM 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGE
Not Applicable.
ITEM 3. FEE TABLE AND SYNOPSIS
1. Expense Information
Annual Expenses
Management Fees . . . . . . . . . . . . . . . .36%
Interest Payments on Borrowed Funds . . . . . .02%
Other Expenses. . . . . . . . . . . . . . . . .24%
Total Annual Expenses . . . . . . . . . . . . .62%
Example 1 year 3 years 5 years 10 years
You would pay the following
expenses on a $1,000 investment,
assuming a 5% annual return: $6.38 $19.98 $34.80 $77.91
The purpose of the preceding table is to assist the investor in
understanding the various costs and expenses that an investor in
BBT Subsidiary Inc. (the "Fund") will bear directly or
indirectly.
"Other Expenses" are based on estimated amounts for the current
fiscal year. The example above should not be considered a
representation of future expenses, which may be higher or lower.
2. Not Applicable.
3. Not Applicable.
ITEM 4. FINANCIAL HIGHLIGHTS
Not Applicable.
ITEM 5. PLAN OF DISTRIBUTION
Not Applicable.
ITEM 6. SELLING SHAREHOLDERS
Not Applicable.
ITEM 7. USE OF PROCEEDS
Not Applicable.
ITEM 8. GENERAL DESCRIPTION OF THE REGISTRANT
8.1. General. The Fund was incorporated under the laws of the
State of Maryland on May 15, 1996, and is a diversified closed-
end management investment company. The Fund was incorporated
solely for the purpose of receiving all or a substantial portion
of the assets of The Blackrock 1998 Term Trust Inc., incorporated
under the laws of the State of Maryland on February 21, 1991
(the "1998 Term Trust").
8.2. Investment Objective and Policies. The Fund's investment
objective is to manage a portfolio of investment grade fixed
income securities while providing cash flow definition to the
1998 Term Trust. No assurance can be given that the Fund's
investment objective will be achieved.
The Fund will seek to achieve high monthly income by investing
primarily in Corporate Debt Securities rated BBB or better,
Mortgage-Backed Securities and Commercial Mortgage-Backed
Securities, and other fixed income securities that mature on or
about December 31, 1998. The Fund may also invest in various
instruments designed to hedge interest rate risk and its effects
on the market value of the Fund's securities investments.
All of the Fund's assets will be invested in securities that are
(i) issued or guaranteed by the United States government or one
of its agencies or instrumentalities, (ii) rated at least investment
grade by any nationally recognized credit rating agency or
(iii) with respect to no more than 20% of the Fund's assets,
determined by the Adviser to be of comparable credit quality at
the time of assessment of credit risk and do not take into
account potential changes in market value. Securities issued by
the U.S. government or its agencies or instrumentalities or
guaranteed thereby are generally considered to be of the same or
higher credit quality as privately issued securities rated AAA by
S&P or Aaa by Moody's.
The Fund may also invest its assets in other types of debt
securities including those issued by non-U.S. issuers, including
Municipal Securities, Asset Backed Securities and Corporate Debt
Securities.
In order to maintain its tax status as a pass-though entity, the
Fund will be required to distribute substantially all of its net
investment income each year, including accrued income on its Zero
Coupon Securities, for which no cash is received until their
maturity. The Fund intends to make such dividend payments in
cash. In order to generate sufficient cash to pay these
dividends, however, the Fund will be required in certain
instances to apply principal returned on investments to such
payments in lieu of reinvesting such amounts and may be required
to liquidate a portion of its assets from time to time.
The Adviser believes that it will be able to manage the Fund's
assets without realizing capital losses which are not offset, for
federal income tax purposes, by capital gains over the life of
the Fund on the disposition of its other assets.
The Fund expects to use various investment techniques, including
engaging in hedging transactions and short sales, selling covered
call options to enhance income or reduce fluctuations in net
asset value, investing in restricted or illiquid securities,
making forward commitments, entering into repurchase agreements,
reverse repurchase agreements, and dollar rolls, investing in
Eurodollar instruments and lending its portfolio securities.
Under current market conditions, the Fund intends to borrow an
amount equal to approximately 30% of its total assets although
its investment restrictions permit such borrowings in amounts up
to 33 1/3% of its total assets (including the amount borrowed).
The Fund will only borrow when the Adviser believes that such
borrowings will benefit the Fund. Borrowing by the Fund creates
an opportunity for increased income, but, at the same time,
creates special risks.
For purposes of both the foregoing and Item 8.3:
(a) "Mortgage-Backed Securities" are securities that directly or
indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property, including pass-
through securities, such as Ginnie Mae, Fannie Mae and Freddie
Mac Certificates (as defined herein) and collateralized mortgage
obligations ("CMOs"). The yield and credit characteristics of
Mortgage-Backed Securities differ in a number of respects from
Corporate Debt Securities and other traditional debt securities.
(b) "CMO Residuals" are securities issued in connection with
CMOs that generally represent the excess cash flow from the
Mortgage Assets underlying such CMO after payment of principal
and interest on the other CMO securities and related
administrative expenses. CMO residuals may be issued as either
(i) debt obligations of the CMO issuer or (ii) equity interests
in such issuer or the Mortgage Assets underlying the related CMO.
The yield to maturity on these securities is highly sensitive to
prepayments on the related underlying Mortgage Assets. In
certain circumstances, the Fund may fail to recoup fully its
initial investment in a CMO Residual. Under current market
conditions, the Fund expects that it will invest approximately
15% of its assets in these securities and in no event will the
Fund invest more than 40% of its assets in such securities.
(c) "Zero Coupon Securities" are debt obligations which do not
entitle the holder to periodic payments prior to maturity and are
issued and traded at a discount from their face amounts. The
discount varies depending on the time remaining until maturity,
prevailing interest rates, liquidity of the security and the
perceived credit quality of the issuer. Zero Coupon Securities
may be created by separating the interest and the principal
components of securities (i) issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities or (ii)
issued or guaranteed by tax exempt issuers such as state or local
governments or their agencies or instrumentalities (collectively,
"Municipal Issuers") or (iii) issued by private issuers. In
addition, they may be issued directly by private or tax exempt
issuers.
(d) "Other Municipal Securities" are debt securities other than
Zero Coupon Securities issued by Municipal Issuers the income
from which is generally exempt from federal taxation.
(e) "Asset-Backed Securities" have similar structural
characteristics to Mortgage-Backed Securities. However, the
underlying assets are not mortgage loans or interests in mortgage
loans but include assets such as motor vehicle installment sales
or installment loan contracts, leases or various types of real
and personal property, and receivables from revolving credit
(credit card) agreements.
(f) "Corporate Debt Securities" are securities which typically
have fixed or variable interest rates and a fixed maturity, which
may be subject to early redemption. Such securities provide for
payment of interest and principal and have maturities ranging
from one month to thirty years or more.
Investment Limitations. The Fund's investment objective and the
following investment restrictions are fundamental and cannot be
changed without the approval of the holders of a majority of the
Fund's outstanding voting securities (defined in the Investment
Company Act of 1940 (the "1940 Act") as the lesser of (a) more
than 50% of the outstanding shares or (b) 67% or more of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented). All other investment
policies or practices are considered by the Fund not to be
fundamental and accordingly may be changed without stockholder
approval. If a percentage restriction on investment or use of
assets set forth below is adhered to at the time a transaction is
effected, later changes in percentage resulting from changing
market values will not be considered a deviation from policy.
The Fund may not:
(1) with respect to 75% of its total assets, invest
more than 5% of the value of its total assets (taken at
market value at time of purchase) in the outstanding
securities of any one issuer, or own more than 10% of the
outstanding voting securities of any one issuer, in each
case other than securities issued or guaranteed by the U.S.
government or any agency or instrumentality thereof;
(2) invest 25% or more of the value of its total
assets in any one industry;
(3) issue senior securities (including borrowing
money, including on margin if margin securities are owned
and through entering into reverse repurchase agreements) in
excess of 33 1/3% of its total assets (including the amount
of senior securities issued but excluding any liabilities
and indebtedness not constituting senior securities) except
that the Fund may borrow up to an additional 5% of its total
assets for temporary purposes; or pledge its assets other
than to secure such issuances or in connection with hedging
transactions, short sales, when-issued and forward
commitment transactions and similar investment strategies.
The Fund's obligations under interest rate swaps are not
treated as senior securities;
(4) make loans of money or property to any person,
except through loans of portfolio securities, the purchase
of fixed income securities consistent with the Fund's
investment objectives and policies or the acquisition of
securities subject to repurchase agreements;
(5) underwrite the securities of other issuers, except
to the extent that in connection with the disposition of
portfolio securities or the sale of its own shares the Fund
may be deemed to be an underwriter;
(6) purchase real estate or interests therein other
than Mortgage-Backed Securities and similar instruments;
(7) purchase or sell commodities or commodity
contracts except for hedging purposes; or
(8) make any short sale of securities except in
conformity with applicable laws, rules and regulations and
unless, giving effect to such sale, the market value of all
securities sold short does not exceed 25% of the value of
the Fund's total assets and the Fund's aggregate short sales
of a particular class of securities does not exceed 25% of
then outstanding securities of that class.
8.3 Risk Factors. Zero Coupon Securities. The market prices of
Zero Coupon Securities are generally more volatile than the
market prices of securities that pay interest periodically and
are likely to respond to changes in interest rates to a greater
degree than do securities having similar maturities and credit
quality which do pay periodic interest.
Yield Considerations. The yield characteristics of Mortgage-
Backed Securities and Asset-Backed Securities differ from
Corporate Debt Securities and other traditional debt securities.
The major differences typically include more frequent interest
and principal payments, usually monthly, and the possibility that
prepayments of principal may be made at any time. Prepayment
rates are influenced by changes in current interest rates and a
variety of other economic, geographic, social and other factors.
In general, changes in the rate of prepayments on a security will
change the yield to maturity of the security.
The Fund expects that it will invest a portion of its assets in
securities such as CMO Residuals and stripped Mortgage-Backed
Securities that are highly sensitive to changes in prepayment and
interest rates. Under certain interest rate or prepayment rate
scenarios, the Fund may fail to recoup fully its investment in
such securities notwithstanding that such securities may be rated
AAA or Aaa. Under current market conditions, the Fund expects to
invest approximately 15% of its assets in CMO Residuals and under
no circumstances will the Fund invest more than 40% of its assets
in CMO Residuals. Under current market conditions, the Fund
expects to invest approximately 10% of its assets in stripped
Mortgage-Backed Securities.
As the result of usual prepayment patterns, amounts available for
reinvestment by the Fund are likely to be greater during a period
of declining interest rates and, as a result, likely to be
reinvested at lower interest rates than during a period of rising
interest rates. Mortgage-Backed Securities and Asset-Backed
Securities may decrease in value as a result of increases in
interest rates and may benefit less than other fixed income
securities from declining interest rates because of the risk of
prepayment. The Fund's income and dividends are expected to
decline over the term of the Fund due to the anticipated
shortening of the dollar-weighted average maturity of the Fund's
assets over the term of the Fund.
Disposition of Assets. The Fund must distribute to stockholders
each year substantially all of its net investment income in order
to continue to qualify as a pass-through entity for federal
income tax purposes. The Fund intends to make such dividend
payments in cash. Because the Fund must accrue income on its
Zero Coupon Securities each year even though it receives no cash
interest payments thereon until maturity, however, the Fund will
be required in certain instances to apply principal returned on
investments to dividend payments in lieu of reinvesting such
amounts and may be required to liquidate a portion of its assets
from time to time for the purpose of paying such dividends.
Illiquid Securities. The Fund may invest in securities that lack
an established secondary trading market or are otherwise
considered illiquid. Liquidity of a security relates to the
ability to easily dispose of securities and the price to be
obtained, and does not generally relate to the credit risk or
likelihood of receipt of cash at maturity. Illiquid securities
may trade at a discount from comparable, more liquid investments.
Illiquid securities in which the Fund may invest include, under
current guidelines of the staff of the Securities and Exchange
Commission (the "Commission"), stripped mortgage-backed,
privately stripped U.S. Government, agency and municipal
securities, CMO Residuals, interest rate swaps, certain hedging
instruments and restricted securities of corporate and other
issuers, including certain Corporate Debt Securities. The Fund
expects that approximately 15% of its assets will be invested in
CMO Residuals and approximately 20% of its assets will be
invested in the remaining categories of illiquid securities,
representing an anticipated total of 35% of the Fund's assets.
In no event will the Fund invest more than 40% of its assets in
CMO Residuals and the total of all such illiquid investments will
not exceed 60% of the Fund's assets. Although the staff of the
Commission currently categorizes these securities as illiquid,
some of them trade in established secondary markets.
Borrowings. The Fund is authorized to borrow funds (including
through reverse repurchase agreements) in amounts not exceeding
33 1/3% of its total assets (including the amount borrowed) and
under current market conditions intends to borrow an amount equal
to approximately 30% of its total assets. Borrowing by the Fund
creates an opportunity for increased net income, but, at the same
time, creates special risks. The Fund will only borrow when the
Adviser believes that such borrowings will benefit the Fund. To
the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund will have to pay,
the Fund's net income will be greater than if borrowings had not
been used. Conversely, if the income from the securities
purchased with borrowed funds is not sufficient to cover the cost
of borrowing, the net income of the Fund will be less than if
borrowing had not been used, and therefore the amount available
for distribution to stockholders as dividends will be reduced.
The Fund may also borrow up to an additional 5% of its total
assets for temporary purposes without regard to the foregoing
limitation.
Non-U.S. Securities. The Fund may invest less than 10% of its
total assets in debt securities, including Corporate Debt
Securities, of non-U.S. issuers although under current market
conditions the Fund does not expect to purchase any non-U.S.
securities. Investing in non-U.S. securities involves certain
special risks.
The rating of a corporate debt security may change over time, as
S&P and Moody's monitor and evaluate the ratings assigned to
corporate debt securities on an ongoing basis. As a result,
corporate debt securities held by the Fund could receive a higher
rating (which would tend to increase their value) or a lower
rating (which would tend to decrease their value) during the time
that they are owned by the Fund. If a security owned by such
Fund is downgraded below either BBB- by S&P or Baa3 by Moody's,
the Adviser will monitor such security and determine whether to
sell it based on the factors it considers relevant such as
remaining terms of such Fund, size of the investment, whether a
loss or gain will result, relative risk to such Fund, depth of
the trading market or any other relevant factors.
Other Investment Techniques. The Fund may use various other
investment techniques that also involve special considerations
including engaging in hedging transactions and short sales,
selling covered call options, making forward commitments,
entering into repurchase agreements, reverse repurchase
agreements, and dollar rolls, investing in Eurodollar
instruments, purchasing or selling interest rate swaps, caps,
floors or collars, and lending its portfolio securities.
Market Price of Shares. The shares of closed-end investment
companies such as the Fund frequently trade at a discount from
their net asset values but may trade at a premium. The Fund
cannot predict whether its shares will trade at, above or below
net asset value. This market price risk may be greater for
investors who intend to sell their shares in a relatively short
period after completion of the public offering. The Fund is
permitted to engage in share repurchases or make tender offers
for a portion of the shares in an effort to reduce any market
value discount that may exist. There are special risks
associated with such activities.
The market value of the Fund's assets will fluctuate with changes
in prevailing interest rates. To the extent the various hedging
techniques and active portfolio management employed by the Fund
do not offset these changes, the net asset value of the Fund's
shares will also fluctuate in relation to interest rate changes.
It is anticipated that a substantial portion of the Fund's
portfolio will consist of debt securities, the value of which
varies inversely with changes in prevailing interest rates. The
various hedging techniques employed by the Fund, the term of the
Fund and the different characteristics of particular securities
in which the Fund may invest make it very difficult to predict
the impact of interest rate changes on either the net asset value
or the market price of the shares.
Shares Unsecured. Although certain portfolio securities
purchased by the Fund are collateralized by, or represent
ownership interests in, specific assets, the shares themselves
are not so secured.
Antitakeover Provisions. Certain antitakeover provisions will
make a change in the Fund's business or management more difficult
without the approval of the Fund's board of directors and may
have the effect of depriving stockholders of an opportunity to
sell their shares at a premium above the prevailing market price.
ITEM 9. MANAGEMENT
1. General.
(a) Board of Directors. The Directors set broad policies
for the Fund and choose its officers. The Adviser manages the
day-to-day operations of the Fund and supplies officers to the
Fund for this purpose. The Directors shall consist at all times
of no less than two (2) Directors, unless the Fund has three (3)
or more stockholders during which time the number of Directors
shall never be less than three (3). No more than 60% of the
Directors are "interested persons" of the Fund, as defined in the
1940 Act.
(b) Investment Adviser. The Adviser, BlackRock Financial
Management, Inc., is located at 345 Park Avenue, New York, New
York 10154. The Adviser currently serves as the investment
advisor to institutional and individual fixed income investors in
the U.S. and overseas through a number of funds and separately
managed accounts with combined total assets in excess of $41
billion.
Pursuant to an Investment Advisory Agreement (the "Advisory
Agreement"), the Fund has retained the Adviser to manage the
investment of its assets, to provide such investment research,
advice and supervision, in conformity with its investment
objective and policies, as may be necessary for the operations of
the Fund. The Advisory Agreement was approved by the Directors
on May 16, 1996 and by the Fund's sole shareholder on May 16, 1996.
