File No. 811-07903
As filed with the Securities and Exchange Commission on March 27, 1997
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
(X) REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
BLACKROCK MQE INVESTORS
(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
BLACKROCK MQE INVESTORS
345 PARK AVENUE
NEW YORK, NEW YORK 10154
(Name and Address of Agent for Service)
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Copies to:
RICHARD T. PRINS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
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BLACKROCK ASSET INVESTORS
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 . . . . Financial Highlights
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; Other
Policies
9. Management . . . . . . . . . Management; General
10. Capital Stock, Long-Term
Debt, and Other Securities . Capital Stock, Long-
Term Debt, and Other
Securities; Capital
Stock; Long-Term Debt;
General; Taxes;
Outstanding
Securities; Securities
Ratings
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
Statement of
Part B Additional Infor-
Item No. mation Caption
-------- -----------------
14. Cover Page . . . . . . . . . Not Applicable
15. Table of Contents . . . . . . Not Applicable
16. General Information and
History . . . . . . . . . . . General Description of
the Registrant
17. Investment Objective and
Policies . . . . . . . . . . Investment Objective
and Policies;
Investment
Restrictions
18. Management . . . . . . . . . Management of the
Trust; Officers and
Directors
19. Control Persons and Principal
Holders of Securities . . . . Control Persons;
Affiliated
Subscriptions
20. Investment Advisory and
Other Services . . . . . . . Management of the
Trust
21. Brokerage Allocation and
Other Practices . . . . . . . Management of the
Trust
22. Tax Status . . . . . . . . . Taxation of the Trust
23. Financial Statements . . . . Financial Statements
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* . . . . . . . . . . . . 1.00%
Interest Payments on Borrowed Funds . . . 0.00%
Other Expenses. . . . . . . . . . . . . . .09%
Total Annual Expenses . . . . . . . . . . 1.09%
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: $11 $33 $55 $109
The purpose of the preceding table is to assist the investor
in understanding the various costs and expenses that an investor
in BlackRock MQE Investors (the "Trust") will bear directly or
indirectly.
*The "Management Fee" is an annual profit allocation paid to
the Trust's investment manager equal to a cumulative return of 1%
per year of funded capital commitments; provided, however, such
profit allocation will not be made to the extent that the holders
of units of beneficial interest (the "Units"), par value $0.01
per share, have not received cumulative net returns of at least
5% per year of funded capital commitments. Holders of the
Trust's preferred units (the "Preferred Units"), par value $0.01
per share, are not required to pay any management fee or any
other expenses of the Trust.
"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
The financial highlights included in the Trust's Annual
Report for the period beginning with the Trust's commencement of
investment operations on November 1, 1996 to December 31, 1996,
together with the report of Deloitte & Touche LLP thereon, as
filed with the Securities and Exchange Commission, are
incorporated by reference. Copies of the foregoing may be
obtained, without charge, upon written request to Randal A.
Nardone, c/o the Trust, 345 Park Avenue, New York, NY 10154 or by
calling 1(800)227-7BFM(7236).
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 Trust was formed by its trustees as a
business trust under the laws of the State of Delaware on October
24, 1996, and is a non-diversified closed-end management
investment company. Unless terminated earlier, the Trust shall
terminate on December 31, 2021, subject to no more than two
separate one-year extensions approved by holders of a majority of
the Trust's Units and Preferred Units. The Trust has obtained
capital commitments ("Capital Commitments") in the form of
subscription agreements from investors for an aggregate amount of
$46,629,950 and has also issued and sold 100 Preferred Units
for an aggregate amount of $50,000. Each subscription
agreement obligates the investor to purchase up to a specified
aggregate dollar amount of Units or a specified percentage of the
aggregate Capital Commitments of the Trust. The Trust will call
any or all of each investor's Capital Commitment as it deems
necessary. All Units will be issued at net asset value ("NAV")
per Unit as calculated within 48 hours (exclusive of Saturdays,
Sundays and Holidays) prior to issuance. Pursuant to the
Subscription Agreements, the Trust has received approximately
$46.6 million in capital contributions from its holders of Units
(the "Holders") and holders of Preferred Units (the "Preferred
Holders") in the aggregate.
8.2. Investment Objectives and Policies. BlackRock
Financial Management, Inc. ("BlackRock"), an investment adviser
registered under the Investment Advisers Act of 1940, has formed
the Trust to provide institutional investors with a way to
invest, through the Trust, in subordinated debentures and, at the
discretion of the trustees of the Trust, working capital
financing (the "Subordinated Debt"), of Annington Finance No. 3
PLC or its affiliates ("Annington Finance"), warrants (the
"Warrants") exercisable for common stock of Annington Homes
Limited or its affiliates (together with its affiliates
"Annington"), and other securities issued in respect of such
securities. The Annington companies have been organized to
acquire the married Quarters Estate ("MQE") from the United
Kingdom Ministry of Defence in a complex transaction. MQE
includes approximately 57,000 residential units of housing spread
over 805 sites in England and Wales.
In addition, the Trust will utilize Treasury, mortgage,
Eurodollar, Gilt, Sterling (and any other British Pound
instruments) and currency forwards, futures and options (on cash
and futures) and interest rate, currency and mortgage swaps, caps
and floors and other financial instruments, provided that the
Trust may utilize these instruments solely for the purpose of
hedging and not for speculative purposes, and will utilize
financing agreements, such as reverse repurchase agreements and
dollar rolls, subject to the leverage limitations set forth below
and in the Investment Company Act of 1940 (the "1940 Act").
The Trust's investment objective and the following investment
restrictions are fundamental and cannot be changed without
approval of a majority of the Trustees and the approval of the
holders of a majority of the Trust's Units and Preferred Units.
Subject to the foregoing, the Trust may not: (1) invest in any
assets other than the Subordinated Debt, the Warrants, securities
received in respect of the Subordinated Debt or Warrants, the
fixed income instruments listed above under "Additional Eligible
Investments" and other instruments for hedging purposes; (2)
issue senior securities representing indebtedness in excess of
limitations under the 1940 Act or incur indebtedness that would
give rise to unrelated business taxable income within the meaning
of Sections 512 through 514 of the Internal Revenue Code of 1986,
as amended; (3) issue Preferred Units having an aggregate
liquidation preference at the time of issuance in excess of
$100,000 plus accumulated and unpaid dividends; (4) make loans of
money in property to any person except consistent with the
limitations expressed in item (1) above; (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 securities the Trust may be deemed to be an
underwriter; (6) invest for the purpose of exercising control
over any company other than the Annington companies; (7) purchase
real estate or interests therein except to the extent the assets
described in item (1) above constitute real estate or interests
therein; or (8) purchase or sell commodities or commodity
contracts for any purpose except for hedging purposes.
8.3. Risk Factors.
(a) General. Investment in the Trust may involve certain
risk factors and special considerations, including those arising
from the Trust's investment securities, policies and practices,
from the Trust's investment strategy, and from the structure of
the Trust and restrictions applicable to its Units.
As a result of concentrating its investments solely in securities
of the Annington companies, the Trust will be a non-diversified
investment company and, therefore, much more susceptible than a
more widely diversified fund to any single economic, political or
regulatory occurrence. In particular, declines in United Kingdom
residential real estate values, adverse local and basic economic
conditions, and poor performance by any or all of the Annington
companies may affect the value of the Trust's holdings as well as
the ability of the Trust to conduct its operations.
Investments in securities of the Annington companies, whose
prices are quoted in sterling, pose currency exchange risks
(including blockage, devaluation and non-exchangability) as well
as a range of other potential risks which could include
expropriation, confiscatory taxation, political or social
instability, illiquidity, price volatility and market
manipulation. In addition, the Subordinated Debt securities will
bear interest at a fixed rate, which may be unattractive, if
interest rates increase or Annington's business results are poor.
In order to hedge against currency risks, the Trust may utilize
Treasury, mortgage, Eurodollar, Gilt, Sterling (and any other
British Pound instruments) and currency futures, forward
contracts and options. In order to hedge against general
interest rate risk, the Trust may utilize interest rate, currency
and mortgage swaps, caps and floors and other financial
instruments. However, the Trust may utilize these instruments
solely for hedging purposes and not for speculative purposes.
Typically, these techniques involve one or more the following
risks: (i) imperfect correlation between the performance and
value of the instrument and the value of the Trust's securities
or other objective of BlackRock; (ii) possible lack of a
secondary market for closing out a position in such instrument;
(iii) losses resulting from interest rate or other market
movement not anticipated by BlackRock; and (iv) the possible
obligation to meet additional margin or other payment
requirements, all of which could worsen the Trust's position. In
addition, less information may be available regarding securities
of the Annington companies and the Annington companies may not be
subject to accounting, auditing and financial reporting standards
and requirements comparable to or as uniform as those applicable
to U.S. companies. Transaction costs of investing in the
Annington companies may be higher than were it a U.S. company.
The Subordinated Debt in which the Trust intends to invest is
junior to all other obligations for borrowed money of the
Annington companies and accordingly has substantial vulnerability
to default in payment of interest and principal. In the event of
a default by Annington Finance, the Trust can not expect to
receive any proceeds unless and until obligations senior to it
are paid in full.
The Trust's investments are subject to legal or other
restrictions on transfer and are such that no liquid market
presently exists. See Annex B. In addition, illiquid
securities, such as the Trust's investments, may be difficult, or
require a substantial period of time to sell and may be salable
only at a discount from comparable, more liquid investments.
Illiquid securities may also be more difficult to value.
Conflicts of interest exist in the structure and operation of the
Trust's business. Although the allocations which BlackRock is
entitled to receive as manager have not been set by "arm's
length" negotiations, BlackRock believes such allocations are
justified in light of the Trust's structure, investment program
and investor base.
The Trust will seek to disclose to the Holders and Preferred
Holders any specific conflicts of interest that arise and which
are considered by the Trust to be material to investors in the
Trust.
No funds, securities or property of the Trust will be commingled
by the Trust with the property of any other fund or person.
The Trust's success may depend significantly on the skill and
acumen of key employees at BlackRock. If Wesley Edens or any
other key employee should cease to participate in the Trust's
business the Trust might be adversely affected.
Although the officers of BlackRock will devote as much time to
the Trust as they believe is necessary to assist the Trust in
achieving its investment objectives and to administer the Trust's
operations, none of them expects to devote substantially all of
his working time to the affairs of the Trust.
Holders and Preferred Holders shall have no power to vote on any
matter except matters on which a vote of Holders and Preferred
Holders is required by applicable law or is required by or
permitted by the Declaration of Trust.
Units and Preferred Units may be transferred only to other
qualified investors, only if the transfer will not require any
registration by the Trust and only with prior approval from the
Trust and BlackRock. Consequently, there will be no trading
market for the Units and Preferred Units and investors may be
required to bear the economic risks of their investment until
termination of the Trust.
In addition, because the Trust will derive most of its income if
not all from a non-U.S. source and possibly incur a foreign tax,
the potential for a "double tax" is present (although not likely)
because of the potential limitations on investors' ability to
utilize fully all foreign tax credits, as described below. The
Trust has a lack of operating history upon which to evaluate its
likely performance.
(b) Effects of Leverage. The Trust is authorized to issue
up to 200 Preferred Units at $500 per Preferred Unit and has
issued 100 Preferred Units with an aggregate liquidation
preference of $50,000. See Item 10.1 - Capital Stock. The
Preferred Units pay cumulative dividends when, as and if declared
by the Trustees at the rate of 10% per year, have a liquidation
preference per Preferred Unit equal to $500 plus accumulated and
unpaid dividends, will be redeemable in whole or in part at any
time at liquidation preference and will have certain voting and
other rights as required by the 1940 Act. The Trust must
experience an annual return of approximately .01% in order to
cover annual dividend payments on the number of Preferred Units
issued and outstanding.
The following table illustrates the effect of the Preferred Units
on the return to a holder of Units:
Assumed return
on portfolio -10% -5% 0% 5% 10%
(net of expenses)
Corresponding
return to common -10%(1) -5%(1) 0%(1) 5%(1) 10%(1)
stockholder
---------------
1 In percent.
Although the Trust's use of leverage is limited to the extent
permitted by the 1940 Act, the use of leverage by the Trust
creates certain risks. In particular, if the Trust leverages on
a short-term basis and invests the proceeds in longer-term
securities, an increase in short-term interest rates may reduce,
eliminate or reverse the interest rate differential usually
available between short-term and long-term rates, thereby
reducing the Trust's net investment income or causing loss.
Conversely, an increase in long-term interest rates may reduce
the value of the Trust's leveraged long-term securities by more
than the yield advantage from the leverage and may cause
substantial loss in the Trust's net asset value. Leverage also
magnifies gains and losses attributable to other investment
policies and practices.
8.4. Other Policies. Consistent with its investment
objectives, policies and restrictions, the Trust may also invest
in the following types of assets: (1) U.S. Government securities,
including U.S. Treasury securities and securities issued by
agencies or instrumentalities of the U.S. Government; (2) asset-
backed securities that are rated in one of the four highest
rating categories by a nationally recognized rating agency;
(3) corporate debt securities that are rated in one of the four
highest rating categories by a nationally recognized rating
agency; (4) short-term investments that have a remaining term to
maturity at the time of purchase of no greater than one year,
including commercial paper rated not lower than A-1/P-1 and other
money market instruments of similar credit standing, non-
contingent interest bearing deposits in banks chartered by or
within the United States with long-term ratings at least A-, and
money market mutual funds; (5) hedging instruments; and (6)
subject to compliance with the 1940 Act, any other type of asset
investment in which is made in furtherance of the Trust's
investment objective after having received approval by a majority
of the Trustees.
8.5. Not Applicable.
8.6. Not Applicable.
ITEM 9. MANAGEMENT
(1) General.