As compensation for its services rendered to the Fund, the
Adviser will receive a Management Fee directly from the Fund.
(c) Portfolio Management. The Fund's portfolio manager
will be BlackRock Financial Management, Inc.
(d) Administration Agreement. Under the Administration
Agreement with the Fund, Prudential Mutual Fund Management, Inc.,
One Seaport Plaza, New York, New York 10292, administers the
Fund's corporate affairs subject to the supervision of the
Directors and furnishes the Fund with office facilities and
ordinary clerical and bookkeeping services.
(e) Custodian, Transfer Agent, Dividend Disbursing Agent
and Registrar. State Street Bank & Trust Company, One Heritage
Drive, North, Quincy, MA will serve as custodian for the Fund's
portfolio securities and cash and as Transfer Agent, Dividend
Disbursing Agent and Registrar for the shares, and in those
capacities, maintains certain financial and accounting books and
records pursuant to agreements with the Fund. The Fund may also
periodically enter into arrangements with other qualified
custodians with respect to certain types of securities or other
transactions. Transfer, dividend disbursing and registrar
functions have been delegated to and are being performed by
Boston EquiServe, L.P., an affiliate of State Street.
(f) Expenses. The Advisory Agreement provides, among other
things, that the Adviser will bear all expenses of its employees
and overhead incurred in connection with its duties under the
Advisory Agreement, and the expense of services rendered by any
employee of the Adviser in such employee's capacity as a Director
or officer of the Fund.
ITEM 10. CAPITAL STOCK, LONG-TERM DEBT, AND OTHER SECURITIES
1. Capital Stock. The Fund is authorized to issue up to
500 million shares of capital stock of all classes, all of which
have a per value of one cent ($.01) per share. The shares have
no preemptive, conversion, exchange or redemption rights. Each
share has equal voting, dividend, distribution and liquidation
rights. Shareholders of the Fund have cumulative voting rights
on the election of Directors and are entitled to one vote per
share on all other matters subject to shareholder approval. When
issued against payment therefor, the shares will be fully paid
and non-assessable. No person has any liability for liabilities
of the Fund by reason of owning shares.
2. Long Term Debt. None.
3. General. None.
4. Taxes. The Fund and the Adviser intend to qualify the
Fund as a Regulated Investment Company ("RIC") under Subchapter M
of the Internal Revenue Code of 1986. If the Fund so qualifies,
the Fund will not be subject to federal income tax on its net
investment income and net short-term capital gain, if any,
realized during any fiscal year to the extent that the Fund
distributes such income and capital gains to shareholders. In
order to qualify as a RIC, the Fund must satisfy certain tests
regarding the nature and distribution of its income and assets.
So long as the Fund qualifies as a RIC, the Fund will not be
subject to federal income tax on the income which it distributes.
However, the Fund will be subject to federal and possibly state
corporate income tax on any undistributed income. Under the
Code, amounts not distributed by a RIC on a timely basis in
accordance with a calendar year distribution requirement are
subject to a 4% excise tax. To the extent that the Fund realizes
net capital gains, the Fund intends to distribute such gains at
least annually and designate them as capital gain dividends. See
Item 22 for additional information regarding Taxes.
5. Outstanding Securities.
Amount
Outstanding
Exclusive of
Amount Held by Amount Shown
Amount Registrant or Under
Title of Class Authorized for its Account Previous Column
Voting Shares 500 million None 58,660,527 shares
shares
6. Securities Ratings.
None.
ITEM 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES
1. None.
2. None.
ITEM 12. LEGAL PROCEEDINGS
None.
ITEM 13. TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION
Not Applicable.
PART B
ITEM 14. COVER PAGE
Not Applicable.
ITEM 15. TABLE OF CONTENTS
Not Applicable.
ITEM 16. GENERAL INFORMATION AND HISTORY
The Fund has no history. See Item 8 - General Description
of the Registrant, for general information.
ITEM 17. INVESTMENT OBJECTIVES AND POLICIES
Additional detail on the 1998 Term Trust's investment objectives
and policies is provided in its Registration Statement filed with
the SEC on February 21, 1991.
ITEM 18. MANAGEMENT
The following individuals are the officers and Directors of the
Fund. A brief statement of their present positions and principal
occupations during the past five years is also provided.
Name and Business Position(s) Held Principal Occupation(s)
Address with Registrant During Past Five Years
Andrew F. Brimmer Director President of Brimmer &
4400 MacArthur Company, Inc. a Washington,
Blvd., D.C.-based economic and
N.W. Suite 302 financial consulting firm.
Washington, D.C. Formerly member of the Board
20007 of Governors of the Federal
reserve System. Director,
Airborne Express, Bank-
America Corporation (Bank of
America), Carr Realty
Corporation, College
Retirement Equities Fund
(Trustee), E.I. du Pont de
Nemours & Company, Gannett
Company (publishing),
Navistar International
Corporation (truck
manufacturing) and PHH
Corporation (car leasing).
Richard E. Cavanagh Director President and Chief Executive
845 Third Avenue Officer of The Conference
New York, NY 10022 Board, Inc., a leading global
business membership
organization. Former
Executive Dean of the John F.
Kennedy School of Government
at Harvard University from
1988-1995. Acting Director,
Harvard Center for Business
and Government (1991-1993).
Formerly Partner (principal)
of McKinsey & Company, Inc.
(1980-1988). Former
Executive Director of Federal
Cash Management, White House
Office of Management and
Budget (1977-1979). Trustee,
Wesleyan University.
Kent Dixon Director Consultant/Investor. Former
9495 Blind Pass Road President and Chief Executive
Unit #602 Officer of Empire Federal
St. Petersburg, FL Savings Bank of America and
33706 Banc PLUS Savings
Association, former Chairman
of the Board, President and
Chief Executive Officer of
Northeast Savings. Former
Director of ISFA (the owner
of INVEST, a national
securities brokerage service
designed for banks and thrift
institutions).
Frank J. Fabozzi Director Consultant. Editor of The
858 Tower View Journal of Portfolio
Circle Management and Adjunct
New Hope, PA 18938 Professor of Finance at the
School of Organization and
Management at Yale
University. Director,
Guardian Mutual Funds Group.
Author and editor of several
books on fixed income
portfolio management.
Visiting Professor of Finance
and Accounting at the Sloan
School of Management,
Massachusetts Institute of
Technology from 1986 to
August 1992.
Laurence D. Fink* ** Director and Chairman and Chief Executive
Chairman of the Officer of the Adviser.
Board Formerly Managing Director of
The First Boston Corporation,
member of its management
Committee, co-head of its
Taxable Fixed Income
Department, and head of its
Mortgage and Real Estate
Products Group. Chairman of
the Board of each of the
Funds. Trustee, New York
University Medical Center.
James Grosfeld Director Consultant/Investor.
20500 Civic Center Formerly Chairman of the
Drive Board and Chief Executive
Suite 3000 Officer of Poulte Corporation
Southfield, MI (homebuilding and mortgage
48076 banking and finance) (May
19974-April 1990).
James Clayburn Director Dean Emeritus of The John E.
LaForce, Jr. Anderson Graduate School of
P.O. Box 1595 Management, University of
Pauma Valley, CA California since July 1,
92061 1993. Director, Eli Lilly
and Company
(pharmaceuticals), Imperial
Credit Industries (mortgage
banking), Jacobs Engineering
Group, Inc., Rockwell
International Corporation,
Payden & Krygel Investment
Trust (mutual fund),
Provident Investment Counsel
Funds (investment companies),
Timken Company (roller
bearing and steel). Acting
Dean of the School of
Business, Hong Kong
University of Science and
Technology 1990-1993. From
1978 to September 1993, Dean
of The John E. Anderson
Graduate School of
Management, University of
California.
Ralph L. Director and President of the Adviser.
Schlosstein* ** President Formerly Managing Director of
Shearson Lehman Hutton Inc.
and co-head of its Mortgage
and Savings Institutions
Group. President of each of
the Funds. Trustee Denison
University, Director of the
Fund for New York City Public
Education, Member Visiting
Board of Overseers of the
John F. Kennedy School of
Government at Harvard
University.
Scott Amero Vice President Managing Director of the
Adviser. From 1985 to 1990
Vice President at The First
Boston Corporation in the
Fixed Income Research
Department.
Keith T. Anderson Vice President Managing Director of the
Adviser. From February 1987
to April 1988 Vice President
at The First Boston
Corporation in the Fixed
Income Research Department.
Previously Vice President and
Senior Portfolio Manager at
Criterion Investment
Management Company.
Michael C. Huebsch Vice President Managing Director of the
Adviser. From July 1985 to
January 1989 Vice President
at The First Boston
Corporation in the Fixed
Income Research Department.
Robert S. Kapito Vice President Managing Director and Vice
Chairman of the Adviser.
Formerly Vice President at
The First Boston Corporation
in the Mortgage Products
Group.
Henry Gabbay Treasurer Managing Director and Chief
Operating Officer of the
Adviser. From September 1984
to February 1989 Vice
President at The First Boston
Corporation.
Kevin Klingert Vice President Managing Director of the
Adviser. From March 1985 to
October 1991 Assistant Vice
President at Merrill Lynch,
Pierce, Fenner & Smith in the
Unit Investment Trust
Department.
James Kong Assistant Managing Director of the
Treasurer Adviser. From April 1987 to
April 1989 Assistant Vice
President at The First Boston
Corporation in the CMO/ABO
Administration Department.
Previously affiliated with
Deloitte, Haskins & Sells
(now Deloitte & Touche LLP).
Karen H. Sabath Secretary Managing Director of the
Adviser. From June 1986 to
July 1988 Associate at The
First Boston Corporation in
the Mortgage Finance
Department. From August 1988
to December 1992 Associate,
Vice President of the
Adviser.
Richard Shea, Esq. Vice Principal of the Adviser.
President/Tax From December 1988 to
February 1993 Tax Counsel at
Prudential Securities, Inc.
From August 1984 to December
1988 Senior Tax Specialist at
Laventhol & Horwath.
* Directors who are directors, officers or employees of the
Adviser.
** Directors who may be deemed to be "interested persons" of the
Fund.
Each Director (other than any Director who is a partner,
director, officer or employee of the Adviser or any affiliate
thereof or successor thereto) will receive no compensation for
serving as Director of the Fund. Inasmuch as each Director is
also a Director of the BNN Subsidiary Inc., the Trusts and the
other investment companies in the BlackRock fund complex, it is
anticipated that the aggregate annual compensation to each
Director for service to investment companies in the BlackRock
fund complex will be approximately $160,000, with the exception
of Mr. Grosfeld who will receive approximately $200,000 for his
combined service as a director of the BNN Subsidiary Inc. and the
Trusts and of each of the other investment companies in the
BlackRock complex. Each Director is entitled to one vote on each
matter requiring the Directors to take any action or consent to
the taking of any action. In all cases in which a Director vote
is required, only the vote of the Directors present (whether in
person or by telephone) and eligible to vote with respect to such
matter will be taken into consideration in determining whether
consent has been given or withheld. On each matter on which
Directors vote, each Director may give or withhold his or her
vote as he or she deems appropriate in his or her sole
discretion.
Messrs. Fink, Gabbay and Grosfeld also serve in the same capacity
as a director and/or officer, as the case may be, of each of the
other closed end investment companies in the BlackRock fund
complex except that Mr. Schlosstein is also a director of each of
such other investment companies. In addition, the Adviser serves
as investment sub-advisor to The BlackRock Government Income
Trust, the Dean Witter Premier Income Trust and the Smith Barney
Shearson Adjustable Rate Government Income Fund, each of which
are open-end management investment companies. The Adviser also
acts as an advisor to BlackRock Institutional Trust, an open end
investment company consisting of sixteen investment portfolios.
Mr. Grosfeld additionally serves as a director and officer of
such Trust.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
1. The 1998 Term Trust, which has offices at 345 Park
Avenue, New York, New York 10154, owns 100% of the
voting shares of the Registrant.
2. See Item 19.1.
3. None.
ITEM 20. INVESTMENT ADVISORY AND OTHER SERVICES
1-6. See Item 9 - Management.
7. Deloitte & Touche LLP, 2 World Financial Center, New
York, New York 10281-1431.
8. None.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
1. Not Applicable.
2. None.
3. Not Applicable.
4. None.
5. None.
ITEM 22. TAX STATUS
The following discussion is based on the advice of Skadden, Arps,
Slate, Meagher & Flom and, except as otherwise indicated,
reflects provisions of the Internal Revenue Code of 1986, as
amended (the "Code") as of the date of this registration
statement. In addition, the following discussion is a general
summary of certain of the current federal income tax laws
regarding the Fund and investors in the shares, and does not
purport to deal with all of the federal income tax consequences
or any of the state or other tax considerations applicable to the
Fund, or to all categories of investors, some of which may be
subject to special rules. Prospective investors should consult
their own tax advisors regarding the federal, state, local,
foreign and other tax consequences to them of investments in the
Fund, including the effects of any changes, including proposed
changes, in the tax laws.
Taxation of the Fund. The Fund and the Adviser intend to qualify
the Fund as a RIC under Subchapter M of the Code. If the Fund so
qualifies, the Fund will not be subject to federal income tax on
its net investment income and net short-term capital gains, if
any, realized during any fiscal year to the extent that the Fund
distributes such income and capital gains to shareholders.
In order to qualify as a RIC, the Fund must, among other things,
(a) derive at least 90% of its gross income from dividends,
interest, payments with respect to loans of securities and gains
from the sale or other disposition of securities or certain other
related income; (b) generally derive less than 30% of its gross
income from gains from the sale or other disposition of
securities and certain other investments held for less than three
months; and (c) diversify its holdings so that at the end of each
fiscal quarter (i) at least 50% of the value of the Fund's assets
is represented by cash, U.S. government securities, securities of
other RICs, and other securities which, with respect to any one
issuer, do not represent more than 5% of the value of the Fund's
assets nor more than 10% of the voting securities of such issuer,
and (ii) not more than 25% of the value of the Fund's assets is
invested in securities of any one issuer other than U.S.
government securities or the securities of other RICs; and (d)
distribute to its shareholders at least 90% of its net investment
income (including tax-exempt interest and net short-term capital
gain but not net capital gain, which is the excess of net long-
term capital gain over net short-term capital loss). If for any
other reason the Fund does not qualify as a RIC, the Fund will be
taxable as an ordinary corporation which would have a material
adverse effect on the Fund.
So long as the Fund qualifies as a RIC, the Fund will not be
subject to federal tax on the income so distributed. However,
the Fund would be subject to federal and possibly state corporate
income tax (currently at a maximum federal tax rate of 35%) on
any undistributed income other than tax-exempt income from
municipal securities. Under the Code, amounts not distributed by
a RIC on a timely basis in accordance with a calendar year
distribution requirement are subject to a 4% excise tax. To
avoid the imposition of such tax, the Fund must distribute, in
each calendar year, an amount at least equal to the sum of (a)
98% of the ordinary income for such calendar year; (b) 98% of the
net capital gains for the one-year period ending on October 31 of
such calendar year (unless the Fund has a fiscal year ending in
November or December and irrevocably elects to use that fiscal
year as the one-year period); and (c) 100% of all ordinary income
and net capital gains from prior years that were not previously
distributed. For purposes of the excise tax, any income or
capital gains retained by, and taxed in the hands of, the Fund
are treated as having been distributed.
Liquidating distributions which in the aggregate exceed a
shareholder's basis in shares will be treated as gain from the
sale of shares. If a shareholder receives in the aggregate
liquidating distributions which are less than such basis, such
shareholder will recognize a loss to that extent.
Dividends and other distributions by the Fund are generally
taxable to the shareholders at the time the dividend or
distribution is made. Any dividends declared by the Fund in
October, November or December and made payable to shareholders of
record in such a month will be taxable to shareholders as of
December 31, provided that the dividend is paid in the following
January.
If a shareholder purchases shares at a cost that reflects an
anticipated dividend, such dividend will be taxable even though
it represents economically in whole or in part a return of the
purchase price. Investors should consider the tax implications
of buying shares shortly prior to a dividend distribution.
The Fund will, within 60 days after the close of its taxable
year, send written notices to shareholders regarding the tax
status of all distributions made during the year.
In general, if a share of the Fund is sold, the seller will
recognize gain or loss equal to the difference between the amount
realized on the sale and the seller's adjusted basis in the
share. Any gain or loss realized upon a sale of shares by a
shareholder who is not a dealer in securities will be treated as
capital gain or loss, and will be long-term capital gain or loss
if the shares were held for more than six months. However, any
loss recognized by a shareholder within six months of purchasing
the shares will be treated as a long-term capital loss to the
extent of any long-term capital gain distributions received by
the shareholder and the shareholder's share of undistributed
long-term capital gains. In addition, any loss realized on a sale
of shares will be disallowed to the extent the shares disposed of
are replaced within a period of 61 days beginning 30 days before
the disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
The Fund may be required to withhold federal income tax at the
rate of 31% of any payments made to a shareholder of the Fund if
the shareholder has not provided a correct taxpayer
identification number and certain required certifications to the
Fund, or if the Secretary of the Treasury notifies the Fund that
the number provided by a shareholder is incorrect or that the
shareholder has not reported all interest and dividend income
required to be shown on the shareholder's federal income tax
return.