(a) Board of Trustees. The Trustees set broad policies for
the Trust and choose its officers. Black Rock manages the day-
to-day operations of the Trust and supplies officers to the Trust
for this purpose. The Board of Trustees of the Trust shall
consist at all times of no less than three (3) Trustees, a
majority of whom are "unaffiliated" with BlackRock and no more
than 60% of whom are "interested persons" of the Trust as defined
in Section 2(a)(19) of the 1940 Act; provided that, for this
purpose, a Trustee will be deemed "unaffiliated" with BlackRock
if such Trustee is not an officer, director or employee of
BlackRock or any of its affiliated companies.
(b) Investment Manager. The Trust's manager, BlackRock,
located at 345 Park Avenue, New York, New York 10154, is a
Delaware corporation which is wholly owned by PNC Bank, N.A., the
12th largest bank in the United States. BlackRock currently
manages more than $40 billion of fixed income assets on behalf of
worldwide institutional and individual investors through a
variety of separate accounts and mutual funds.
The Trust has retained BlackRock 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 Trust and to supervise the operations of any other entities
utilized by the Trust.
Each year, BlackRock will receive a profit allocation
(the "Special BlackRock Allocation") equal to a cumulative return
of 1% of funded Capital Commitments; provided, however, such
Special BlackRock Allocation will not occur to the extent that
holders of Units have not received cumulative net returns of at
least 5% per year of funded Capital Commitments.
(c) Portfolio Management. The Trust's portfolio manager
will be Wesley R. Edens, who is a Managing Director of BlackRock
and who managed the commercial and non-agency residential
mortgage-backed securities businesses of Lehman Brothers Inc.
prior to joining BlackRock in October 1993.
(d) Not Applicable
(e) Custodian, Transfer Agent, Dividend Disbursing Agent
and Registrar. State Street Bank & Trust Company ("State
Street"), 1776 Heritage Drive, North Quincy, MA, will serve as
custodian for the Trust'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
Trust. The Trust 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 Financial Data Services, Inc., an affiliate
of State Street.
(f) Expenses. BlackRock will bear all expenses of its
employees and overhead incurred in connection with its duties
contemplated herein, and the services rendered by any employee of
BlackRock in such employee's capacity as a Trustee or officer of
the Trust.
The Trust will be responsible for paying the expenses
of its operations as outlined below.
The Trust's expenses include (a) the fees and expenses
of custodians, accounting systems, accounting agents and
auditors, external administrators and transfer and dividend
disbursement agents, counsel, Trustees, insurance, taxes, any
required filings and registrations, proxy expenses,
communications to holders of Units and Preferred Units, SEC
examinations, capital calls, and registered agents; (b) portfolio
transaction expenses, leverage expense and reasonable costs of
outside consultants; (c) litigation expenses (provided that in
the case of litigation expenses of indemnified parties, such
expenses will be borne by the Trust only to the extent provided
for under the terms of written indemnifications provided to such
parties by the Trust); and (d) such other expenses as are
approved from time to time by a majority of the Trustees.
Notwithstanding anything to the contrary, losses incurred on the
Trust's investments, whether classified as expenses or otherwise,
shall be borne by the Trust.
BlackRock will assume all other costs and expenses of
the Trust. No Trustee or officer of the Trust who is a director,
officer or employee of BlackRock or any of its affiliates will
receive compensation from the Trust.
In addition to the expenses listed above, the Trust
will bear the organizational and offering expenses of the Trust.
9.2 Not Applicable
9.3 Control Persons. Leeway & Co. owns 42.89% of the
Units.
ITEM 10. CAPITAL STOCK, LONG-TERM DEBT, AND OTHER SECURITIES
1. Capital Stock. The Trust is authorized to issue up to
100 million Units and 200 Preferred Units. Other than a
preference for Preferred Units with respect to dividends and
liquidation preference, the Units and Preferred Units shall not
entitle the holder to preference, preemptive, appraisal,
conversion, exchange or redemption rights. Each Unit has equal
voting, dividend, distribution and liquidation rights. Each
Preferred Unit has equal voting, dividend, distribution and
liquidation rights. The Preferred Units pay cumulative dividends
when, as and if declared by the Trustees at the rate of 10% per
year, have a liquidation preference per Preferred Unit equal to
$500 plus accumulated and unpaid dividends, will be redeemable in
whole or in part at any time at liquidation preference and will
have certain voting and other rights as required by the 1940 Act.
Holders and Preferred Holders of the Trust have plurality voting
rights on the election of Trustees and are entitled to one vote
per Unit or Preferred Unit, as the case may be, on all other
matters subject to holder approval. When issued against payment
therefor, the Units and Preferred Units will be fully paid and
non-assessable. No person has any liability for liabilities of
the Trust by reason of owning Units or Preferred Units, although
each person that subscribes for Units or Preferred Units is
liable for the full amount of such subscription in accordance
with and subject to the terms of the related subscription
agreement.
2. Long-Term Debt. None.
3. General. None.
4. Taxes. The Trust and BlackRock will use their
respective best efforts to ensure that the Trust qualifies each
year and elects to be treated as a partnership for U.S. federal
income tax purposes.
5. Outstanding Securities.
<TABLE>
<CAPTION>
Amount
Outstanding
Amount Held by Exclusive of
Amount Registrant or Amount Shown Under
Title of Class Authorized for its Account Previous Column
-------------- ---------- --------------- ------------------
<S> <C> <C> <C>
Units of Beneficial 100 million Units None 46,580 Units
Interest
Preferred Units 200 Preferred Units None 100 Preferred Units
of Beneficial
Interest
</TABLE>
6. Securities Ratings. None.
ITEM 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES
1. Not Applicable.
2. Not Applicable.
ITEM 12. LEGAL PROCEEDINGS
Not Applicable.
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 Trust has no history. See Item 8 - General Description of
the Registrant, for general information.
ITEM 17. INVESTMENT OBJECTIVE AND POLICIES
Additional information regarding the Trust's permitted
investments is set forth below. See Item 8 - General Description
of the Registrant, for additional information.
Hedging instruments, including the use of futures, options,
swaps, caps and floors, present certain risks. With respect to
hedging, the variable degree of correlation between price
movements of hedging instruments and price movements in the
position being hedged creates the possibility that losses on the
hedge may be greater than gains in the value of the Trust's
position. In addition, certain instruments and markets may not
be liquid in all circumstances. As a result, in volatile
markets, the Trust may not be able to close out a transaction
without incurring losses substantially greater than the initial
deposit. Although the use of these instruments for hedging
should tend to minimize the risk of loss due to a decline in the
value of the position, at the same time they tend to limit any
potential gain which might result from an increase in the value
of such position. The ability of the Trust to successfully
utilize these hedging techniques will depend on BlackRock's
ability to predict pertinent market movements and sufficient
correlations, which cannot be assured. Finally, the daily
deposit requirements in futures contracts that the Trust sells
create an ongoing greater potential financial risk than do
options transactions, where the exposure is limited to the cost
of the initial premium. Losses due to the use of hedging
techniques will reduce NAV.