Under current law, the Fund is required to withhold U.S.
withholding tax from any distributions of net investment income
paid to most non-U.S. investors, and the ownership of an interest
in a Fund by a non-U.S. individual at death may subject such
individual to U.S. estate tax. Consequently, the Fund may not be
appropriate as an investment for non-U.S. persons and such
prospective investors are urged to consult their own tax advisors
with respect to the potential effective tax liability that may
arise with respect to an investment in the Fund.
ITEM 23. FINANCIAL STATEMENTS
Not Applicable.
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Not Applicable.
(2) (a) Articles of Incorporation.
(b) By-Laws.
(c) None.
(d) Not Applicable.
(e) None.
(f) Form of Notes.
(g) Form of Investment Advisory Agreement.
(h) Not Applicable.
(i) None.
(j) Form of Custodian Agreement.
(k) Form of Administration Agreement;
Form of Transfer Agent Agreement.
(l) Not Applicable.
(m) None.
(n) Not Applicable.
(o) Not Applicable.
(p) None.
(q) None.
(r) None.
ITEM 25. MARKETING ARRANGEMENTS
None.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable.
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
The Fund does not control any person.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES OF THE FUND
Title of Class Number of Record Holders
Voting Shares 1
ITEM 29. INDEMNIFICATION
Under the Fund's By-laws, the Fund agrees to indemnify the
Directors or officers of the Fund (each such person being an
"indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and reasonable counsel fees reasonably
incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or
investigative body in which he may be or may have been involved
as a party or otherwise or with which he may be or may have been
threatened, while acting in any capacity set forth above by
reason of his having acted in any such capacity, except with
respect to any matter as to which he shall not have acted in good
faith in the reasonable belief that his action was in the best
interest of the Fund or, in the case of any criminal proceeding,
as to which he shall have had reasonable cause to believe that
the conduct was unlawful, provided, however, that no indemnitee
shall be indemnified hereunder against any liability to any
person or any expense of such indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence
(negligence in the case of those Directors or officers who are
directors, officers or employees of the Adviser ("Affiliated
Indemnitees")), or (iv) reckless disregard of the duties involved
in the conduct of his position (the conduct referred to in such
clauses (i) through (iv) being sometimes referred to herein as
"disabling conduct"). Notwithstanding the foregoing, with
respect to any action, suit or other proceeding voluntarily
prosecuted by any indemnitee as plaintiff, indemnification shall
be mandatory only if the prosecution of such action, suit or
other proceeding by such indemnitee was authorized by a majority
of the Directors.
Further, pursuant to the Advisory Agreement, the Fund agrees to
indemnify the Adviser and each of the Adviser's directors,
officers, employees and controlling persons and the partners,
directors, officers and employees thereof (each such person being
an "indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and reasonable counsel fees reasonably
incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or
investigative body in which he may be or may have been involved
as a party or otherwise or with which he may be or may have been
threatened, while acting in any capacity set forth above with
respect to the services provided hereunder or thereafter by
reason of his having acted in any such capacity, except with
respect to any matter as to which he shall not have acted in good
faith in the reasonable belief that his action was in the best
interest of the Fund or, in the case of any criminal proceeding,
as to which he shall have had reasonable cause to believe that
the conduct was unlawful, provided, however, that no indemnitee
shall be indemnified hereunder against any liability to any
person or any expense of such indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) negligence or (iv)
reckless disregard of the duties involved in the conduct of his
position. Notwithstanding the foregoing, with respect to any
action, suit or other proceeding voluntarily prosecuted by any
indemnitee as plaintiff, indemnification shall be mandatory only
if the prosecution of such action, suit or other proceeding by
such indemnitee was authorized by a majority of the Directors.
Insofar as indemnification for liabilities under the Securities
Act of 1933, as amended (the "1933 Act") may be permitted to the
Directors and officers, the Fund has been advised that in the
opinion of the SEC such indemnification is against public policy
as expressed in such Act and is therefore unenforceable. If a
claim for indemnification against such liabilities under the 1933
Act (other than for expenses incurred in a successful defense) is
asserted against the Fund by the Directors or officers in
connection with the shares, the Fund will, unless in the opinion
of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final
adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of the Adviser, reference is made to the Adviser's
current Form ADV filed under the Investment Advisors Act of 1940,
as amended, incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Fund are maintained in part at
the office of the Adviser at 345 Park Avenue, New York, New York
10154, in part at the offices of the Custodian and the
Administrator, State Street Bank & Trust Company, with offices at
One Heritage Drive, North Quincy, MA 02171 and Prudential Mutual
Fund Management, Inc., with offices at One Seaport Plaza, New
York, New York 10292, respectively, and in part at the offices of
Boston EquiServe, L.P., BFDS Building, 4th Floor, 2 Heritage
Drive, Quincy, MA 02171.
ITEM 32. MANAGEMENT SERVICES
Except as described above in Item 9 - Management, the Fund is not
a party to any management service related contract.
ITEM 33. UNDERTAKINGS
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company
Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New
York, on the 18th day of September, 1996.
BBT Subsidiary Inc.
(Registrant)
By /s/ Ralph L. Schlosstein
_______________________
Name: Ralph L. Schlosstein
Title: President
SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit Page
Number Exhibit Number
Exhibit A Articles of Incorporation . . . . . .
Exhibit B By-Laws . . . . . . . . . . . . . . .
Exhibit C None . . . . . . . . . . . . . . . . .
Exhibit D Not Applicable . . . . . . . . . . . .
Exhibit E None . . . . . . . . . . . . . . . . .
Exhibit F Form of Notes . . . . . . . . . . . .
Exhibit G Form of Investment Advisory Agreement
Exhibit H Not Applicable . . . . . . . . . . . .
Exhibit I None . . . . . . . . . . . . . . . . .
Exhibit J Form of Custodian Agreement . . . . .
Exhibit K (a) Form of Administration Agreement .
(b) Form of Transfer Agent Agreement .
Exhibit L Not Applicable . . . . . . . . . . . .
Exhibit M None . . . . . . . . . . . . . . . . .
Exhibit N Not Applicable . . . . . . . . . . . .
Exhibit O Not Applicable . . . . . . . . . . . .
Exhibit P None . . . . . . . . . . . . . . . . .
Exhibit Q None . . . . . . . . . . . . . . . . .
Exhibit R None . . . . . . . . . . . . . . . . .
ARTICLES OF INCORPORATION
OF
THE BLACKROCK 1998 TERM FUND INC.
ARTICLE I
THE UNDERSIGNED, John R. Mentzer, whose post
office address is 10 Light Street, Baltimore, Maryland
21202, being at least eighteen (18) years of age, hereby
forms a corporation under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is The BlackRock
1998 Term Fund Inc. (the "Corporation").
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is
formed are to act as an investment company under the
federal Investment Company Act of 1940, an amended (the
"1940 Act"), and to exercise and enjoy all of the general
powers, rights and privileges granted to, or conferred
upon, corporations by the Maryland General Corporation
Law now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office
of the Corporation in the State of Maryland is c/o The
Corporation Trust Incorporated, 32 South Street, Balti-
more, Maryland 21202. The name of the resident agent of
the Corporation in the State of Maryland in The Corpora-
tion Trust Incorporated, a corporation of the State of
Maryland, and the post office address of the resident
agent is 32 South Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital
stock of all classes which the Corporation shall have
authority to issue is Two Million (2,000,000) shares, all
of which shall have a par value of one cent ($.01) per
share and of the aggregate par value of Twenty Thousand
Dollars ($20,000).
(2) (a) The Board of Directors of the Corpo-
ration is authorized to classify or to reclassify, from
time to time, any unissued shares of stock of the Corpo-
ration, whether now or hereafter authorized, by setting,
changing or eliminating the preferences, conversion or
other rights, voting powers, restrictions, limitations as
to dividends, qualifications, or terms and conditions of
or rights to require redemption of the stock.
(b) Without limiting the generality of
the foregoing, the dividends and distributions or other
payments with respect to the stock of the Corporation,
and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from
time to time by the Board of Directors, and such divi-
dends and distributions may vary from class to class to
such extent and for such purposes as the Board of Direc-
tors may deem appropriate, including, but not limited to,
the purpose of complying with requirements of regulatory
or legislative authorities.
(c) Until such time as the Board of
Directors shall provide otherwise pursuant to the author-
ity granted in this section (2) all the authorized shares
of the Corporation are designated as Common Stock.
Shares of the Common Stock and the holders thereof, and
shares of any class and the holders thereof, shall be
subject to the following provisions, provided, however,
that if no shares of any class other than Common Stock
are outstanding, the shares of the Common Stock and the
holders thereof shall nevertheless be subject to the
following provisions except to the extent that such
provisions are by their terms applicable only when shares
of two or more classes are outstanding.
(i) The net asset value of each
share of the Corporation's capital stock issued, sold or
purchased at net asset value shall be the current net
asset value per share as determined in accordance with
procedures adopted from time to time by the Board of
Directors which comply with the 1940 Act.
(ii) Shares of each class of stock
shall be entitled to such dividends or distributions, in
stock or in cash or both, as may be declared from time to
time by the Board of Directors, acting in its sole dis-
cretion, with respect to such class.
(iii) In the event of the liquida-
tion or dissolution of the Corporation, the holders of
the Common Stock of the Corporation's stock shall be
entitled to receive all the assets of the Corporation not
attributable to other classes of stock through any pref-
erence. The assets so distributable to the stockholders
shall be distributed among such stockholders in propor-
tion to the number of shares of that class held by them
and recorded on the books of the Corporation.
(iv) Unless otherwise expressly
provided in these Articles of incorporation, including
any Articles Supplementary creating any class of capital
stock, on each matter submitted to a vote of stockhold-
ers, each holder of a share of capital stock of the
Corporation shall be entitled to one vote for each share
standing in such holder's name on the books of the Corpo-
ration, irrespective of the class thereof, and all shares
of all classes of capital stock shall vote together as a
single class; provided, however, that as to any matter
with respect to which a separate vote of any class is
required by the 1940 Act or any rules, regulations or
orders issued thereunder, or the Maryland General Corpo-
ration Law, such requirement as to a separate vote by
that class shall apply in lieu of a vote of all classes
voting together as a single class as described above.
(v) The Corporation shall be enti-
tled to purchase shares of its capital stock, to the
extent that the Corporation may lawfully effect such
purchase under the laws of the State of Maryland, upon
such terms and conditions and for such consideration as
the Board of Directors shall deem advisable.
(vi) All shares purchased by the
Corporation shall constitute authorized but unissued
shares and the number of the authorized shares of stock
of the Corporation shall not be reduced by the number of
any shares purchased by it. Unless and until their clas-
sification is changed in accordance with section (2) of
this Article V, all shares of capital stock so purchased
shall continue to belong to the same class to which they
belonged at the time of their purchase.
(vii) The Corporation may issue
shares of stock in fractional denominations to the same
extent as its whole shares, and shares in fractional
denominations shall be shares of capital stock having
proportionately to the respective fractions represented
thereby all the rights of whole shares, including without
limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate
upon liquidation of the Corporation, but excluding the
right to receive a stock certificate representing frac-
tional shares.
(viii) Any purchase or transfer or
purported purchase or transfer of capital stock to (i)
the United States, any State or political subdivision
thereof, any foreign government, any international orga-
nization, or any agency or instrumentality of any of the
foregoing; (ii) any organization (other than a farmer's
cooperative described in SECTION521 of the Internal Revenue
Code of 1986, as amended (the "Code")) that is exempt
from the tax imposed by 26 U.S.C. SECTIONSECTION1-1399 and not sub-
ject to the tax imposed by 26 U.S.C SECTION511; or (iii) any
rural electric or telephone cooperative described in
SECTION1381(a)(2)(C) of the Code shall be void. Any capital
stock purportedly transferred to or retained by such an
entity may, at the option of the Corporation, be repur-
chased by the Corporation at the lesser of market value
or net asset value at the time of repurchase.
(ix) All persons who shall acquire
capital stock or other securities of the Corporation
shall acquire the same subject to the provisions of these
Articles of Incorporation and the By-Laws of the Corpora-
tion, as each may be amended from time to time.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE CORPORATION
AND OF THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation
shall initially be two (2), which number may be increased
by or pursuant to the By-Laws of the Corporation but
shall never be less than two (2), unless the Corporation
has three (3) or more stockholders during which time the
number of directors shall never be less than three (3).
In addition, and notwithstanding the preceding sentence,
the number of the Corporation's directors shall be in-
creased by or pursuant to the Corporation's By-Laws to a
number greater than or equal to three prior to or at the
Corporation's first annual meeting of stockholders (the
"initial annual meeting"). The names of the persons who
shall act as directors until the initial annual meeting
and until their successors are duly elected and qualify
are:
Ralph L. Schlosstein
Laurence D. Fink
Beginning with the initial annual meeting, the
directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall con-
sist, as nearly as may be possible, of one-third of the
total number of directors constituting the entire Board
of Directors. At the initial annual meeting of stock-
holders, Class I directors shall be elected for a one-
year term, Class II directors for a two-year term and
Class III directors for a three-year term. At each
annual meeting of stockholders beginning with the annual
meeting of stockholders next succeeding the initial
annual meeting, successors to the class of directors
whose term expires at that annual meeting shall be
elected for a three-year term. A director elected at an
annual meeting shall hold office until the annual meeting
for the year in which his term expires and until his
successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement, dis-
qualification or removal from office. If the number of
directors is changed, any increase or decrease shall be
apportioned among the classes, as of the annual meeting
of stockholders next succeeding any such change, so as to
maintain a number of directors in each class as nearly
equal as possible. In no case shall a decrease in the
number of directors shorten the term of any incumbent
director. Any vacancy on the Board of Directors that
results from an increase in the number of directors may
be filled by a majority of the entire Board of Directors,
provided that a quorum is present, and any other vacancy
occurring in the Board of Directors may be filled by a
majority of the directors then in office, whether or not
sufficient to constitute a quorum, or by a sole remaining
director; provided, however, that if the stockholders of
any class of the Corporation's capital stock are entitled
separately to elect one or more directors, a majority of
the remaining directors elected by that class or the sole
remaining director elected by that class may fill any
vacancy among the number of directors elected by that
class. A director elected by the Board of Directors to
fill any vacancy in the Board of Directors shall serve
until the next annual meeting of stockholders and until
his successor shall be elected and shall qualify, sub-
ject, however, to prior death, resignation, retirement,
disqualification or removal from office. At any annual
meeting of stockholders, any director elected to fill any
vacancy in the Board of Directors that has arisen since
the preceding annual meeting of stockholders (whether or
not any such vacancy has been filled by election of a new
director by the Board of Directors) shall hold office for
a term which coincides with the remaining term of the
class to which such directorship was previously assigned,
if such vacancy arose other than by an increase in the
number of directors, and until his successor shall be
elected and shall qualify. In the event such vacancy
arose due to an increase in the number of directors, any
director so elected to fill such vacancy at an annual
meeting shall hold office for a term which coincides with
that of the class to which such directorship has been
apportioned as heretofore provided, and until his succes-
sor shall be elected and shall qualify. A director may
be removed for cause only, and not without cause, and
only by action taken by the holders of at least seventy-
five percent (75%) of the shares of capital stock then
entitled to vote in an election of such director.
(2) The Board of Directors of the Corporation
is hereby empowered to authorize the issuance from time
to time of shares of capital stock, whether now or here-
after authorized, for such consideration as the Board of
Directors may deem advisable, subject to such limitations
as may be set forth in these Articles of Incorporation or
in the By-Laws of the Corporation or in the Maryland
General Corporation Law or the 1940 Act.
(3) Each person who at any time is or was a
director or officer of the Corporation shall be indemni-
fied by the Corporation to the fullest extent permitted
by the Maryland General Corporation Law as it may be
amended or interpreted from time to time, including the
advancing of expenses, subject to any limitations imposed
by the 1940 Act and the Rules and Regulations promulgated
thereunder. Furthermore, to the fullest extent permitted
by Maryland law, as it may be amended or interpreted from
time to time, subject to the limitations imposed by the
1940 Act and the Rules and Regulations promulgated there-
under, no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders.
No amendment of the Charter of the Corporation or repeal
of any of its provisions shall limit or eliminate any of
the benefits provided to any person who at any time is or
was a director or officer of the Corporation under this
Section in respect of any act or omission that occurred
prior to such amendment or repeal.
(4) The Board of Directors of the Corporation
shall have the exclusive authority to make, alter or
repeal from time to time any of the By-Laws of the Corpo-
ration except any particular By-Law which is specified as
not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the 1940 Act
and the Rules and Regulations promulgated thereunder.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No stockholder of the Corporation shall by
reason of his holding shares of capital stock have any
preemptive or preferential right to purchase or subscribe
to any shares of capital stock of the Corporation, now or
hereafter authorized, or any notes, debentures, bonds or
other securities convertible into shares of capital
stock, now or hereafter to be authorized, whether or not
the issuance of any such shares of capital stock, or
notes, debentures, bonds or other securities would ad-
versely affect the dividend or voting rights of such
stockholder; and the Board of Directors may issue shares
of any class of capital stock of the Corporation, or any
notes, debentures, bonds, or other securities convertible
into shares of any class of capital stock of the Corpora-
tion, either, whole or in part, to the existing stock-
holders.