The Trust may purchase and sell put and call options on
securities and indices solely for hedging purposes. The Trust is
authorized to purchase and sell exchange listed options and
over-the-counter options ("OTC Options") which are privately
negotiated with the counterparty solely for hedging purposes.
Listed options are issued by the Options Clearing Corporation
("OCC") which guarantees the performance of the obligations of
the parties to such options. The Trust's ability to close out
its position as a purchaser or seller of an exchange-listed put
or call option is dependent upon the existence of a liquid
secondary market on option exchanges. The hours of trading for
options on debt securities may not conform to the hours during
which the underlying securities are traded. To the extent that
the option markets close before the markets for the underlying
securities, significant price and rate movements can take place
in the underlying markets that cannot be reflected in the option
markets. In addition, the Trust may sell financial futures
contracts or purchase put and call options on such futures solely
for hedging purposes. At the time a futures contract is
purchased or sold, the Trust must allocate cash or securities as
a deposit payment ("initial margin"). It is expected that the
initial margin that the Trust will pay may range from
approximately 1% to approximately 5% of the value of the
securities or commodities underlying the contract. In certain
circumstances, however, such as periods of high volatility, the
Trust may be required by an exchange to increase the level of its
initial margin payment. Additionally, initial margin
requirements may be increased generally in the future by
regulatory action. The Trust's use of futures and options on
futures will in all cases be consistent with applicable
regulatory requirements and in particular the rules and
regulations of the CFTC. In accordance with such regulations and
the Trust's investment policies, the Trust currently may enter
into such transactions without limit for bona fide hedging
purposes.
Futures contracts, interest rate swaps, caps, floors and collars,
short sales, reverse repurchase agreements and dollar rolls, and
listed options on securities, indices and futures contracts sold
by the Trust are generally subject to segregation and coverage
requirements of either the CFTC or the SEC, with the result that,
if the Trust does not hold the security or futures contract
underlying the instrument, the Trust may be required to segregate
on an ongoing basis with its custodian, cash, U.S. government
securities, or other liquid high grade debt obligations in an
amount at least equal to the Trust's obligations with respect to
such instruments. Such amounts fluctuate as the obligations
increase or decrease. The segregation requirement can result in
the Trust maintaining securities positions it would otherwise
liquidate, segregating assets at a time when it might be
disadvantageous to do so or otherwise restrict portfolio
management.
The Trust may make short sales of securities solely for hedging
purposes. Short sales will be made in compliance with applicable
regulatory requirements and will be fully collateralized at all
times. In conjunction with such sales, the Trust may have to pay
a fee to borrow particular securities and is often obligated to
pay over any payments received on such borrowed securities. The
Trust's obligation to replace the borrowed security will be
secured by collateral deposited with the broker dealer, usually
cash, U.S. government securities or other high grade liquid
securities. The Trust will also be required to segregate similar
collateral with its custodian to the extent, if any, necessary so
that the aggregate collateral value is at all times at least
equal to the current market value of the security sold short.
Although the Trust's gain is limited to the price at which it
sold the security short, its potential loss is theoretically
unlimited. The Trust will not make a short sale if, after giving
effect to such sale, the market value of all securities sold
short exceeds 25% of the value of its total assets and the
Trust's aggregate short sales of a particular class of securities
exceeds 25% of the outstanding securities of that class. The
Trust may also make short sales "against the box" without respect
to such limitations. In this type of short sale, at the time of
the sale, the Trust owns or has the immediate and unconditional
right to acquire at no additional cost the identical security.
The Trust may enter into interest rate swaps and the purchase or
sale of interest rate caps and floors. The Trust will enter into
these transactions solely for hedging purposes. The Trust will
only use these transactions as a hedge or for duration or risk
management. The Trust may enter into interest rate swaps, caps
and floors on either an asset-based or liability-based basis, and
will usually enter into interest rate swaps on a net basis, i.e.,
the two payment streams are netted out, with the Trust receiving
or paying, as the case may be, only the net amount of the two
payments on the payment dates. The Trust will accrue the net
amount of the excess, if any, of the Trust's obligations over its
entitlements with respect to each interest rate swap on a daily
basis and will segregate with a custodian an amount of cash or
liquid high grade securities having an aggregate NAV at all times
at least equal to the accrued excess. The Trust will not enter
into any interest rate swap, cap or floor transaction unless the
unsecured senior debt or the claims-paying ability of the other
party thereto is rated investment grade by at least one
nationally recognized statistical rating organization at the time
of entering into such transaction.
The Trust may invest temporarily, without limitation, in
repurchase agreements, which are agreements pursuant to which
securities are acquired by the Trust from a third party with the
understanding that they will be repurchased by the seller at a
fixed price on an agreed date. These agreements may be made with
respect to any of the portfolio securities in which the Trust is
authorized to invest. Repurchase agreements may be characterized
as loans secured by the underlying securities and will be entered
into in accordance with the requirements of the SEC. The Trust
may enter into repurchase agreements with (i) member banks of the
Federal Reserve System having total assets in excess of $500
million and (ii) securities dealers, provided that such banks or
dealers meet the creditworthiness standards established by the
Trustees ("Qualified Institutions"). The Advisor will monitor
the continued creditworthiness of Qualified Institutions, subject
to the supervision of the Trustees. The resale price reflects
the purchase price plus an agreed upon market rate of interest
which is unrelated to the coupon rate or date of maturity of the
purchased security. The collateral is marked to market daily.
Such agreements permit the Trust to keep all its assets earning
interest while retaining "overnight" flexibility in pursuit of
investments of a longer-term nature.
ITEM 18. MANAGEMENT
The following individuals are the officers and Trustees of the
Trust. A brief statement of their present positions and
principal occupations during the past five years is also
provided.
Position(s)
Name, Age and Business Held with Principal Occupation(s)
Address Registrant During Past Five Years
------------------------- ------------ -----------------------
Laurence D. Fink,(1,2) 44 Chairman of Chairman and Chief
BlackRock Financial the Board of Executive Officer,
Management, Inc. Trustees BlackRock
345 Park Avenue
New York, NY 10154
Donald G. Drapkin, 48 Trustee Vice Chairman and
Revlon Group Inc. Director, MacAndrews &
35 East 62nd Street Forbes Holdings Inc.
New York, NY 10021 (diversified holding
company), Revlon Group
Inc., Andrews Group
Inc., Director, Revlon,
Inc., Marvel
Entertainment Group
Inc., The Coleman
Company (outdoor
products)
Kendrick R. Wilson, III, 50 Trustee General Partner, Lazard
Lazard Freres & Co. Freres & Co.; formerly,
One Rockefeller Plaza President, Ranieri
33rd Floor Wilson & Co.
New York, NY 10022 (investment banking)
Ralph. L. Schlosstein, 46 President President, BlackRock
BlackRock Financial
Management, Inc.
345 Park Avenue
New York, NY 10154
Wesley R. Edens, 35 Chief Managing Director,
BlackRock Financial Operating BlackRock; formerly
Management, Inc. Officer Managing Director,
345 Park Avenue Lehman Brothers, Inc.
New York, NY 10154 (investment banking)
Susan L. Wagner, 35 Secretary Managing Director,
BlackRock Financial BlackRock
Management, Inc.
345 Park Avenue
New York, NY 10154
Henry Gabbay, 49 Treasurer Chief Operating
BlackRock Financial Officer, BlackRock
Management, Inc.
345 Park Avenue
New York, NY 10154
Robert I. Kauffman,(3) 33 Managing Principal, BlackRock;
BlackRock Financial Director formerly, Executive
Management, Inc. Director, Lehman
345 Park Avenue Brothers International
New York, NY 10154 (Europe) and Vice
President, Lehman
Brothers
James Kong, 36 Asst. Managing Director,
BlackRock Financial Treasurer BlackRock
Management, Inc.
345 Park Avenue
New York, NY 10154
Randal A. Nardone,(3) 41 Managing Principal, BlackRock;
BlackRock Financial Director and formerly Partner,
Management, Inc. Asst. Sec. Thacher, Proffitt &
345 Park Avenue Wood (law firm)
New York, NY 10154
Erik P. Nygaard,(3) 37 Managing Principal, BlackRock;
BlackRock Financial Director formerly, Director,
Management, Inc. Nomura Securities
345 Park Avenue International and Vice
New York, NY 10154 President, Lehman
Brothers
1 Trustees who are directors, officers or employees of
BlackRock
2 Trustees who may be deemed to be "interested persons" of
the Trust
3 Member of Management Team
Each Trustee (other than any Trustee who is a partner, director,
officer or employee of BlackRock or any affiliate thereof or
successor thereto) shall receive the following amounts for
serving as a Trustee: (i) $6,000 per year, (ii) $1,000 per
physical meeting, and (iii) $125 per telephonic meeting. The
Trust also pays each Trustee (whether or not such person is a
partner, director, officer or employee of BlackRock or any
affiliate thereof or successor thereto) for all out-of-pocket
expenses of such Trustee incurred in attending each such meeting.
It is anticipated that the aggregate annual compensation to each
Trustee for services to investment companies in the BlackRock
Fund complex will be approximately $50,000, with the exception of
Mr. Fink, who only will be reimbursed for his expenses incurred
in attending each meeting, estimated at approximately $10,000
annually. Each Trustee is entitled to one vote on each matter
requiring the Trustees to take any action or consent to the
taking of any action. In all cases in which a Trustee vote is
required, only the vote of the Trustees 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
Trustees vote, each Trustee may give or withhold his or her vote
as he or she deems appropriate in his or her sole discretion.
Mr. Fink is a director and officer of each of the other closed-
end investment companies in the BlackRock Fund complex. Messrs.
Schlosstein, Gabbay and Kong are officers of each of the other
closed-end investment companies in the BlackRock Fund complex.
Messrs. Drapkin and Wilson serve as directors of each of
BlackRock Asset Investors, BlackRock Fund Investors I, BlackRock
Fund Investors II and BlackRock Fund Investors III (collectively
"BAI"). Messrs. Edens, Kauffman, Nardone, Nygaard and Ms. Wagner
also serve in the same capacity as officers of BAI except that Mr.
Edens also is a director of BAI.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
1. Leeway & Co., which is organized under the laws of the
State of Delaware and has offices at 345 Park Avenue,
New York, New York 10054, owns approximately 42.89% of
the Units.
2. (a) B.M. Housing, L.L.C., which is organized under the
laws of the State of Michigan and has offices at
32400 Telegraph Road, Suite 202, Bingham Farms, MI
48025, owns approximately 24.54% of the Units.
(b) Keyport Life Insurance, which is organized under
the laws of the State of Rhode Island and has
offices at 125 High Street, Boston, MA 02110 owns
approximately 21.45% of the Units.
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 will serve as the Trust's
independent public accountant and will provide
accounting services to the Trust.
8. None.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
1. See Item 9 - Management, above. Other investment
companies which BlackRock manages will also invest in the
Annington companies. Investment decisions for the Trust are made
independently from those of such other investment companies;
however, from time to time, the same investment decision may be
made for more than one investment company. When two or more
investment companies managed by BlackRock seek to purchase or
sell the same securities, the securities actually purchased or
sold will be allocated among the companies and on a good faith
equitable basis by BlackRock in its discretion in accordance with
the accounts' various investment objectives. In some cases, this
system may adversely affect the price or size of the position
disposable by the Trust. In other cases,however, the ability of
the Trust to participate in volume transactions may produce
better execution for the Trust.
BlackRock primarily will administer the Trust's
investment in the Annington companies. In doing so, BlackRock
will, subject to the investment limitations and restrictions set
forth herein, make all decisions to buy and sell securities for
the Trust, will select dealers to effect transactions, will
negotiate prices, and will effect securities transactions in a
manner deemed fair and reasonable to Holders and Preferred
Holders of the Trust and not according to any formula.
BlackRock's primary considerations in selecting the manner of
executing securities transactions for the Trust will be prompt
execution of orders, the size and breadth of the market for the
security, the reliability, integrity and financial condition and
execution capability of the firm, the size of and difficulty in
executing the order, and the best net price.
2. None.
3. See response to Item 21.1.
4. None.
5. None.
ITEM 22. TAX STATUS
The following is a summary of the material U.S. Federal income
tax consequences relating to the purchase, ownership and
disposition of Units and Preferred Units in the Trust. The
discussion is based upon the Internal Revenue Code (the "Code"),
rules and regulations promulgated thereunder, published rulings
and court decisions, all as in effect on the date of this
registration statement. The discussion does not describe all of
the U.S. Federal income tax consequences that may be relevant to
a particular investor in view of such investor's particular
circumstance and is not directed to investors subject to special
treatment under U.S. Federal income tax law, such as foreign
persons, insurance companies and entities or other persons
generally exempt from U.S. Federal income taxation. No advance
rulings have been or will be sought from the Service regarding
any matter discussed in this Registration Statement.
Accordingly, prospective investors are urged to consult their tax
advisers to determine the federal, state, local and foreign
income and other tax consequences to them of acquiring, holding
and disposing units, including the application of the alternative
minimum tax. Any reference to "holder" in this Item 22 shall
apply to both the holders of Units and Preferred Units. Any
reference to "units" shall be a reference to both the Units and
Preferred Units.
The Trust has received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP that under current law the Trust will be
treated as a partnership and not as an association taxable as a
corporation for U.S. Federal income tax purposes. Unlike an
advance ruling from the Service, an opinion of counsel is not
binding on the Service or any court. Accordingly, no assurance
can be given that the Service will not challenge the
classification of the Trust as a partnership or that a court
would not sustain any such challenge and thereby treat the Trust
as an association taxable as a corporation.
If, for any reason, the Trust were treated as an association
taxable as a corporation, the Trust would be subject to U.S.
Federal income tax on its taxable income at regular corporate
income tax rates, without deduction for any distributions to the
holders, thereby materially reducing the amount of any cash
available for distribution. In addition, capital gains and
losses and other income and deductions of the Trust would not be
passed through to the holders and the holders would be treated as
shareholders for U.S. Federal income tax purposes. In such case,
all distributions by the Trust to the holders would be treated as
dividends, return of capital or capital gain. Unless otherwise
stated, the discussion below assumes that the Trust will be
treated as a partnership for U.S. Federal income tax purposes.