ARTICLE VIII
CERTAIN VOTES OF STOCKHOLDERS
(1) Except as otherwise provided in these
Articles of Incorporation and notwithstanding any provi-
sion of the Maryland General Corporation Law (other than
Sections 3-601 through 3-603 of the Maryland General
Corporation Law or any successors thereto) requiring
approval by the stockholders (or any class of stockhold-
ers) of any action by the affirmative vote of a greater
proportion than a majority of the votes entitled to be
cast on the matter, any such action may be taken or
authorized upon the concurrence of a majority of the
number of votes entitled to be cast thereon (or a majori-
ty of the votes entitled to be cast thereon as a separate
class).
(2) Notwithstanding the terms of Section 3-603
(e)(1)(iv) of the Maryland General Corporation Law (or
any successor thereto) and the provisions of Section (1)
of this Article VIII, the Corporation hereby expressly
elects to be subject to the requirements of Section 3-602
of the Maryland General Corporation Law. The amendment,
alteration, modification, or repeal of this Section (2)
of Article VIII of these Articles of Incorporation shall
require the vote specified in Section 3-602 of the Mary-
land General Corporation Law.
ARTICLE IX
DETERMINATION BINDING
Any determination made in good faith, so far as
accounting matters are involved, in accordance with
accepted accounting practice by or pursuant to the au-
thority of the direction of the Board of Directors, as to
the amount of assets, obligations or liabilities of the
Corporation, as to the amount of net income of the Corpo-
ration from dividends and interest for any period or
amounts at any time legally available for the payment of
dividends, as to the amount of any reserves or charges
set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alter-
ation or cancellation of any reserves or charges (whether
or not any obligation or liability for which such re-
serves or charges shall have been created, shall have
been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the price of
any security owned by the Corporation or as to any other
matters relating to the issuance, sale, redemption or
other acquisition or disposition of securities or shares
of capital stock of the Corporation, and any reasonable
determination made in good faith by the Board of Direc-
tors shall be final and conclusive, and shall be binding
upon the Corporation and all holders of its capital
stock, past, present and future, and shares of the capi-
tal stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of
shares of capital stock or acceptance of share certifi-
cates, that any and all such determinations shall be
binding as aforesaid. No provision of these Articles of
Incorporation shall be effective to (a) require a waiver
of compliance with any provision of the Securities Act of
1933, as amended, or the 1940 Act, or of any valid rule,
regulation or order of the Securities and Exchange Com-
mission thereunder or (b) protect or purport to protect
any director or officer of the Corporation against any
liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
ARTICLE X
PRIVATE PROPERTY OF STOCKHOLDERS
The private property of stockholders shall not
be subject to the payment of corporate debts to any
extent whatsoever.
ARTICLE XI
LIMITED TERM OF EXISTENCE
The Corporation shall have a limited period of
existence and shall cease to exist at the close of busi-
ness on December 31, 1998, except that the Corporation
shall continue to exist for the purpose of paying, satis-
fying, and discharging any existing debts or obligations,
collecting and distributing its assets, and doing all
other acts required to liquidate and wind up its business
and affairs. After the close of business on December 31,
1998, if the Corporation has not liquidated and wound up
its business and affairs, the directors shall become
trustees of the Corporation's assets for purposes of
liquidation with the full powers granted to directors of
a corporation which has voluntarily dissolved under
Subtitle 4 of Title 3 of the Maryland General Corporation
Law or any successor statute as are necessary to liqui-
date the Corporation and wind up its affairs, but in no
event with lesser powers than the powers granted by such
subtitle granted under the Maryland General Corporation
Law as of the date of incorporation of the Corporation.
The Board of Directors may, to the extent it
deems it appropriate, adopt a plan of termination at any
time during the twelve months immediately preceding
December 31, 1998, which plan of termination may set
forth the terms and conditions for implementing the
termination of the Corporation's existence under this
Article XI. Stockholders of the Corporation shall not be
entitled to vote on the adoption of any such plan or the
termination of the Corporation's existence under this
Article XI.
ARTICLE XII
CONVERSION TO OPEN-END COMPANY
Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the Corpora-
tion, a favorable vote of a majority of the total number
of directors fixed in accordance with the By-Laws of the
Corporation and the favorable vote of the holders of at
least seventy-five percent (75%) of the shares of capital
stock of the Corporation entitled to be voted on the
matter shall be required to approve, adopt or authorize
an amendment to these Articles of Incorporation that
makes the Common Stock or any other class of capital
stock a "redeemable security" as that term is defined in
the 1940 Act.
The Corporation shall notify the holders of all
shares of capital stock of the approval, in accordance
with the preceding paragraph of this Article XII, of any
amendment to these Articles of Incorporation that makes
the Common Stock a "redeemable security" (as that term is
defined in the 1940 Act) no later than thirty (30) days
prior to the date of filing of such amendment with the
Department of Assessments and Taxation (or any successor
agency) of the State of Maryland; such amendment may not
be so filed, however, until the later of (a) ninety (90)
days following the date of approval of such amendment by
the holders of shares of capital stock in accordance with
the preceding paragraph of this Article XII and (b) the
next January 1 or July 1, whichever is sooner, following
the date of such approval by holders of shares of capital
stock.
ARTICLE XIII
AMENDMENT
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in these
Articles of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reserva-
tion. Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the Corpora-
tion (and notwithstanding the fact that a lesser percent-
age may be specified by law, these Articles of Incorpora-
tion or the By-Laws of the Corporation), the amendment or
repeal of Section (1), Section (3), or Section (4) of
Article VI, Section (1) of Article VIII, Article X,
Article XI, Article XII or this Article XIII of these
Articles of Incorporation shall require the affirmative
vote of the holders of at least seventy-five percent
(75%) of the shares then entitled to be voted on the
matter.
IN WITNESS WHEREOF, the undersigned incorpora-
tor of The BlackRock 1998 Term Fund Inc. hereby executes
the foregoing Articles of Incorporation and acknowledges
the same to be his act and further acknowledges that, to
the best of his knowledge, the matters and facts set
forth therein are true in all material respects under the
penalties of perjury.
Dated the 15th day of May, 1996.
/s/ John R. Mentzer
John R. Mentzer
THE BLACKROCK 1998 TERM FUND, INC.
ARTICLES OF AMENDMENT
The BlackRock 1998 Term Fund, Inc., a Maryland
corporation (the "Corporation"), hereby certifies as
follows:
FIRST: The Charter of the Corporation is
amended hereby by deleting the provisions of Article II
and Article (V)(1) thereof in their entirety and insert-
ing in lieu of such provisions the following:
Article II
NAME
The name of the Corporation is BBT Subsidiary Inc
Article V
CAPITAL STOCK
(1): the total number of shares of capital
stock of all classes that the Corporation shall
have authority to issue is FIVE HUNDRED MILLION
(500,000,000) shares, each having a par value
of $0.01, all which shall be designated as
Common Stock. The aggregate par value of all
shares of the capital stock of all classes that
the Corporation shall have authority to issue
is $5,000,000.
SECOND: The Board of Directors of the Corpora-
tion has adopted resolutions which declared the foregoing
amendment to the Charter of the Corporation set forth in
these Articles of Amendment to be advisable and approved
the same.
THIRD: No shares of the capital stock of the
Corporation entitled to be voted upon the foregoing
amendment to the Charter of the Corporation had been
issued by the Corporation or were outstanding or sub-
scribed for at the time of the approval of the foregoing
amendment to the Charter of the Corporation by the Board
of Directors.
FOURTH: (a) The foregoing amendment to the
Charter of the Corporation increases the authorized
capital stock of the Corporation. The total number of
shares of stock of all classes which the Corporation had
authority to issue immediately before the amendment to
the Charter of the Corporation set forth herein was
2,000,000 shares, all of one class known as Common Stock,
each having a par value of $0.01, and the aggregate par
value of all of the shares of the capital stock that the
Corporation had authority to issue was $20,000. Effec-
tive upon the effectiveness of the amendment set forth
herein, the total number of shares of capital stock of
all classes that the Corporation shall have authority to
issue shall be increased to five hundred million
(500,000,000) shares, each having a par value of $0.01,
all of which are designated as Common Stock, and the
aggregate par value of all shares of the capital stock of
all classes that the Corporation shall have authority to
issue shall be $5,000,000.
(b) The preferences, conversion and other
rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of
redemption of the authorized shares of the capital stock
of the Corporation will not be changed by the foregoing
amendment to the Charter of the Corporation.
IN WITNESS WHEREOF, The BlackRock 1998 Term
Fund, Inc. has caused these Articles of Amendment and
Restatement to be executed in its name and on its behalf
by its President and its corporate seal to be affixed and
attested to by its Secretary as of the ______ day of
July, 1996.
ATTEST: _________________________________
_________________________ By_________________________(SEAL)
_________________________ _______________________________
Secretary President
The undersigned, being the duly elected and acting
President of The BlackRock 1998 Term Fund, Inc. hereby ac-
knowledges that the foregoing Articles of Amendment, of which
this certificate is a part, is the act and deed of such corpo-
ration, and certifies, under the penalties for perjury, to the
best of his knowledge, information and belief, that all mat-
ters and facts set forth therein are true in all material
respects.
__________________________________
__________________________________
President
BY-LAWS
OF
THE BLACKROCK 1998 TERM FUND INC
ARTICLE I
Offices
Section 1. Principal Office. The principal
office of the Corporation shall be in the City of Balti-
more, State of Maryland.
Section 2. Principal Executive Office. The
principal executive offices of the Corporation shall be
at One Seaport Plaza, New York, New York 10292.
Section 3. Other Offices. The Corporation may
have such other offices in such places as the, Board of
Directors may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. An annual meeting
of the stockholders of the Corporation for the election
of directors and for the transaction of such other busi-
ness as may properly be brought before the meeting shall
be held in May of each year.
Section 2. Special Meetings. Special meetings
of the stockholders, unless otherwise provided by law or
by the Articles of Incorporation, may be called for any
purpose or purposes by a majority of the Board of Direc-
tors, the President, or on the written request of the
holders of at least 25% of the outstanding capital stock
of the Corporation entitled to vote at such meeting.
Section 3. Place of Meetings. Annual and
special meetings of the stockholders shall be held at
such place within the United States as the Board of
Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of
Notice. Notice of the place, date and time of the hold-
ing of each annual and special meeting of the stockhold-
ers and the purpose or purposes of each special meeting
shall be given personally or by mail, not less than ten
nor more than ninety days before the date of such meet-
ing, to each stockholder entitled to vote at such meeting
and to each other stockholder entitled to notice of the
meeting. Notice by mail shall be deemed to be duly given
when deposited in the United States mail addressed to the
stockholder at his address as it appears on the records
of the Corporation, with postage thereon prepaid.
Notice of any meeting of stockholders shall be
deemed waived by any stockholder who shall attend such
meeting in person or by proxy, or who shall, either
before or after the meeting, submit a signed waiver of
notice which is filed with the records of the meeting.
When a meeting is adjourned to another time and place,
unless the Board of Directors, after the adjournment,
shall fix a new record date for an adjourned meeting, or
the adjournment is for more than one hundred and twenty
days after the original record date, notice of such
adjourned meeting need not be given if the time and place
to which the meeting shall be adjourned were announced at
the meeting at which the adjournment is taken.
Section 5. Quorum. At all meetings of the
stockholders, the holders of a majority of the shares of
stock of the Corporation entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum
for the transaction of any business, except as otherwise
provided by statute or by the Articles of Incorporation.
In the absence of a quorum no business may be transacted,
except that the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote
may adjourn the meeting from time to time, without notice
other than announcement thereat except as otherwise
required by these By-Laws, until the holders of the
requisite amount of shares of stock shall be so present.
At any such adjourned meeting at which a quorum may be
present any business may be transacted which might have
been transacted at the meeting as originally called. The
absence from any meeting, in person or by proxy, of
holders of the number of shares of stock of the Corpora-
tion in excess of a majority thereof which may be re-
quired by the laws of the State of Maryland, the Invest-
ment Company Act of 1940, as amended, or other applicable
statute, the Articles of Incorporation, or these By-Laws,
for action upon any given matter shall not prevent action
at such meeting upon any other matter or matters which
may properly come before the meeting, if there shall be
present thereat, in person or by proxy, holders of the
number of shares of stock of the Corporation required for
action in respect of such other matter or matters.
Section 6. Organization. At each meeting of
the stockholders, the Chairman of the Board (if one has
been designated by the Board), or in the Chairman of the
Board's absence or inability to act, the President, or in
the absence or inability of the Chairman of the Board and
the President, a Vice President, shall act as chairman of
the meeting. The Secretary, or in the Secretary's ab-
sence or inability to act, any person appointed by the
chairman of the meeting, shall act as secretary of the
meeting and keep the minutes thereof.
Section 7. Order of Business. The order of
business at all meetings of the stockholders shall be as
determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise pro-
vided by statute or the Articles of Incorporation, each
holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of
the stockholders to one vote for every share of such
stock standing in such stockholder's name on the record
of stockholders of the Corporation as of the record date
determined pursuant to Section 9 of this Article or if
such record date shall not have been so fixed, then at
the later of (i) the close of business on the day on
which notice of the meeting is mailed or (ii) the thirti-
eth day before the meeting.
Each stockholder entitled to vote at any meet-
ing of stockholders may authorize another person or
persons to act for him by a proxy signed by such stock-
holder or his attorney-in-fact. No proxy shall be valid
after the expiration of eleven months from the date
thereof, unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the stock-
holder executing it, except in those cases where such
proxy states that it is irrevocable and where an irrevo-
cable proxy is permitted by law. Except as otherwise
provided by statute, the Articles of Incorporation or
these ByLaws, any corporate action to be taken by vote of
the stockholders shall be authorized by a majority of the
total votes cast at a meeting of stockholders by the
holders of shares present in person or represented by
proxy and entitled to vote on such action.
If a vote shall be taken on any question other
than the election of directors, which shall be by written
ballot, then unless required by statute or these By-Laws,
or determined by the chairman of the meeting to be advis-
able, any such vote need not be by ballot. On a vote by
ballot, each ballot shall be signed by the stockholder
voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
Section 9. Fixing of Record Date. The Board
of Directors may set a record date for the purpose of
determining stockholders entitled to vote at any meeting
of the stockholders. The record date, which may not be
prior to the close of business on the day the record date
is fixed, shall be not more than ninety nor less than ten
days before the date of the meeting of the stockholders.
All persons who were holders of record of shares at such
time, and not others, shall be entitled to vote at such
meeting and any adjournment thereof.
Section 10. Inspectors. The Board may, in
advance of any meeting of stockholders, appoint one or
more inspectors to act at such meeting or any adjournment
thereof. If the inspector shall not be so appointed or
if any of them shall fail to appear or act, the chairman
of the meeting may, and on the request of any stockholder
entitled to vote thereat shall, appoint inspectors. Each
inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully
the duties of inspector at such meeting with strict
impartiality and according to the best of his ability.
The inspectors shall determine the number of shares
outstanding and the voting powers of each, the number of
shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots
or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness
to all stockholders. On request of the chairman of the
meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any chal-
lenge, request or matter determined by them and shall
execute a certificate of any fact found by them. No
director or candidate for the office of director shall
act as inspector of an election of directors. Inspectors
need not be stockholders.
Section 11. Consent of Stockholders in Lieu of
Meeting. Except as otherwise provided by statute or the
Articles of Incorporation, any action required to be
taken at any annual or special meeting of stockholders,
or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if the
following are filed with the records of stockholders
meetings: (i) a unanimous written consent which sets
forth the action and is signed by each stockholder enti-
tled to vote on the matter and (ii) a written waiver of
any right to dissent signed by each stockholder entitled
to notice of the meeting but not entitled to vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. Except as other-
wise provided in the Articles of Incorporation, the
business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. All
powers of the Corporation may be exercised by or under
authority of the Board of Directors except as conferred
on or reserved to the stockholders by law or by the
Articles of Incorporation or these By-Laws.
Section 2. Number of Directors. The number of
directors shall be fixed from time to time by resolution
of the Board of Directors adopted by a majority of the
Directors then in office; provided, however, that the
number of directors shall in no event be less than two
nor more than nine. Any vacancy created by an increase
in Directors may be filled in accordance with Section 6
of this Article III. No reduction in the number of
directors shall have the effect of removing any director
from office prior to the expiration of his term. Direc-
tors need not be stockholders.
Section 3. Election and Term of Directors.
Each class of Directors as to which vacancies exist shall
be elected by written ballot at the annual meeting of
stockholders, or a special meeting held for that purpose
unless otherwise provided by statute or the Articles of
Incorporation. The term of office of each director shall
be from the time of his election and qualification until
the expiration of the term of his class or until the
annual election of directors next succeeding his election
and until his successor shall have been elected and shall
have qualified, or until his death, or until he shall
have resigned, or have been removed as hereinafter pro-
vided in these By-Laws, or as otherwise provided by
statute or the Articles of Incorporation.
Section 4. Resignation. A director of the
Corporation may resign at any time by giving written
notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such
resignation shall take effect at the time specified
therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its
receipt; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to
make it effective.