Under current U.S. Federal income tax law, a partnership that
constitutes a "publicly-traded partnership" may be taxed as a
corporation in certain circumstances generally depending upon the
nature of its income. Pursuant to final Treasury regulations
recently issued by the Service (the "Final Regulations"), a
partnership will not be treated as a publicly traded partnership
if its interests are not (a) traded on an established security
market or (b) readily tradeable on a secondary market (or the
substantial equivalent thereof). Units in the Trust will not be
listed on any securities exchange. In addition, due to
restrictions on transfers and redemptions, no secondary market
will exist for the units. Accordingly, BlackRock expects that
the Trust will not be treated as a publicly-traded partnership
and will use its best efforts to conduct the affairs of the Trust
so that it will not be so treated.
As a partnership, the Trust generally will not itself be subject
to U.S. Federal income tax. Rather, each holder in computing its
Federal income tax liability for a taxable year will be required
to take into account its allocable share of all items of Trust
income, gain, loss, deduction and credit for the taxable year of
the Trust ending within or with the taxable year of such holder,
regardless of whether such holder has received any distributions
from the Trust. The Trust will make distributions of cash to its
holders; it is expected that a holder's allocable share of Trust
taxable income nevertheless will exceed cash distributions to
such holder for any taxable year. Since the Trust expects to
accrue significant non-cash income, a significant amount of
income could pass through to the holders without any
corresponding distributions. Such accruals will constitute
ordinary income and will increase such holder's basis in its
interest in the Trust. If cash is subsequently received and
distributed by the Trust in respect of such accruals, no
additional income would be recognized. In the event a holder's
interest in the Trust becomes worthless, the accrued income will
have the effect of increasing the holder's capital loss in
respect of its interest in the Trust. The characterization of an
item of profit or loss usually will be determined at the Trust
(rather than at the holder) level.
For U.S. Federal income tax purposes, a holder's allocable share
of items of Trust income, gain, loss, deduction and credit will
be determined by the Trust's Declaration of Trust provided such
allocations either have "substantial economic effect" or are
determined to be in accordance with the holders' units in the
Trust. If the allocations provided by the Trust's Declaration of
Trust were successfully challenged by the Service, the
redetermination of the allocations to a particular holder for
U.S. Federal income tax purposes could be less favorable than the
allocations set forth in the Trust's Declaration of Trust.
The maximum ordinary income tax rate for individuals is currently
39.6%, and the maximum individual income tax rate for long-term
capital gains is currently 28% (unless the taxpayer elects to be
taxed at ordinary rates - see "Limitation on Deductibility of
Interest" below), although in either case the actual rate may be
higher due to the phase out of certain tax deductions and
exemptions. For corporate taxpayers, the maximum tax rate is
currently 35%.
A holder's adjusted tax basis for its Units will be equal to the
amount of its initial capital contributions and will be increased
by (a) any additional capital contributions made by such holder
and (b) the sum of such holder's allocable share of (i) items of
Trust taxable income and gain and (ii) liabilities of the Trust.
A holder's adjusted tax basis will be decreased, but not below
zero, by the holder's allocable share of (a) items of Trust
deductions and losses and (b) by the amount of any cash
distributions by the Trust or the amount of the basis of any
property, other than cash, distributed by the Trust and
constructive distributions resulting from a reduction in such
holder's share of liabilities of the Trust, if any. In certain
situations, the distribution of marketable securities by the
Trust may be treated as a cash distribution equal to the fair
market value of the marketable securities. A distribution of
marketable securities will not, however, be treated as a cash
distribution if the Trust constitutes an "investment
partnership." Although not free from doubt, the Trust should
constitute an investment partnership for this purpose and,
therefore, any distributions of marketable securities to the
holders should not be treated as cash distributions for U.S.
Federal income tax purposes.
If the recognition of a holder's allocable share of Trust losses
would reduce its adjusted tax basis for its units below zero, the
recognition of such losses by such holder would be deferred until
such time as the recognition of such losses would not reduce such
holder's basis below zero. If a holder receives a cash
distribution (or constructive cash distribution, as described
above) in an amount that exceeds such holder's adjusted tax basis
in its units, such holder would be required to recognize taxable
income to the extent of that excess. Such amount would be
treated as gain from the sale or exchange of its units. In
general, and subject to the discussion below with respect to the
possible application of Section 751 of the Code, if a holder is
not a "dealer" with respect to its units and has held its units
for more than one year, any such gain would be long-term capital
gain.
A sale or liquidation of all or part of a holder's Units will
result in the recognition of gain or loss in an amount equal to
the difference, if any, between the amount realized on the sale
or the cash distributions received upon the liquidation
(including any deemed cash distributions from the Trust, as
described above) and the holder's adjusted tax basis for its
units. Such holder's adjusted tax basis will be adjusted for
this purpose by its allocable share of the Trust's income or loss
for the year of such sale or liquidation. Any gain or loss
recognized with respect to such a sale or liquidation generally
will be treated as capital gain or loss and will be long-term
capital gain or loss if the units have been held for more than
one year. To the extent that the proceeds of the sale or
liquidation are attributable to such holder's allocable share of
the Trust's "unrealized receivables" or "substantially
appreciated inventory," as defined in Section 751 of the Code,
any gain will be treated as ordinary income.
Noncorporate taxpayers are subject to limitations on their
ability to deduct "investment interest" (i.e., interest or short
sale expenses "paid or accrued on indebtedness properly allocable
to property held for investment"). Investment interest is not
deductible in the current year to the extent that it exceeds the
taxpayer's "investment income," consisting of net gain and
ordinary income derived from investments in the current year.
For this purpose, any long-term capital gain is excluded from
investment income unless the taxpayer elects to pay tax on such
amount at ordinary income tax rates.
For purposes of this limitation, the Trust's activities will be
treated as giving rise to investment income for a holder, and the
investment interest limitation would apply to a holder's share of
the interest and short sale expenses attributable to the Trust's
operation. In such case, a holder would be denied a deduction
for all or part of that portion of its distributive share of the
Trust's ordinary losses attributable to interest and short sale
expenses unless it had sufficient investment income from all
sources including from the Trust. A holder that could not deduct
losses currently as a result of the application of the investment
interest limitation would be entitled to carry forward such
losses to future years, subject to the same limitation. The
investment interest limitation would also apply to interest paid
by a holder on money borrowed to finance its investment in the
Trust. Potential investors are advised to consult with their tax
advisors with respect to the application of the investment
interest limitation in their particular tax situations.