Section 5. Removal of Directors. Any director
of the Corporation may be removed for cause (but not
without cause) by the stockholders by a vote of
seventyfive percent (75%) of the votes entitled to be
cast for the election of directors.
Section 6. Vacancies. Subject to the provi-
sions of the Investment Company Act of 1940, as amended,
any vacancies in the Board, whether arising from death,
resignation, removal, an increase in the number of direc-
tors or any other cause, shall be filled by a vote of the
Board of Directors in accordance with the Articles of
Incorporation.
Section 7. Place of Meetings. Meetings of
the Board may be held at such place as the Board may from
time to time determine or as shall be specified in the
notice of such meeting.
Section 8. Regular Meeting. Regular meetings
of the Board may be held without notice at such time and
place as may be determined by the Board of Directors.
Section 9. Special Meetings. Special meetings
of the Board may be called by two or more directors of
the Corporation or by the Chairman of the Board or the
President.
Section 10. Annual Meeting. The annual
meeting of each newly elected Board of Directors (includ-
ing a Board of Directors to which only one class of
Directors has been newly elected) shall be held as soon
as practicable after the meeting of stockholders at which
directors were elected. No notice of such annual meeting
shall be necessary if held immediately after the adjourn-
ment, and at the site, of the meeting of stockholders. If
not so held, notice shall be given as hereinafter provid-
ed for special meetings of the Board of Directors.
Section 11. No Notice of Special Meetings.
Notice of each special meeting of the Board shall be
given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting.
Notice of each such meeting shall be delivered to each
director, either personally or by telephone or any stan-
dard form of telecommunication, at least twenty-four
hours before the time at which such meeting is to be
held, or mailed by first-class mail, postage prepaid,
addressed to him at his residence or usual place of
business, at least three days before the day on which
such meeting is to be held.
Section 12. Waiver of Notice of Meetings.
Notice of any special meeting need not be given to any
director who shall, either before or after the meeting,
sign a written waiver of notice which is filed with the
records of the meeting or who shall attend such meeting.
Except as otherwise specifically required by these By-
Laws, a notice or waiver of notice of any meeting need
not state the purpose of such meeting.
Section 13. Quorum and Voting. One-third, but
not less than two, of the members of the entire Board
shall be present in person at any meeting of the Board in
order to constitute a quorum for the transaction of
business at such meeting, and except as otherwise ex-
pressly required by statute, the Articles of Incorpora-
tion, these By-Laws, the Investment Company Act of 1940,
as amended, or other applicable statute, the act of a
majority of the directors present at any meeting at which
a quorum is present shall be the act of the Board; pro-
vided, however, that the approval of any contract with an
investment adviser or principal underwriter, as such
terms are defined in the Investment Company Act of 1940,
as amended, which the Corporation enters into or any
renewal or amendment thereof, the approval of the fideli-
ty bond required by the Investment Company Act of 1940,
as amended, and the selection of the Corporation's inde-
pendent public accountants shall each require the affir-
mative vote of a majority of the directors who are not
interested persons, as defined in the Investment Company
Act of 1940, as amended, of the Corporation. In the
absence of a quorum at any meeting of the Board, a major-
ity of the directors present thereat may adjourn such
meeting to another time and place until a quorum shall be
present thereat. Notice of the time and place of any
such adjourned meeting shall be given to the directors
who were not present at the time of the adjournment and,
unless such time and place were announced at the meeting
at which the adjournment was taken, to the other direc-
tors. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have
been transacted at the meeting as originally called.
Section 14. Organization. The Board may, by
resolution adopted by a majority of the entire Board,
designate a Chairman of the Board, who shall preside at
each meeting of the Board. In the absence or inability
of the Chairman of the Board to preside at a meeting, the
President or, in his absence or inability to act, another
director chosen by a majority of the directors present,
shall act as chairman of the meeting and preside thereat.
The Secretary (or, in his absence or inability to act,
any person appointed by the Chairman) shall act as secre-
tary of the meeting and keep the minutes thereof.
Section 15. Written Consent of Directors in
Lieu of a Meeting. Subject to the provisions of the
Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writ-
ing, and the writings or writing are filed with the
minutes of the proceedings of the Board or committee.
Section 16. Compensation. Directors may
receive compensation for services to the Corporation in
their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by
the Board.
Section 17. Investment Policies. It shall be
the duty of the Board of Directors to ensure that the
purchase, sale, retention and disposal of portfolio
securities and the other investment practices of the
Corporation are at all times consistent with the invest-
ment policies and restrictions with respect to securities
investments and otherwise of the Corporation, as recited
in the Prospectus included in the registration statement
of the Corporation covering the initial public offering
of shares of its capital stock, as filed with the Securi-
ties and Exchange Commission (or as such investment
policies and restrictions may be modified by the Board of
Directors or, if required, by majority vote of the stock-
holders of the Corporation in accordance with the Invest-
ment Company Act of 1940, as amended) and as required by
the Investment Company Act of 1940, as amended. The
Board, however, may delegate the duty of management of
the assets and the administration of its day to day
operations to one or more individuals or corporate man-
agement companies and/or investment advisers pursuant to
a written contract or contracts which have obtained the
requisite approvals, including the requisite approvals of
renewals thereof, of the Board of Directors and/or the
stockholders of the Corporation in accordance with the
provisions of the Investment Company Act of 1940, as
amended.
Section 18. Asset Value. The Board of Direc-
tors shall determine the times and method of calculation
of the net asset value per share of the Fund subject to
conditions with the requirements of the 1940 Act.
ARTICLE IV
Committees
Section 1. Committees of the Board. The Board
of Directors may from time to time, by resolution adopted
by a majority of the whole Board, designate one or more
committees of the Board, each such committee to consist
of two or more directors and to have such powers and
duties as the Board of Directors may, by resolution,
prescribe.
Section 2. General. One-third, but not less
than two, of the members of any committee shall be pres-
ent in person at any meeting of such committee in order
to constitute a quorum for the transaction of business at
such meeting, and the act of a majority present shall be
the act of such committee. The Board may designate a
chairman of any committee and such chairman or any two
members of any committee may fix the time and place of
its meetings unless the Board shall otherwise provide.
In the absence or disqualification of any member of any
committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified
member. The Board shall have the power at any time to
change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any
absent or disqualified member, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the
Board from appointing one or more committees consisting
in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such commit-
tee shall have or may exercise any authority or power of
the Board in the management of the business or affairs of
the Corporation.
ARTICLE V
Officers, Agents and Employees
Section 1. Number of Qualifications. The
officers of the Corporation shall be a President, who
shall be a director of the Corporation, a Secretary and a
Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint
one or more Vice Presidents and may also appoint such
other officers, agents and employees as it may deem
necessary or proper. Any two or more offices may be held
by the same person, except the offices of President and
Vice President, but no officer shall execute, acknowledge
or verify any instrument as an officer in more than one
capacity. Such officers shall be elected by the Board of
Directors each year at its first meeting held after the
annual meeting of stockholders, each to hold office until
the meeting of the stockholders and until his successor
shall have been duly elected and shall have qualified, or
until his death, or until he shall have resigned, or have
been removed, as hereinafter provided in these By-Laws.
The Board may from time to time elect, or delegate to the
President the power to appoint, such officers (including
one or more Assistant Vice Presidents, one or more Assis-
tant Treasurers and one or more Assistant Secretaries)
and such agents, as may be necessary or desirable for the
business of the Corporation. Such officers and agents
shall have such duties and shall hold their offices for
such terms as may be prescribed by the Board or by the
appointing authority.
Section 2. Resignations. Any officer of the
Corporation may resign at any time by giving written
notice of resignation to the Board, the Chairman of the
Board, President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if
the time when it shall become effective shall not be
specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of
such resignation shall be necessary to make it effective.
Section 3. Removal of Officer, Agent or Em-
ployee. Any officer, agent or employee of the Corpora-
tion may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate
such power of removal as to agents and employees not
elected or appointed by the Board of Directors. Such
removal shall be without prejudice to such person's
contract rights, if any, but the appointment of any
person as an officer, agent or employee of the Corpora-
tion shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any of-
fice, either arising from death, resignation, removal or
any other cause, may be filled for the unexpired portion
of the term of the office which shall be vacant, in the
manner prescribed in these By-Laws for the regular elec-
tion or appointment to such office.
Section 5. Compensation. The compensation of
the officers of the Corporation shall be fixed by the
Board of Directors, but this power may be delegated to
any officer in respect of other officers under his con-
trol.
Section 6. Bonds or Other Security. If re-
quired by the Board, any officer, agent or employee of
the Corporation shall give a bond or other security for
the faithful performance of his duties, in such amount
and with such surety or sureties as the Board may re-
quire.
Section 7. President. The President shall be
the chief executive officer of the Corporation. In the
absence of the Chairman of the Board (or if there be
none), he shall preside at all meetings of the stockhold-
ers and of the Board of Directors. He shall have, sub-
ject to the control of the Board of Directors, general
charge of the business and affairs of the Corporation.
He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the
Board, and he may delegate these powers.
Section 8. Vice President. Each Vice-Presi-
dent shall have such powers and perform such duties as
the Board of Directors or the President may from time to
time prescribe.
Section 9. Treasurer. The Treasurer shall
(a) have charge and custody of, and be
responsible for, all the funds and securities of the
Corporation, except those which the Corporation has
placed in the custody of a bank or trust company or
member of a national securities exchange (as that term is
defined in the Securities Exchange Act of 1934, as amend-
ed) pursuant to a written agreement designating such bank
or trust company or member of a national securities
exchange as a custodian or sub-custodian of the property
of the Corporation;
(b) keep full and accurate accounts of
receipts and disbursements in books belonging to the
Corporation;
(c) cause all moneys and other valuables
to be deposited to the credit of the Corporation;
(d) receive, and give receipts for,
moneys due and payable, to the Corporation from any
source whatsoever;
(e) disburse the funds of the Corporation
and supervise the investment of its funds as ordered or
authorized by the Board, taking proper vouchers therefor;
and
(f) in general, perform all the duties
incident to the office of Treasurer and such other duties
as from time to time may be assigned to him by the Board
or the President.
Section 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or
more books provided for the purpose, the minutes of all
meetings of the Board, the committees of the Board and
the stockholders;
(b) see that all notices are duly given
in accordance with the provisions of these By-Laws and as
required by law;
(c) be custodian of the records and the
seal of the Corporation and affix and attest the seal to
all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest
the seal to all other documents to be executed on behalf
of the Corporation under its seal;
(d) see that the books, reports, state-
ments, certificates and other documents and records
required by law to be kept and filed are properly kept
and filed; and
(e) in general, perform all the duties
incident to the office of Secretary and such other duties
as from time to time may be assigned to him by the Board
or the President.
Section 11. Delegation of Duties. In case of
the absence of any officer of the Corporation, or for any
other reason that the Board may deem sufficient, the
Board may confer for the time being the powers or duties,
or any of them, of such officer upon any other officer or
upon any director.
ARTICLE VI
Indemnification
Each officer and director of the Corporation
shall be indemnified by the Corporation to the full
extent permitted under the General Laws of the State of
Maryland, including the advancing of expenses, except
that such indemnity shall not protect any such person
against any liability to the Corporation or any stock-
holder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his office. Absent a court
determination that an officer or director seeking indem-
nification was not liable on the merits or guilty of
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his office, the decision by the Corporation to indem-
nify such person must be based upon the reasonable deter-
mination of independent counsel or nonparty independent
directors, after review of the facts, that such officer
or director is not guilty of willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Corporation may purchase insurance on
behalf of an officer or director protecting such person
to the full extent permitted under the General Laws of
the State of Maryland, from liability arising from his
activities as officer or director of the Corporation.
The Corporation, however, may not purchase insurance on
behalf of any officer or director of the Corporation that
protects or purports to protect such person from liabili-
ty to the Corporation or to its stockholders to which
such officer or director would otherwise be subject by
reason of willful misfeasance, bad faith, gross negli-
gence, or reckless disregard of the duties involved in
the conduct of his office.
The Corporation may indemnify or purchase
insurance to the extent provided in this Article VI on
behalf of an employee or agent who is not an officer or
director of the Corporation.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. Each holder of
stock of the Corporation shall be entitled upon request
to have a certificate or certificates, in such form as
shall be approved by the Board, representing the number
of shares of the Corporation owned by him, provided,
however, that certificates for fractional shares will not
be delivered in any case. The certificates representing
shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by
the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer and sealed with the seal of the
Corporation. Any or all of the signatures or the seal on
the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or
registrar before such certificate shall be issued, it may
be issued by the Corporation with the same effect as if
such officer, transfer agent or registrar were still in
office at the date of issue.
Section 2. Stockholders. There shall be kept
at the principal executive office of the Corporation
correct and complete books and records of account of all
the business and transactions of the Corporation. There
shall be made available upon request of any stockholder,
in accordance with Maryland law, a record containing the
number of shares of stock issued during a specified
period not to exceed twelve months and the consideration
received by the Corporation for each such share.
Section 3. Transfers of Shares. Transfers of
shares of stock of the Corporation shall be made on the
stock records of the Corporation only by the registered
holder thereof, or by his attorney thereunto authorized
by power of attorney duly executed and filed with the
Secretary or with a transfer agent or transfer clerk, and
on surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied
by a duly executed stock transfer power and the payment
of all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the
exclusive rights of a person in whose name any share or
shares stand on the record of stockholders as the owner
of such share or shares for all purposes, including,
without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, and the
Corporation shall not be bound to recognize any equitable
or legal claim to or interest in any such share or shares
on the part of any other person.
Section 4. Regulations. The Board may take
such additional rules and regulations, not inconsistent
with these By-Laws, as it may deem expedient concerning
the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint, or
authorize any officer or officers to appoint, one or more
transfer agents or one or more transfer clerks and one or
more registrars and may require all certificates for
shares of stock to bear the signature or signatures of
any of them.
Section 5. Lost, Destroyed or Mutilated Cer-
tificates. The holder of any certificates representing
shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or muti-
lation of such certificate, and the Corporation may issue
a new certificate of stock in the place of any certifi-
cate theretofore issued by it which the owner thereof
shall allege to have been lost or destroyed or which
shall have been mutilated, and the Board may, in its
discretion, require such owner or his legal representa-
tives to give to the Corporation a bond in such sum,
limited or unlimited, and in such form and with such
surety or sureties, as the Board in its absolute discre-
tion shall determine, to indemnify the Corporation
against any claim that may be made against it on account
of the alleged loss or destruction of any such certifi-
cate, or issuance of a new certificate. Anything herein
to the contrary notwithstanding, the Board, in its abso-
lute discretion, may refuse to issue any such new certif-
icate, except pursuant to legal proceedings under the
laws of the State of Maryland.
Section 6. Fixing of a Record Date for Divi-
dends and Distributions. The Board may fix, in advance,
a date not more than ninety days preceding the date fixed
for the payment of any dividend or the making of any
distribution. Once the Board of Directors fixes a record
date as the record date for the determination of the
stockholders entitled to receive any such dividend or
distribution, in such case only the stockholders of
record at the time so fixed shall be entitled to receive
such dividend or distribution.
Section 7. Information to Stockholders and
Others. Any stockholder of the Corporation or his agent
may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its
stockholders, annual statements of its affairs, and
voting trust agreements on file at its principal office.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular
in form and shall bear, in addition to any other emblem
or device approved by the Board of Directors, the name of
the Corporation, the year of its incorporation and the
words "Corporate Seal" and "Maryland". Said seal may be
used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board, the
fiscal year of the Corporation shall end on the 31st day
of December.
ARTICLE X
Depositories and Custodians
Section 1. Depositories. The funds of the
Corporation shall be deposited with such banks or other
depositories as the Board of Directors of the Corporation
may from time to time determine.
Section 2. Custodians. All securities and
other investments shall be deposited in the safe keeping
of such banks or other companies as the Board of Direc-
tors of the Corporation may from time to time determine.
Every arrangement entered into with any bank or other
company for the safe keeping of the securities and in-
vestments of the Corporation shall contain provisions
complying with the Investment Company Act of 1940, as
amended, and the general rules and regulations thereun-
der.
ARTICLE XI
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc.
Checks, notes, drafts, acceptances, bills of exchange and
other orders or obligations for the payment of money
shall be signed by such officer or officers or person or
persons as the Board of Directors by resolution shall
from time to time designate.
Section 2. Sale or Transfer of Securities.
Stock certificates, bonds or other securities at any time
owned by the Corporation may be held on behalf of the
Corporation or sold, transferred or otherwise disposed of
subject to any limits imposed by these By-Laws and pursu-
ant to authorization by the Board and, when so authorized
to be held on behalf of the Corporation, or sold, trans-
ferred or otherwise disposed of, may be transferred from
the name of the Corporation by the signature of the
President or a Vice President or the Treasurer or pursu-
ant to any procedure approved by the Board of Directors,
subject to applicable law.
ARTICLE XII
Independent Public Accountants
The firm of independent public accountants
which shall sign or certify the financial statements of
the Corporation which are filed with the Securities and
Exchange Commission shall be selected annually by the
Board of Directors and ratified by the stockholders in
accordance with the provisions of the Investment Company
Act of 1940, as amended.
ARTICLE XIII
Annual Statement
The books of account of the Corporation shall
be examined by an independent firm of public accountants
at the close of each annual period of the Corporation and
at such other times as may be directed by the Board. A
report to the stockholders based upon each such examina-
tion shall be mailed to each stockholder of the Corpora-
tion of record on such date with respect to each report
as may be determined by the Board, at his address as the
same appears on the books of the Corporation. Such
annual statement shall also be available at the annual
meeting of stockholders and be placed on file at the
Corporation's principal office in the State of Maryland.
Each such report shall show the assets and liabili-
ties of the Corporation as of the close of the annual or
quarterly period covered by the report and the Securities
in which the funds of the Corporation were then invested.
Such report shall also show the Corporation's income and
expenses for the period from the end of the Corporation's
preceding fiscal year to the close of the annual or
quarterly period covered by the report and any other
information required by the Investment Company Act of
1940, as amended, and shall set forth such other matters
as the Board or such firm of independent public accoun-
tants shall determine.
ARTICLE XIV
Amendments
The Board of Directors, by affirmative vote of
a majority thereof, shall have the exclusive right to
amend, alter or repeal these By-Laws at any regular or
special meeting of the Board of Directors, except any
particular By-Law which is specified as not subject to
alteration or repeal by the Board of Directors, subject
to the requirements of the Investment Company Act of
1940, as amended.
BBT SUBSIDIARY INC.
The Corporation will furnish without charge to each stockholder who
so requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof of
the Corporation, and the qualifications, limitations, or restrictions of such
preferences and/or rights. The Corporation will also furnish without charge to
each stockholder who so requests a description of the authority of the
Corporation's board of directors to set the relative rights and preferences of
unissued series of the Corporation's capital stock. Such requests may be made
to the Corporation or the transfer agent.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT- Custodian
TEN ENT -as tenants by the (Cust) (Minor)
entireness under Uniform Gifts to
JT TEN -as joint tenants Minors Act
with right of
survivorship and
not as tenants
in common ---------------------------
(State)
Additional abbreviations may also be used through
not in the above list.
For value received, ________________________________________
hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- --------------------------------------------------------------------- Shares
of the Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
- ----------------------------------------------------------------------------
Attorney to transfer the said Stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated: ________________________
---------------------------------
Signature
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
COMMON STOCK
PAR VALUE $.01 Shares
INCORPORATED UNDER THE LAWS
OF THE STATE OF MARYLAND
THIS CERTIFICATE
IS TRANSFERABLE IN
BOSTON, MA OR IN
NEW YORK, NY
CUSIP ____________
SEE REVERSE FOR CERTAIN
DEFINITIONS
BBT SUBSIDIARY INC.
THIS CERTIFIES THAT
IS THE OWNER OF
FULL PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
BBT Subsidiary Inc., transferable on the books of the Corporation
by the holder hereof in person or by duly authorized attorney upon surrender
of this Certificate properly endorsed. This Certificate and the shares
represented hereby are issued and shall be subject to all of the provisions of
the Articles of Incorporation and By-Laws of the Corporation, such as from
time to time amended, to all of which the holder by acceptance hereof assents.
This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED
STATE STREET BANK and
TRUST COMPANY
BOSTON
TRANSFER AGENT
AND REGISTRAR
AUTHORIZED SIGNATURE
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated May __, 1996, between BBT
Subsidiary Inc. (the "Fund"), a Maryland corporation, and
BlackRock Financial Management, Inc. (the "Adviser"), a
Delaware corporation.
In consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowl-
edged, it is agreed by and between the parties hereto as
follows:
1. In General
The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Fund with
respect to the investment of the Fund's assets and to
supervise and arrange the purchase of securities for and
the sale of securities held in the investment portfolio
of the Fund.
2. Duties and obligations of the Adviser with
respect to investments of assets of the Fund
(a) Subject to the succeeding provisions
of this section and subject to the direction and control
of the Fund's Board of Directors, the Adviser shall (i)
act as investment adviser for and supervise and manage
the investment and reinvestment of the Fund's assets and
in connection therewith have complete discretion in
purchasing and selling securities and other assets for
the Fund and in voting, exercising consents and exercis-
ing all other rights appertaining to such securities and
other assets on behalf of the Fund; (ii) supervise con-
tinuously the investment program of the Fund and the
composition of its investment portfolio; and (iii) ar-
range, subject to the provisions of paragraph 3 hereof,
for the purchase and sale of securities and other assets
held in the investment portfolio of the Fund.
(b) In the performance of its duties
under this Agreement, the Adviser shall at all times
conform to, and act in accordance with, any requirements
imposed by (i) the provisions of the Investment Company
Act of 1940 (the "Act"), and of any rules or regulations
in force thereunder; (ii) any other applicable provision
of law; (iii) the provisions of the Articles of Incorpo-
ration and By-Laws of the Fund, as such documents are
amended from time to time; (iv) the investment objective
and policies of the Fund as set forth in its Registration
Statement on Form N-2; and (v) any policies and determi-
nations of the Board of Directors of the Fund.
(c) The Adviser will bear all costs and
expenses of its partners and employees and any overhead
incurred in connection with its duties hereunder and
shall bear the costs of any salaries or directors fees of
any officers or directors of the Fund who are affiliated
persons (as defined in the Act) of the Adviser except
that the Board of Directors of the Fund may approve
reimbursement to the Adviser of the pro rata portion of
the salaries, bonuses, health insurance, retirement
benefits and all similar employment costs for the time
spent on Fund operations (other than the provision of
investment advice) of all personnel employed by the
Adviser who devote substantial time to Fund operations or
the operations of other investment companies advised by
the Adviser.
(d) The Adviser shall give the Fund the
benefit of its best judgment and effort in rendering
services hereunder, but the Adviser shall not be liable
for any act or omission or for any loss sustained by the
Fund in connection with the matters to which this Agree-
ment relates, except a loss resulting from willful mis-
feasance, bad faith or gross negligence in the perfor-
mance of its duties, or by reason of its reckless disre-
gard of its obligations and duties under this Agreement.
(e) Nothing in this Agreement shall
prevent the Adviser or any partner, officer, employee or
other affiliate thereof from acting as investment adviser
for any other person, firm or corporation, or from engag-
ing in any other lawful activity, and shall not in any
way limit or restrict the Adviser or any of its partners,
officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or
for the accounts of others for whom it or they may be
acting, provided, however that the Adviser will undertake
no activities which, in its judgment, will adversely
affect the performance of its obligations under this
Agreement.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase and
sale of the Fund's portfolio securities, to employ such
securities dealers as may, in the judgment of the Advis-
er, implement the policy of the Fund to obtain the best
net results taking into account such factors as price,
including dealer spread, the size, type and difficulty of
the transaction involved, the firm's general execution
and operational facilities and the firm's risk in posi-
tioning the securities involved. Consistent with this
policy, the Adviser is authorized to direct the execution
of the Fund's portfolio transactions to dealers and
brokers furnishing statistical information or research
deemed by the Adviser to be useful or valuable to the
performance of its investment advisory functions for the
Fund.
4. Compensation of The Adviser
The Parties to this Agreement agree that the
Adviser will receive compensation for the services it
renders under this Agreement from The BlackRock 1998 Term
Trust Inc.
5. Indemnity
(a) The Fund hereby agrees to indemnify
the Adviser and each of the Adviser's partners, officers,
employees, agents, associates and controlling persons and
the partners, officers, employees and agents thereof
(including any individual who serves at the Adviser's
request as director, officer, partner, trustee or the
like of another corporation) (each such person being an
"indemnitee") against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
(all as provided in accordance with applicable corporate
law) reasonably incurred by such indemnitee in connection
with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any
court or administrative or investigative body in which he
may be or may have been involved as a party or otherwise
or with which he may be or may have been threatened,
while acting in any capacity set forth above in this
Section 5 or thereafter by reason of his having acted in
any such capacity, except with respect to any matter as
to which he shall have been adjudicated not to have acted
in good faith in the reasonable belief that his action
was in the best interest of the Fund and furthermore, in
the case of any criminal proceeding, so long as he had no
reasonable cause to believe that the conduct was unlaw-
ful, provided, however, that (1) no indemnitee shall be
indemnified hereunder against any liability to the Fund
or its shareholders or any expense of such indemnitee
arising by reason of (i) willful misfeasance, (ii) bad
faith, (iii) gross negligence or (iv) reckless disregard
of the duties involved in the conduct of his position
(the conduct referred to in such clauses (i) through (iv)
being sometimes referred to herein as "disabling con-
duct"), (2) as to any matter disposed of by settlement or
a compromise payment by such indemnitee, pursuant to a
consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be
provided unless there has been a determination that such
settlement or compromise is in the best interests of the
Fund and that such indemnitee appears to have acted in
good faith in the reasonable belief that his action as in
the best interest of the Fund and did not involve dis-
abling conduct by such indemnitee and (3) with respect to
any action, suit or other proceeding voluntarily prose-
cuted by any indemnitee as plaintiff, indemnification
shall be mandatory only if the prosecution of such ac-
tion, suit or other proceeding by such indemnitee was
authorized by a majority of the full Board of the Fund.
(b) The Fund shall make advance payments
in connection with the expenses of defending any action
with respect to which indemnification might be sought
hereunder if the Fund receives a written affirmation of
the indemnitee's good faith belief that the standard of
conduct necessary for indemnification has been met and a
written undertaking to reimburse the Fund unless it is
subsequently determined that he is entitled to such
indemnification and if the directors of the Fund deter-
mine that the facts then known to them would not preclude
indemnification. In addition, at least one of the fol-
lowing conditions must be met: (A) the indemnitee shall
provide a security for his undertaking, (B) the Fund
shall be insured against losses arising by reason of any
lawful advances, or (C) a majority of a quorum consisting
of directors of the Fund who are neither "interested
persons" of the Fund (as defined in Section 2(a)(19) of
the Act) nor parties to the proceeding ("Disinterested
Non-Party Directors") or an independent legal counsel in
a written opinion, shall determine, based on a review of
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the indem-
nitee ultimately will be found entitled to indemnifica-
tion.
(c) All determinations with respect to
indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before
whom the proceeding was brought that such indemnitee is
not liable by reason of disabling conduct or, (2) in the
absence of such a decision, by (i) a majority vote of a
quorum of the Disinterested Non-Party Directors of the
Fund, or (ii) if such a quorum is not obtainable or
event, if obtainable, if a majority vote of such quorum
so directs, independent legal counsel in a written opin-
ion. All determinations that advance payments in connec-
tion with the expense of defending any proceeding shall
be authorized shall be made in accordance with the imme-
diately preceding clause (2) above.
The rights accruing to any indemnitee under
these provisions shall not exclude any other right to
which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective on the
date it is approved by the stockholder of the Fund and
shall continue in effect for a period of two years and
thereafter from year to year, but only so long as such
continuation is specifically approved at least annually
in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser
at any time without penalty upon giving the Fund sixty
days written notice (which notice may be waived by the
Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty days notice
(which notice may be waived by the Adviser), provided
that such termination by the Fund shall be directed or
approved by the vote of a majority of the Directors of
the Fund in office at the time or by the vote of the
holders of a "majority" (as defined in the Act) of the
voting securities of the Fund at the time outstanding and
entitled to vote. This Agreement shall terminate auto-
matically in the event of its assignment (as "assignment"
is defined in the Act).
7. Notices
Any notice under this Agreement shall be in
writing to the other party at such address as the other
party may designate from time to time for the receipt of
such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth
day after the postmark if such notice is mailed first
class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance
with the laws of the State of New York for contracts to
be performed entirely therein without reference to choice
of law principles thereof and in accordance with the
applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have
caused the foregoing instrument to be executed by their
duly authorized officers, all as of the day and the year
first above written.
BBT SUBSIDIARY INC.
[SEAL] By: _________________________________
Name:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: _________________________________
Name:
Title:
CUSTODIAN CONTRACT
This Contract between , a corporation
organized and existing under the laws of , having
its principal place of business at hereinafter
called the "Fund", and State Street Bank and Trust Compa-
ny, a Massachusetts trust company, having its principal
place of business at 225 Franklin Street, Boston, Massa-
chusetts, 02110, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual
covenants and agreements hereinafter contained, the
parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by
It
The Fund hereby employs the Custodian as the custo-
dian of its assets pursuant to the provisions of the
Declaration of Trust. The Fund agrees to deliver to the
Custodian all securities and cash owned by it, and all
payments of income, payments of principal or capital
distributions received by it with respect to all securi-
ties owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury
shares of capital stock, $ par value, ("Shares")
of the Fund as may be issued or sold from time to time.
The Custodian shall not be responsible for any property
of the Fund held or received by the Fund and not deliv-
ered to the Custodian.
Upon receipt of "Proper Instructions" (within the
meaning of Section 3), the Custodian shall from time to
time employ one or more sub-custodians, but only in
accordance with an applicable vote by the Board of Trust-
ees of the Fund, and provided that the Custodian shall
have no more or less responsibility or liability to the
Fund on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to
the Custodian.
2. Duties of the Custodian with Respect to Property of
the Fund Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all
non-cash property, including all securities owned by
the Fund, other than (a) securities which are main-
tained pursuant to Section 2.10 in a clearing agency
which acts as a securities depository or in a book-
entry system authorized by the U.S. Department of
the Treasury, collectively referred to herein as
"Securities System" and (b) commercial paper of an
issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper")
which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section
2.11.
2.2 Delivery of Securities. The Custodian shall release
and deliver securities owned by the Fund held by the
Custodian or in a Securities System account of the
Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate
by the parties, and only in the following cases:
1) Upon sale of such securities for the account of
the Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with
any repurchase agreement related to such secu-
rities entered into by the Fund;
3) In the case of a sale effected through a Secu-
rities System, in accordance with the provi-
sions of Section 2.10 hereof;
4) To the depository agent in connection with
tender or other similar offers for securities
of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, or otherwise
become payable; provided that, in any such
case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent. for trans-
fer into the name of the Fund or into the name
of any nominee or nominees of the Custodian or
into the name or nominee name of any agent
appointed pursuant to Section 2.9 or into the
name or nominee name of any sub-custodian ap-
pointed pursuant to Article 1; or for exchange
for a different number of bonds, certificates
or other evidence representing the same aggre-
gate face amount or number of units; provided
that, in any such case, the new securities are
to be delivered to the Custodian;
7) Upon the sale of such securities for the ac-
count of the Fund, to the broker or its clear-
ing agent, against a receipt, for examination
in accordance with "street delivery" custom;
provided that in any such case, the Custodian
shall have no responsibility or liability for
any loss arising from the delivery of such
securities prior to receiving payment for such
securities except as may arise from the
Custodian's own negligence or willful miscon-
duct;
8) For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization,
reorganization or readjustment of the securi-
ties of the issuer of such securities, or pur-
suant to provisions for conversion contained in
such securities, or pursuant to any deposit
agreement; provided that, in any such case, the
new securities and cash, if any, are to be
delivered to the Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exer-
cise of such warrants, rights or similar secu-
rities or the surrender of interim receipts or
temporary securities for definitive securities;
provided that, in any such case, the new secu-
rities and cash, if any, are to be delivered to
the Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against
receipt of adequate collateral as agreed upon
from time to time by the Custodian and the
Fund, which may be in the form of cash or obli-
gations issued by the United States government,
its agencies or instrumentalities, except that
in connection with any loans for which collat-
eral is to be credited to the Custodian's ac-
count in the book-entry system authorized by
the U.S. Department of the Treasury, the Custo-
dian will not be held liable or responsible for
the delivery of securities owned by the Fund
prior to the receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of
assets by the Fund, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions
of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Secu-
rities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association
of Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options
Clearing Corporation and of any registered
national securities exchange, or of any similar
organization or organizations, regarding escrow
or other arrangements in connection with trans-
actions by the Fund;
13) For delivery in accordance with the provisions
of any agreement among the Fund, the Custodian,
and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract
Market, or any similar organization or organi-
zations, regarding account deposits in connec-
tion with transactions by the Fund;
14) For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution
of the Board of Trustees or of the Executive
Committee signed by an officer and certified by
the Secretary or an Assistant Secretary, speci-
fying the securities of the Fund to be deliv-
ered, setting forth the purpose for which such
delivery is to be made, declaring such purpose
to be a proper corporate purpose, and naming
the person or persons to whom delivery of such
securities shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of
any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusive-
ly to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in
common with other registered investment companies
having the same investment adviser as the Fund, or
in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee
name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian
on behalf of the Fund under the terms of this Con-
tract shall be in "street name" or other good deliv-
ery form. If, however, the Fund directs the Custo-
dian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securi-
ties and to notify the Fund on a best efforts basis
only of relevant corporate actions including, with-
out limitation, pendency of calls, maturities,
tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and main-
tain a separate bank account or accounts in the name
of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or ac-
counts, subject to the provisions hereof, all cash
received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank
account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for the Fund may be
deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion
deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified
to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company
and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majori-
ty of the Board of Trustees of the Fund. Such funds
shall be deposited by the Custodian in its capacity
as Custodian and shall be withdrawable by the Custo-
dian only in, that capacity.