An individual, a trust and an estate are entitled to deduct
investment expenses (including any advisory fees) only to the
extent that they exceed 2% of adjusted gross income. In
addition, the Code further restricts the ability of an individual
with an adjusted gross income in excess of a specified amount to
deduct such investment expenses. Under such provision,
investment expenses in excess of 2% of adjusted gross income may
only be deducted to the extent such excess expenses (along with
certain other itemized deductions) exceed the lesser of (i) 3% of
the excess of the individual's adjusted gross income over the
specified amount or (ii) 80% of the amount of certain itemized
deductions otherwise allowable for the taxable year. Moreover,
such investment expenses are miscellaneous itemized deductions
which are not deductible by a noncorporate taxpayer in
calculating its alternative minimum tax liability. The Special
BlackRock Allocation should not be subject to this limitation.
The consequences of these limitations will vary depending upon
the particular tax situation of each taxpayer. Accordingly,
noncorporate holders should consult their tax advisors with
respect to the application of these limitations.
As noted above, a holder is restricted from currently taking into
account for U.S. Federal income tax purposes its allocable share
of any Trust loss that exceeds such holder's adjusted tax basis
in its units. In addition, the Code restricts individuals and
certain closely-held corporations from taking into account for
U.S. Federal income tax purposes any Trust net loss in excess of
the amounts for which such holder is "at risk" with respect to
its units as of the end of the Trust's taxable year in which such
loss occurred. The amount for which a holder is "at risk" with
respect to its units generally is equal to its adjusted tax basis
for such units, less any amounts borrowed (x) in connection with
its acquisition of such units for which it is not personally
liable and for which it has pledged no property other than its
units; (y) from persons who have a proprietary interest in the
Trust and from certain persons related to such persons; or (z)
for which the holder is protected against loss through
nonrecourse financing, guarantees or similar arrangements.
Capital losses generally are deductible by individuals only to
the extent of capital gains for the taxable year plus up to
$3,000 of ordinary income ($1,500 in the case of a husband and
wife filing separate returns). Excess capital losses may be
carried forward. Capital losses generally are deductible by
corporations only to the extent of capital gains for the taxable
year. Corporations may carry capital losses back three years and
forward five years.
The Code restricts the deductibility of losses from a "passive
activity" against certain income that is not derived from a
passive activity. This restriction applies to individuals,
personal service corporations, certain closely held corporations
and certain noncorporate entities. Income or loss from the Trust
generally will constitute income or loss from a passive activity.
Accordingly, passive losses from other sources generally should
be deductible against a holder's share of Trust income and gain.
As discussed in Item 8.2 Investment Objectives and Policies,
above, the Trust will invest solely in a non-U.S. issue.
Accordingly, it is possible in the event the Subordinated Debt is
not listed as a Eurobond that certain dividends and interest
received by the Trust from sources within foreign countries will
be subject to withholding taxes imposed by such countries. In
addition, the Trust also may be subject to capital gains taxes in
some of the foreign countries where it purchases and sells
securities. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. It is
impossible to predict the rate of foreign tax the Trust will pay
in advance since the amount of the Trust's assets to be invested
in various countries is not known.
The holders will be informed by the Trust as to their
proportionate share of the foreign taxes paid by the Trust, which
they will be required to include in their income. The holders,
generally will be entitled to claim either a credit (subject,
however, to various limitations on foreign tax credits) or, if
they itemize their deductions, a deduction for their share of
such foreign taxes in computing their U.S. Federal income taxes.
Under the Code, adjustments in tax liability with respect to
Trust items generally will be made at the Trust level in a single
proceeding rather than in separate proceedings with each holder.
BlackRock will represent the Trust as its "tax matters partner"
during any audit and in any dispute with the Service. Each
holder will be informed by BlackRock of the commencement of an
audit of the Trust. In general, BlackRock may enter into a
settlement agreement with the Service on behalf of, and binding
upon, the holders. Prior to settlement, however, a holder may
file a statement with the Service providing that BlackRock does
not have authority to settle on behalf of such holder.
If adjustments are made to items of Trust income, gain, loss,
deduction or credit as the result of an audit of the Trust, the
tax returns of the holders may be reviewed by the Service, which
could result in adjustments of non-Trust items as well as Trust
items.
ITEM 23. FINANCIAL STATEMENTS
The audited financial statements included in the Trust's
Annual Report for the period beginning with the Trust's
commencement of investment operations on November 1, 1996 to
December 31, 1996, together with the report of Deloitte & Touche
LLP thereon, as filed with the Securities and Exchange
Commission, are incorporated by reference. Copies of the
foregoing may be obtained, without charge, upon written request
to Randal A. Nardone, c/o the Trust, 345 Park Avenue, New York,
NY 10154 or by calling 1(800)227-7BFM(7236).
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Financial Statements (1).
(2) (a) Declaration of Trust.
(b) By-Laws.
(c) None.
(d) Not Applicable.
(e) None.
(f) None.
(g) None.
(h) Not Applicable.
(i) None.
(j) Form of Custodian Agreement.
(k) (1) None.
(2) Form of Transfer Agent Agreement.
(l) Not Applicable.
(m) None.
(n) Not Applicable.
(o) Not Applicable.
(p) Form of Subscription Agreement[s].
(q) None.
(r) None.
(1) Incorporated by reference from the Trust's Annual Report for
the period beginning with the Trust's commencement of
investment operations on November 1, 1996 to December 31,
1996, as filed with the Securities and Exchange Commission.
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
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
Title of Class Number of Record Holders
-------------- ------------------------
Units of Beneficial 15
Interest
Preferred Units of 91
Beneficial Interest
ITEM 29. INDEMNIFICATION
The Declaration of Trust provides that no Indemnified Person (as
defined below) will be liable to any holder of Units and
Preferred Units, or the Trust for any act or failure to act on
behalf of the Trust, unless such act or failure to act resulted
from the willful misfeasance, bad faith or gross negligence (or,
solely in the case of Trustees and officers of the Trust who are
affiliated with BlackRock, negligence) of such Indemnified
Person or by reason of such Indemnified Person's reckless
disregard of his obligations and duties. Each Indemnified Person
may consult with counsel and accountants in respect of Trust
affairs and is to be fully protected and justified in any action
or inaction which is taken in accordance with the advice or
opinion of such counsel or accountants. The foregoing provisions
(as well as the indemnification provisions described below),
however, may not be construed to relieve any Indemnified Person
of any liability to the extent that such liability may not be
waived, modified or limited under applicable law.
The Declaration of Trust provides that the Trust must indemnify
and hold harmless the Trustees and officers of the Trust as well
as BlackRock, and any of its officers, partners, directors,
shareholders, employees and controlling persons and the officers,
partners, directors, shareholders, and employees thereof
(collectively, the "Indemnified Persons"), from and against any
liabilities and expenses, including amounts paid in satisfaction
in judgments, in compromise or as fines and penalties, and
reasonable counsel fees reasonably incurred by such Indemnified
Person in connection with the defense or disposition of any
action, suit or other proceeding, 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
Trust, 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 Indemnified Person shall be
Indemnified against any liability arising by reason of willful
misfeasance, bad faith or gross negligence (or, solely in the
case of Trustees and officers of the Trust who are affiliated
with BlackRock, negligence) of such Indemnified Person or by
reason of such Indemnified Person's reckless disregard of his
obligations and duties. The Trust shall make advance payments in
connection with the expenses of defending any action with respect
to which indemnification might be sought hereunder if the Trust
receives a written affirmation by the Indemnified Person of the
Indemnified Person's good faith belief that the standards of
conduct necessary for indemnification have been met and a written
undertaking to reimburse the Trust unless it is subsequently
determined that he is entitled to such indemnification and if a
majority of the Trustees determines that the applicable standards
of conduct necessary for indemnification appear to have been met.