2.5 Availability of Federal Funds. Upon mutual agree-
ment between the Fund and the Custodian, the Custo-
dian shall, upon the receipt of Proper Instructions,
make federal funds available to the Fund as of
specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 Collection of Income. Subject to provisions of
Section 2.3, the Custodian shall collect on a timely
basis all income and other payments with respect to
registered securities held hereunder to which the
Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect
on a timely basis all income and other payments with
respect to bearer securities if, on the date of
payment by the issuer, such securities are held by
the Custodian or its agent thereof and shall credit
such income, as collected, to the Fund's custodian
account. Without limiting the generality of the
foregoing, the Custodian shall detach and present
for payment all coupons and other income items
requiring presentation as and when they become due
and shall collect interest when due on securities
held hereunder. Income due the Fund on securities
loaned pursuant to the provisions of Section 2.2(10)
shall be the responsibility of the Fund. The Custo-
dian will have no duty or responsibility in connec-
tion therewith, other than to provide the Fund with
such information or data as may be necessary to
assist the Fund in arranging for the timely delivery
to the Custodian of the income to which the Fund is
properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions
when deemed appropriate by the parties, the Custodi-
an shall pay out monies of the Fund in the following
cases only:
1) Upon the purchase of securities, options, fu-
tures contracts or options on futures contracts
for the account of the Fund but only (a)
against the delivery of such securities or
evidence of title to such options, futures
contracts or options on futures contracts to
the Custodian (or any bank, banking firm or
trust company doing business in the United
States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by
the Custodian as its agent for this purpose)
registered in the name of the Fund or in the
name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effect-
ed through a Securities System, in accordance
with the conditions set forth in Section 2.10
hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in
the case of repurchase agreements entered into
between the Fund and the Custodian, or another
bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities
either in certificate form or through an entry
crediting the Custodian's account at the Feder-
al Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund or (e) for transfer to
a time deposit account of the Fund in any bank;
such transfer may be effected prior to receipt
of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions
as defined in Section 3;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 2.2 hereof;
3) For the payment of any expense or liability
incurred by the Fund, including but not limited
to the following payments for the account of
the Fund: interest, taxes, management, ac-
counting, transfer agent and legal fees, and
operating expenses of the Fund whether or not
such expenses are to be in whole or part capi-
talized or treated as deferred expenses;
4) For the payment of any dividends declared pur-
suant to the governing documents of the Fund;
5) For payment of the amount of dividends received
in respect of securities sold short;
6) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions,
a certified copy of a resolution of the Board
of Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant
Secretary, specifying the amount of such pay-
ment, setting forth the purpose for which such
payment is to be made, declaring such purpose
to be a proper purpose, and naming the person
or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. Except as specifically stated
otherwise in this Contract, in any and every case
where payment for purchase of securities for the
account of the Fund is made by the Custodian in
advance of receipt of the securities purchased in
the absence of specific written instructions from
the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities
to the same extent as if the securities had been
received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any
time or times in its discretion appoint (and may at
any time remove) any other bank or trust company
which is itself qualified under the Investment
Company Act of 1940, as amended, to act as a custo-
dian, as its agent to carry out such of the provi-
sions of this Article 2 as the Custodian may from
time to time direct; provided however, that the
appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain securities
owned by the Fund in a clearing agency registered
with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, col-
lectively referred to herein as "Securities System"
in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and
regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Fund
in a Securities System provided that such secu-
rities are represented in an account ("Ac-
count") of the Custodian in the Securities
System which shall not include any assets of
the Custodian other than assets held as a fidu-
ciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to
securities of the Fund which are maintained in
a Securities System shall identify by book-
entry those securities belonging to the Fund;
3) The Custodian shall pay the securities pur-
chased for the account of the Fund upon (i)
receipt of advice from the Securities System
that such securities have been transferred to
the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such
payment and transfer for the account of the
Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) re-
ceipt of advice from the Securities System that
payment for such securities has been trans-
ferred to the Account, and (ii) the making of
an entry on the records of the Custodian to
reflect such transfer and payment for the ac-
count of the Fund. Copies of all advices from
the Securities System of transfers of securi-
ties for the account of the Fund shall identify
the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall
furnish the Fund confirmation of each transfer
to or from the account of the Fund in the form
of a written advice or notice and shall furnish
to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Secu-
rities System for the account of the Fund;
4) The Custodian shall provide the Fund with any
report obtained by the Custodian on the Securi-
ties System's accounting system, internal ac-
counting control and procedures for safeguard-
ing securities deposited in the Securities
System;
5) The Custodian shall have received the initial
certificate required by Article 12 hereof;
6) Anything to the contrary in this Contract not-
withstanding, the Custodian shall be liable to
the Fund for any loss or damage to the Fund
resulting from use of the Securities System by
reason of any negligence, misfeasance or mis-
conduct of the Custodian or any of its agents
or of any of its or their employees or from
failure of the Custodian or any such agent to
enforce effectively such rights as it may have
against the Securities System; at the election
of the Fund, it shall be entitled to be subro-
gated to the rights of the Custodian with re-
spect to any claim against the Securities Sys-
tem or any other person which the Custodian may
have as a consequence of any such loss or dam-
age if and to the extent that the Fund has not
been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions;
2) The Custodian may keep securities of the Fund
in the Direct Paper System only if such securi-
ties are represented in an account ("Account")
of the Custodian in the Direct Paper System
which shall not include any assets of the Cus-
todian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in
the Direct Paper System shall identify by book-
entry those securities belonging to the Fund;
4) The Custodian shall pay for securities pur-
chased for the account of the Fund upon the
making of an entry on the records of the Custo-
dian to reflect such payment and transfer of
securities to the account of the Fund. The
Custodian shall transfer securities sold for
the account of the Fund upon the making of an
entry on the records of the Custodian to re-
flect such transfer and receipt of payment for
the account of the Fund;
5) The Custodian shall furnish the Fund confirma-
tion of each transfer to or from the account of
the Fund, in the form of a written advice or
notice, of Direct Paper on the next business
day following such transfer and shall furnish
to the Fund copies of daily transaction sheets
reflecting each day's transaction in the Secu-
rities System for the account of the Fund;
6) The Custodian shall provide the Fund with any
report on its system of internal accounting
control as the Fund may reasonably request from
time to time.
2.12 Segregated Account. The Custodian shall upon re-
ceipt of Proper Instructions establish and maintain
a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be
transferred cash and/or securities, including secu-
rities maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance
with the provisions of any agreement among the Fund,
the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the
Commodity Futures Trading Commission or any regis-
tered contract market), or of any similar organiza-
tion or organizations, regarding escrow or other
arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or
government securities in connection with options
purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compli-
ance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment compa-
nies and (iv) for other proper corporate purposes,
but only, in the case of clause (iv), upon receipt
of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Trustees or of
the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes
to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custo-
dian shall execute ownership and other certificates
and affidavits for all federal and state tax purpos-
es in connection with receipt of income or other
payments with respect to securities of the Fund held
by it and in connection with transfers of such
securities.
2.14 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly
executed by the registered holder of such securi-
ties, if the securities are registered otherwise
than in the name of the Fund or a nominee of the
Fund, all proxies, without indication of the manner
in which such proxies are to be voted, and shall
promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to
such securities.
2.15 Communications Relating to Fund Securities. Subject
to the provisions of Section 2.3, the Custodian
shall transmit promptly to the Fund all written
information (including, without limitation, pendency
of calls and maturities of securities and expira-
tions of rights in connection therewith and notices
of exercise of call and put options written by the
Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from
issuers of the securities being held for the Fund.
With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund all
written information received by the Custodian from
issuers of the securities whose tender or exchange
is sought and from the party (or his agents) making
the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer,
exchange offer or any other similar transaction, the
Fund shall notify the Custodian at least three
business days prior to the date on which the Custo-
dian is to take such action.
2.16 Reports to Fund by Independent Public Accounts. The
Custodian shall provide the Fund, at such times as
the Fund may reasonably require, with respect by
independent public accountants on the accounting
system, internal accounting control and procedures
for safeguarding securities, futures contracts and
options on futures contracts, including securities
deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian
under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may
reasonably be required by the Fund, to provide
reasonable assurance that any material inadequacies
would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so
state.
3. Proper Instructions
Proper Instructions as used herein means a writing
signed or initialled by one or more person or persons as
the Board of Trustees shall have from time to time autho-
rized. Each such writing shall set forth the specified
transaction or type of transaction involved, including a
specific statement of the purpose for which such action
is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give
such instructions with respect to the transaction in-
volved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of
the Secretary or an Assistant Secretary as to the autho-
rization by the Board of Trustees of the Fund accompanied
by a detailed description of procedures approved by the
Board of Trustees, Proper Instructions may include commu-
nications effected directly between electro-mechanical or
electronic devices provided that the Board of Trustees
and the Custodian are satisfied that such procedures
afford adequate safeguards for the Fund's assets. For
purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant
to any three-party agreement which requires a segregated
asset account in accordance with Section 2.12.
4. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor
expenses of handling securities or other simi-
lar items relating to its duties under this
Contract, provided that all such payments shall
be accounted for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable in-
struments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of
the Fund except as otherwise directed by the
Board of Trustees of the Fund.
5. Evidence of Authority
The Custodian shall be protected in action upon any
instructions, notice, request, consent, certificate or
other instrument or paper believed by it to be genuine
and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified
copy of a vote of the Board of Trustees of the Fund as
conclusive evidence (a) of the authority of any person to
act in accordance with such vote or (b) of any determina-
tion or of any action by the Board of Trustees pursuant
to the Declaration of Trust as described in such vote,
and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice
to the contrary.
6. Duties of Custodian with Respect to the Books of
Account and Calculation of Net Asset Value and Net
Income
The Custodian shall cooperate with and supply neces-
sary information to the entity or entities appointed by
the Board of Trustees of the Fund to keep the books of
account of the Fund and/or compute the net asset value
per share of the outstanding shares of the Fund or, if
directed in writing to do so by the Fund, shall itself
keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall
also calculate weekly the net income of the Fund as
described in the Fund's currently effective prospectus
and shall advise the Fund and the Transfer Agent weekly
of the total amounts of such net income and, if instruct-
ed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of
such net income among its various components. The calcu-
lations of the net asset value per share and the weekly
income of the Fund shall be made at the time or times
described from time to time in the Fund's currently
effective prospectus.
7. Records
The Custodian shall create and maintain all records
relating to its activities and obligations under this
Contract in such manner as will meet the obligations of
the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-
1 and 31a-2 thereunder. All such records shall be the
property of the Fund and shall at all times during the
regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Secu-
rities and Exchange Commission. The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian
and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in
such tabulations.
8. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as
the Fund may from time to time request, to obtain from
year to year favorable opinions from the Fund's indepen-
dent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-
2, and Form N-SAR or other annual reports to the Securi-
ties and Exchange Commission and with respect to any
other requirements of such Commission.
9. Compensation of Custodian
The Custodian shall be entitled to reasonable com-
pensation for its services and expenses as Custodian, as
agreed upon from time to time between the Fund and the
Custodian.
10. Responsibility of Custodian
So long as and to the extent that it is in the
exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be
held harmless in acting upon any notice, request, con-
sent, certificate or other instrument reasonably believed
by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant
acting pursuant to the terms of a three-party futures or
options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provi-
sions of this Contract, but shall be kept indemnified by
and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence.
It shall be entitle to rely on and may act upon advice of
counsel (who may be counsel for the Fund) on all matters,
and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
If the Fund requires that Custodian to take any
action with respect to securities, which action involves
the payment of money or which action may, in the opinion
of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of
money or incurring liability of some other form, the
Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodi-
an in an amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates,
subsidiaries or agents, to advance cash or securities for
any purpose (including but not limited to securities
settlements and assumed settlement) or in the event that
the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this
Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act
or willful misconduct, any property at any time held for
the account of the Fund shall be security therefor and
should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and
to dispose of the Fund's assets to the extent necessary
to obtain reimbursement.
11. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty
(30) days after the date of such delivery or mailing;
provided, however that the Custodian shall not act under
Section 2.10 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Fund has
approved the initial use of a particular Securities
System, as required by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian
shall not act under Section 2.11 hereof in the absence of
receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has ap-
proved the initial use of the Direct Paper System; pro-
vided, further, however, that the Fund shall not amend or
terminate this Contract in contravention of any applica-
ble federal or state regulations, or any provision of the
Declaration of Trust, and further provided, that the Fund
may at any time by action of its Board of Trustees (i)
substitute another bank or trust company for the Custodi-
an by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appro-
priate regulatory agency or court of competent jurisdic-
tion.
Upon termination of the Contract, the Fund shall pay
to the Custodian such compensation as may be due as of
the date of such termination and shall likewise reimburse
the Custodian for its costs, expenses and disbursements.
12. Successor Custodian
If a successor custodian shall be appointed by the
Board of Trustees of the Fund, the Custodian shall, upon
termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form
for transfer, all securities then held by it hereunder
and shall transfer to an account of the successor custo-
dian all of the Fund's securities held in a Securities
System.
If no such successor custodian shall be appointed,
the Custodian shall, in like manner, upon receipt of a
certified copy of a vote of the Board of Trustees of the
Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance
with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the
Board of Trustees shall have been delivered to the Custo-
dian on or before the date when such termination shall
become effective, then the Custodian shall have the right
to deliver to a bank or trust company, which is a "bank"
as defined in the Investment Company Act of 1940, doing
business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held
by the Custodian relative thereto and all other property
held by it under this Contract and to transfer to an
account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other prop-
erties remain in the possession of the Custodian after
the date of termination hereof owing to failure of the
Fund to procure the certified copy of the vote referred
to or of the Board of Trustees to appoint a successor
custodian, the Custodian shall be entitled to fair com-
pensation for its services during such period as the
Custodian retains possession of such securities, funds
and other properties and the provisions of this contract
relating to the duties and obligations of the Custodian
shall remain in full force and effect.
13. Interpretive and Additional Provisions
In connection with the operation of this Contract,
the Custodian and the Fund, may from time to time agree
on such provisions interpretive of or in addition to the
provisions of this Contract as may in their joint opinion
be consistent with the general tenor of this Contract.
Any such interpretive or additional provisions shall be
in writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional
provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of
Trust of the Fund. No interpretive or additional provi-
sions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
14. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with the laws
of The Commonwealth of Massachusetts.
15. Prior Contracts
This Contract supersedes and terminates, as of the
date hereof, all prior contracts between the Fund and the
Custodian relating to the custody of the Fund's assets.
16. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 re-
quires banks which hold securities for the account of
customers to respond to requests by issuers of securities
for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to
disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate wheth-
er it authorizes the Custodian to provide the Fund's
name, address, and share position to requesting companies
whose securities the Fund owns. If the Fund tells the
Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells
the Custodian "yes" or does not check either "yes" or
"no" below, the Custodian is required by the rule to
treat the Fund as consenting to disclosure of this infor-
mation for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company
from using the Fund's name and address for any purpose
other than corporate communications. Please indicate
below whether the Fund consents or objects by checking
one of the alternatives below.
YES [ ] The Custodian is authorized to re-
lease the Fund's name, address, and
share positions.
NO [ ] The Custodian is not authorized to
release the Fund's name, address and
share positions.
IN WITNESS WHEREOF, each of the parties has caused
this instrument to be executed in its name and behalf by
its duly authorized representative and its seal to be
hereunder affixed as of the day of , 199.
ATTEST NAME OF FUND
By
ATTEST STATE STREET BANK AND TRUST
COMPANY
By
Executive Vice President
CUSTODIAN CONTRACT
BETWEEN
(NAME OF TRUST, COMPANY, FUND)
AND
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held
by It . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Proper-
ty of the Fund Held By the Custodian . . . . . . 1
2.1 Holding Securities . . . . . . . . . . . . 1
2.2 Delivery of Securities . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . 4
2.5 Availability of Federal Funds . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . 5
2.8 Liability for Payment in Advance of Re-
ceipt of Securities Purchased . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in Securities Sys-
tems . . . . . . . . . . . . . . . . . . . 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . 8
2.12 Segregated Account . . . . . . . . . . . . 9
2.13 Ownership Certificates for Tax Purposes . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . 10
2.15 Communications Relating to Fund Securi-
ties . . . . . . . . . . . . . . . . . . . 10
2.16 Reports to Fund by Independent Public
Accounts . . . . . . . . . . . . . . . . . 10
3. Proper Instructions . . . . . . . . . . . . . . 11
4. Actions Permitted without Express Authority . . 11
5. Evidence of Authority . . . . . . . . . . . . . 12
6. Duties of Custodian with Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income . . . . . . . . . . . . . . . . . 12
7. Records . . . . . . . . . . . . . . . . . . . . 12
8. Opinion of Fund's Independent Accountant . . . . 13
9. Compensation of Custodian . . . . . . . . . . . 13
10. Responsibility of Custodian . . . . . . . . . . 13
11. Effective Period, Termination and Amendment . . 14
12. Successor Custodian . . . . . . . . . . . . . . 14
13. Interpretive and Additional Provisions . . . . . 15
14. Massachusetts Law to Apply . . . . . . . . . . . 16
15. Prior Contracts . . . . . . . . . . . . . . . . 16
16. Shareholder Communications Election . . . . . . 16
BBT SUBSIDIARY INC.
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made as of the ____
day of July, 1996 between BBT SUBSIDIARY INC., a Maryland
corporation (the "Fund"), and Prudential Mutual Fund
Management Inc., a Delaware corporation (the "Administra-
tor").
W I T N E S S E T H:
WHEREAS, the Fund is a diversified closed-end
management investment company registered under the In-
vestment Company Act of 1940, as amended (the "Investment
Company Act"); and
WHEREAS, the Fund has retained an investment
adviser for the purpose of investing its assets in secu-
rities and desires to retain the Administrator for cer-
tain administrative services, and the Administrator is
willing to furnish such administrative services on the
terms and conditions hereinafter set forth,
NOW, THEREFORE, the parties hereto agree as
follows:
1. The Fund hereby appoints the Administrator
to provide the services set forth below, subject to the
overall supervision of the Board of Directors of the Fund
for the period and on the terms set forth in this Agree-
ment. The Administrator hereby accepts such appointment
and agrees during such period to render the services
herein described and to assume the obligations herein set
forth, for the compensation herein provided.
2. Subject to the supervision of the Board of
Directors and officers of the Fund, the Administrator
shall provide facilities for meetings of the Board of
Directors and shareholders of the Fund and office facili-
ties and personnel to assist the officers of the Fund in
the performance of the following services:
(a) Oversee the determination and publi-
cation of the Fund's net asset value in accordance with
the Fund's policy as adopted from time to time by the
Board of Directors;
(b) Oversee the maintenance by State
Street Bank and Trust Company of certain books and re-
cords of the Fund as required under the Investment Compa-
ny Act of 1940 and maintain (or oversee maintenance by
such other persons as approved by the Board of Directors)
such other books and records (other than those maintained
by the investment adviser) required by law or for the
proper operation of the Fund;
(c) Prepare and file the Fund's federal,
state and local income tax returns and any other required
tax returns;
(d) Review the appropriateness of and
arrange for payment of the Fund's expenses;
(e) Prepare for review and approval by
officers of the Fund financial information for the Fund's
semi-annual and annual reports, proxy statements and
other communications with shareholders required or other-
wise to be sent to Fund shareholders, and arrange for the
printing and dissemination of such reports and communica-
tions to shareholders;
(f) Prepare for review by an officer of
the Fund the Fund's periodic financial reports required
to be filed with the Securities and Exchange Commission
("SEC") on Form N-SAR and Form N-2 and such other re-
ports, forms or filings, as may be mutually agreed upon;
(g) Prepare reports relating to the
business and affairs of the Fund (not otherwise appropri-
ately prepared by the Fund's investment adviser, custodi-
an, counsel or auditors);
(h) Prepare such information and reports
as may be required by any stock exchange or exchanges on
which the Fund's shares are listed;
(i) Make such reports and recommendations
to the Board concerning the performance of the indepen-
dent accountants as the Board may reasonably request or
deems appropriate;
(j) Make such reports and recommendations
to the Board concerning the performance and fees of the
Fund's custodian, transfer and dividend disbursing agent
as the Board may reasonably request or deems appropriate;
(k) Oversee and review calculations of
fees paid to the Administrator, the investment adviser
and the custodian;
(l) Consult with the Fund's officers,
independent accountants, legal counsel, custodian, ac-
counting agent and transfer and dividend disbursing agent
in establishing the accounting policies of the Fund;
(m) Review implementation of any stock
purchase or dividend reinvestment programs authorized by
the Board of Directors;
(n) Facilitate bank or other borrowings
by the Fund;
(o) Prepare such information and reports
as may be required by any banks from which the Fund
borrows funds;
(p) Provide such assistance to the in-
vestment adviser, the custodian and the Fund's counsel
and auditors as generally may be required to properly
carry on the business and operations of the Fund; and
(q) Respond to or refer to the Fund's
officers or transfer agent, shareholder inquiries relat-
ing to the Fund.
(r) Provide to Standard & Poor's Corpora-
tion ("S&P"), upon its request, corporate or financial
information reasonably available to the Administrator to
assist S&P in the rating of the Fund's shares.
All services are to be furnished
through the medium of any directors, officers or employ-
ees of the Administrator as the Administrator deems
appropriate in order to fulfill its obligations hereun-
der.
Each party shall bear all its own expenses
incurred in connection with this Agreement.
3. The Fund shall not pay the Administrator
any fee for services rendered under this Agreement.
4. The Administrator assumes no responsibili-
ty under this Agreement other than to render the services
called for hereunder, and specifically assumes no respon-
sibilities for investment advice or the investment or
reinvestment of the Fund's assets.
5. The Administrator shall not be liable for
any error of judgment or for any loss suffered by the
Fund in connection with the matters to which this Agree-
ment relates, except a loss resulting from willful mis-
feasance, bad faith or gross negligence on its part in
the performance of, or from reckless disregard by it of
it obligations and duties under, this Agreement.
6. This Agreement shall become effective as
of the date on which the Fund's Registration Statement on
Form N-2 is filed with the SEC and shall thereafter
continue in effect unless terminated as herein provided.
This Agreement may be terminated by either party hereto
(without penalty) at any time upon not less than 60 days'
prior written notice to the other party hereto.
7. The services of the Administrator to the
Fund hereunder are not exclusive and nothing in this
Agreement shall limit or restrict the right of the Admin-
istrator to engage in any other business or to render
services of any kind to any other corporation, firm,
individual or association. The Administrator shall be
deemed to be an independent contractor, unless otherwise
expressly provided or authorized by this Agreement.
8. During the term of this Agreement, the
Fund agrees to furnish the Administrator at the principal
office of the Administrator prior to use thereof all
prospectuses, proxy statements, reports to shareholders,
sales literature, or other material prepared for distri-
bution to shareholders of the Fund or the public that
refer in any way to the Administrator. If the Adminis-
trator reasonably objects in writing to such references
within five business days (or such other time as may be
mutually agreed) after receipt thereof, the Fund will
modify such references in a manner reasonably satisfacto-
ry to the Administrator. In the event of termination of
this Agreement, the Fund will continue to furnish to the
Administrator copies of any of the above-mentioned mate-
rials that refer in any way to the Administrator. The
Fund shall furnish or otherwise make available to the
Administrator such other information relating to the
business affairs of the Fund as the Administrator at any
time, or from time to time, reasonably requests in order
to discharge its obligations hereunder.
9. This Agreement may be amended by mutual
written consent.
10. Any notice of other communication required
to be given pursuant to this Agreement shall be deemed
duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Administrator at One Seaport
Plaza, New York, New York 10292, Attention: Chairman or
(2) to the Fund at 345 Park Avenue, New York, New York
10154, Attention: President.
11. This Agreement sets forth the agreement
and understanding of the parties hereto solely with
respect to the matters covered hereby and the relation-
ship between the Fund and Prudential Mutual Fund Manage-
ment, Inc. as Administrator. Nothing in this Agreement
shall govern, restrict or limit in any respect any other
business dealings between the parties hereto unless
otherwise expressly provided herein.
12. This Agreement shall be governed by and
construed in accordance with the laws of t he State of
New York without reference to choice of law principles
thereof and in accordance with the Investment Company
Act. In the case of any conflict the Investment Company
Act shall control.
IN WITNESS WHEREOF, the parties hereto have
caused this instrument to be executed by their officers
designated below as of the day and year first above
written.
BBT SUBSIDIARY INC.
By __________________________________
Name:
Title:
PRUDENTIAL MUTUAL FUND
MANAGEMENT INC.
By __________________________________
Name:
Title:
REGISTRAR,
TRANSFER AGENCY AND SERVICE AGREEMENT
between
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment; Duties of the Bank . . . . 1
Article 2 Fees and Expenses . . . . . . . . . . . . . . . 5
Article 3 Representations and Warranties of the Bank . . . 6
Article 4 Representations and Warranties of the Fund . . . 6
Article 5 Indemnification . . . . . . . . . . . . . . . . 7
Article 6 Covenants of the Fund and the Bank . . . . . . 11
Article 7 Termination of Agreement . . . . . . . . . . . . 13
Article 8 Assignment . . . . . . . . . . . . . . . . . . . 13
Article 9 Amendment . . . . . . . . . . . . . . . . . . . 14
Article 10 Massachusetts Law to Apply . . . . . . . . . . . 14
Article 11 Merger of Agreement . . . . . . . . . . . . . . 15
REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of ,
19 , by and between
corporation, having its principal office and place of
business at 345 Park Avenue, New York, New York, 10154,
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office
and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank
as its registrar, transfer agent, dividend disbursing
agent, custodian of certain retirement plans and agent in
connection with certain other activities and the Bank
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
Article 1 Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set
forth in this Agreement, the Fund hereby employs and
appoints the Bank to act as, and the Bank agrees to act
as registrar, transfer agent for the Fund's authorized
and issued shares of its common stock ("Shares"), divi-
dend disbursing agent, custodian of certain retirement
plans and agent in connection with any dividend reinvest-
ment plan as set out in the prospectus of the Fund,
corresponding to the date of this Agreement.
1.2 The Bank agrees that it will perform the
following services:
(a) In accordance with procedures established
from time to time by agreement between the Fund and the
Bank, the Bank shall:
(i) Issue and record the appropriate
number of Shares as authorized and
hold such Shares in the appropri-
ate Shareholder account;
(ii) Effect transfers of Shares by the
registered owners thereof upon
receipt of appropriate documenta-
tion;
(iii) Execute transactions directly with
broker-dealers authorized by the
Fund who shall thereby be deemed
to be acting on behalf of the
Fund;
(iv) Prepare and transmit payments for
dividends and distributions de-
clared by the Fund;
(v) Act as agent for Shareholders pur-
suant to the dividend reinvestment
and cash purchase plan as amended
from time to time in accordance
with the terms of the agreement to
be entered into between the Share-
holders and the Bank in substan-
tially the form attached as Exhib-
it A hereto;
(vi) Issue replacement certificates for
those certificates alleged to have
been lost, stolen or destroyed
upon receipt by the Bank of indem-
nification satisfactory to the
Bank and protecting the Bank and
the Fund, and the Bank as its op-
tion, may issue replacement cer-
tificates in place of mutilated
stock certificates upon presenta-
tion thereof and without such in-
demnity; and
(vii) Report abandoned property to the
various states as authorized by
the Fund per policies and princi-
pals agreed upon by the Fund and
the Bank.
(b) In addition to and neither in lieu nor in
contravention of the services set forth in the above
paragraph (a), the Bank shall: (i) perform all of the
customary services of a registrar, transfer agent, divi-
dend disbursing agent, custodian of certain retirement
plans and agent of the dividend reinvestment and cash
purchase plan as described in Article 1 consistent with
those requirements in effect as at the date of this
Agreement. The detailed definition, frequency, limita-
tions and associated costs (if any) set out in the at-
tached fee schedule, include but not limited to: main-
taining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, receiving and tabulating
proxies and mailing Shareholder reports to current Share-
holders, withholding taxes on U.S. resident and non-
resident alien accounts where applicable, preparing and
filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all registered
Shareholders.
Article 2 Fees and Expenses
2.1 For the performance by the Bank pursuant
to this Agreement, the Fund agrees to pay the Bank an
annual maintenance fee as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual writ-
ten agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section
2.1 above, the Fund agrees to reimburse the Bank for out-
of-pocket expenses or advances incurred by the Bank for
the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Bank at
the request or with the consent of the Fund, will be
reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and reim-
bursable expenses within five days following the receipt
of the respective billing notice. Postage and the cost
of materials for mailing of dividends, proxies, Fund
reports and other mailings to all Shareholder accounts
shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund
that:
3.1 It is a trust company duly organized and
existing and in good standing under the laws of the
Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its
business in the Commonwealth of Massachusetts.
3.3 It is empowered under applicable laws and
by its Charter and By-Laws to enter into and perform this
Agreement.
3.4 All requisite corporate proceedings have
been taken to authorize it to enter into and perform this
Agreement.
3.5 It has and will continue to have access to
the necessary facilities, equipment and personnel to
perform its duties and obligations under this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank
that:
4.1 It is a corporation duly organized and
existing and in good standing under the laws of .
4.2 It is empowered under applicable laws and
by its Articles of Incorporation and By-Laws to enter
into and perform this Agreement.
4.3 All corporate proceedings required by said
Articles of Incorporation and By-Laws have been taken to
authorize it to enter into and perform this Agreement.
4.4 It is a closed-end, diversified investment
company registered under the Investment Company Act of
1940, as amended.
4.5 To the extent required by federal securi-
ties laws a registration statement under the Securities
Act of 1933, as amended is currently effective and appro-
priate state securities law filings have been made with
respect to all Shares of the Fund being offered for sale;
information to the contrary will result in immediate
notification to the Bank.
4.6 It shall make all required filings under
federal and state securities laws.
Article 5 Indemnification
5.1 The Bank shall not be responsible for, and
the Fund shall indemnify and hold the Bank harmless from
and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence
or willful misconduct which arise out of the breach of
any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its
agents or subcontractors of information, records and
documents which (i) are received or relied upon by the
Bank or its agents or subcontractors and/or furnished to
it or performed by or on behalf of the Fund, and (ii)
have been prepared, maintained and/or performed by the
Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by
the Bank or its agents or subcontractors of any instruc-
tions or requests of the Fund.
(e) The offer or sale of Shares in violation
of any requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.
5.2 The Bank shall indemnify and hold the Fund
harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or
failure or omission to act by the Bank as a result of the
Bank's lack of good faith, negligence or willful miscon-
duct.
5.3 At any time the Bank may apply to any
officer of the Fund for instructions, and may consult
with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank
under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemni-
fied by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of
such counsel. The Bank, its agents and subcontractors
shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed
by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank
or its agents or subcontractors by telephone, in person,
machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be
held to have notice of any change of authority of any
person, until receipt of written notice thereof from the
Fund. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certif-
icates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the
Fund, and the proper countersignature of any former
transfer agent or former registrar, or of a co-transfer
agent or co-registrar.
5.4 In the event either party is unable to
perform its obligations under the terms of this Agreement
because of acts of God, strikes, equipment or transmis-
sion failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party
shall not be liable for damages to the other for any
damages resulting from such failure to perform or other-
wise from such causes.
5.5 Neither party to this Agreement shall be
liable to the other party for consequential damages under
any provision of this Agreement or for any consequential
damages arising out of any act or failure to act hereun-
der.
5.6 In order that the indemnification provi-
sions contained in this Article 5 shall apply, upon the
assertion of a claim for which either party may be re-
quired to indemnify the other, the party seeking indemni-
fication shall promptly notify the other party of such
assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The
party who may be required to indemnify shall have the
option to participate with the party seeking indemnifica-
tion in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or
make any compromise in any case in which the other party
may be required to indemnify it except with the other
party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.1 The Fund shall promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the
Board of Directors of the Fund authorizing the appoint-
ment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the Articles of Incorporation
and By-Laws of the Fund and all amendments thereto.
6.2 The Bank hereby agrees to establish and
maintain facilities and procedures reasonably acceptable
to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account
of, such certificates, forms and devices.
6.3 The Bank shall keep records relating to
the services to be performed hereunder, in the form and
manner as it may deem advisable. To the extent required
by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Bank agrees that
all such records prepared or maintained by the Bank
relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be pre-
served, maintained and made available in accordance with
such Section and Rules, and will be surrendered promptly
to the Fund on and in accordance with its request.
6.4 The Bank and the Fund agree that all
books, records, information and data pertaining to the
business of the other party which are exchanged or re-
ceived pursuant to the negotiation or the carrying out of
this Agreement shall remain confidential, and shall not
be voluntarily disclosed to any other person, except as
may be required by law.
6.5 In cases of any requests or demands for
the inspection of the Shareholder records of the Fund,
the Bank will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to
such inspection. The Bank reserves the right, however,
to exhibit the Shareholder records to any person whenever
it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to
such person.
Article 7 Termination of Agreement
7.1 This Agreement may be terminated by either
party upon one hundred twenty (120) days written notice
to the other.
7.2 Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the
movement of records and material will be borne by the
Fund. Additionally, the Bank reserves the right to
charge for any other reasonable expenses associated with
such termination and/or a charge equivalent to the aver-
age of three (3) month's fees.
Article 8 Assignment
8.1 Except as provided in Section 8.3 below,
neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the
written consent of the other party.
8.2 This Agreement shall inure to the benefit
of and be binding upon the parties and their respective
permitted successors and assigns.
8.3 The Bank may, without further consent on
the part of the Fund, subcontract for the performance
hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly regis-
tered as a transfer agent pursuant to Section 17A(c)(1)
of the Securities Exchange Act of 1934, as amended ("Sec-
tion 17A(c)(l)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or
(iii) a BFDS affiliate; provided, however, that the Bank
shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own
acts and omissions.
Article 9 Amendment
9.1 This Agreement may be amended or modified
by a written agreement executed by both parties and
authorized or approved by a resolution of the Board of
Directors of the Fund.
Article 10 Massachusetts Law to Apply
10.1 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance
with the laws of the Commonwealth of Massachusetts.
Article 11 Merger of Agreement
11.1 This Agreement constitutes the entire
agreement between the parties hereto and supersedes any
prior agreement with respect to the subject hereof wheth-
er oral or written.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed in their names and
on their behalf by and through their duly authorized
officers, as of the day and year first above written.
BY:
ATTEST:
STATE STREET BANK AND TRUST COMPANY
BY:
Vice President
ATTEST:
Assistant Secretary