In addition, at least one of the following conditions must be
met: (1) the Indemnified Person shall provide adequate security
for his undertaking, (2) the Trust shall be insured against
losses arising by reason of any lawful advances, or (3) a
majority of a quorum of the independent Trustees, or if a
majority vote of such quorum so directs, independent legal
counsel in a written opinion, shall conclude, based on a review
of readily available facts (as opposed to a full trial-type
inquiry), that there is substantial reason to believe that the
Indemnified Person ultimately will be found entitled to
indemnification.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF BLACKROCK
For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of BlackRock, reference is made to BlackRock's current
Form ADV filed under the Investment Advisors Act of 1940,
incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Trust are maintained in part at
the office of BlackRock at 345 Park Avenue, New York, New York
10154, in part at the offices of the Custodian and Administrator,
State Street Bank & Trust Company, with offices at 1776 Heritage
Drive, North Quincy, MA 02171 and in part at the offices of
Boston Financial Data Services Inc., BFDS Building, 4th Floor, 2
Heritage Drive, Quincy, MA 02171.
ITEM 32. MANAGEMENT SERVICES
Except as described above in Item 9 - Management, the Trust 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 27th day of March, 1997.
BLACKROCK MQE INVESTORS
(Registrant)
By /s/ Randal A. Nardone
---------------------
Randal A. Nardone
Asst. Secretary
SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit Page
Number Exhibit Number
------- ------- ------
Exhibit A Declaration of Trust . . . . . . . . . . .
Exhibit B By-Laws . . . . . . . . . . . . . . . . .
Exhibit C None . . . . . . . . . . . . . . . . . . .
Exhibit D Not Applicable . . . . . . . . . . . . . .
Exhibit E None . . . . . . . . . . . . . . . . . . .
Exhibit F None . . . . . . . . . . . . . . . . . . .
Exhibit G None . . . . . . . . . . . . . . . . . . .
Exhibit H Not Applicable . . . . . . . . . . . . . .
Exhibit I None . . . . . . . . . . . . . . . . . . .
Exhibit J Form of Custodian Agreement . . . . . . .
Exhibit K (1) None . . . . . . . . . . . . . . . .
(2) Form of Transfer Agent Agreement . .
Exhibit L Not Applicable . . . . . . . . . . . . . .
Exhibit M None . . . . . . . . . . . . . . . . . . .
Exhibit N Not Applicable . . . . . . . . . . . . . .
Exhibit O Not Applicable . . . . . . . . . . . . . .
Exhibit P Form of Subscription Agreements . . . . .
Exhibit Q None . . . . . . . . . . . . . . . . . . .
Exhibit R None . . . . . . . . . . . . . . . . . . . . .
DECLARATION OF TRUST
OF
BLACKROCK MQE INVESTORS
October 30, 1996
INDEX
DECLARATION OF TRUST
OF
BLACKROCK MQE INVESTORS
Page
ARTICLE I
NAME, INVESTMENT OBJECTIVE AND DEFINITIONS
Section 1.1 Name, Principal Office and Registered Agent.......... 1
Section 1.2 Investment Objective................................. 2
Section 1.3 Definitions.......................................... 2
ARTICLE II
TRUSTEES
Section 2.1 Number of Trustees................................... 5
Section 2.2 Election and Term of Office of Trustees.............. 6
Section 2.3 Vacancies among Trustees............................. 7
Section 2.4 Effect of Vacancies.................................. 8
Section 2.5 Committees........................................... 8
Section 2.6 Delegation of Power.................................. 9
Section 2.7 Meetings............................................. 9
Section 2.8 Officers............................................. 10
ARTICLE III
POWERS OF TRUSTEES
Section 3.1 General.............................................. 10
Section 3.2 Investments.......................................... 10
Section 3.3 Legal Title.......................................... 13
Section 3.4 Duties and Obligations of the
Manager..................................... 14
Section 3.5 Portfolio Transactions and Brokerage................. 16
Section 3.6 Contracts with Service Providers..................... 16
Section 3.7 Issuance and Purchase of Securities.................. 17
Section 3.8 Collection and Payment............................... 17
Section 3.9 Expenses............................................. 17
Section 3.10 Manner of Acting; By-Laws............................ 18
Section 3.11 Miscellaneous Powers................................. 18
Section 3.12 Interested Transactions.............................. 19
ARTICLE IV
LIMITATIONS OF LIABILITY OF HOLDERS,
PREFERRED HOLDERS, TRUSTEES AND OTHERS
Section 4.1 No Personal Liability of Holders, Preferred
Holders, Trustees, etc............................ 20
Section 4.2 Mandatory Indemnification............................ 21
Section 4.3 No Bond Required of Trustees......................... 23
Section 4.4 No Duty of Investigation; Notice in
Trust Instruments, etc....................... 23
Section 4.5 Reliance on Experts, etc.............................. 23
ARTICLE V
UNITS OF BENEFICIAL INTEREST
Section 5.1 Beneficial Interest................................... 24
Section 5.2 Rights of Holders and Preferred Holders............... 24
Section 5.3 Trust Only............................................ 25
Section 5.4 Issuance of Units and Preferred Units................. 25
Section 5.5 Capital Calls......................................... 25
Section 5.6 Register of Units and Preferred Units................. 25
Section 5.7 Transfer of Units..................................... 26
Section 5.8 Notices............................................... 27
Section 5.9 Distribution.......................................... 27
ARTICLE VI
DETERMINATION OF NET ASSET VALUE
Section 6.1 Net Asset Value....................................... 27
ARTICLE VII
CAPITAL ACCOUNTS OF HOLDERS
AND OPERATION THEREOF
Section 7.1 Capital Accounts; Division of Net
Income and Net Loss.......................... 28
Section 7.2 Manager Deficit Make-up............................... 29
Section 7.3 Allocation of Net Income from Operations.............. 29
Section 7.4 Allocation of Net Loss................................ 29
Section 7.5 Tax Allocations....................................... 30
Section 7.6 Allocation to Manager................................. 30
Section 7.7 Assignment During Fiscal Year......................... 30
Section 7.8 Qualified Income Offset............................... 30
Section 7.9 Book-Ups.............................................. 31
Section 7.10 Taxation as Partnership............................... 32
Section 7.11 Election to be Treated as Partnership................. 32
Section 7.12 Tax Matters Partner................................... 32
Section 7.13 Right to Make Section 754 Election.................... 33
Section 7.14 Special Tax Allocations............................... 33
Section 7.15 No Deficit Makeup..................................... 35
Section 7.16 Certain Definitions................................... 35
ARTICLE VIII
LIMITED EXISTENCE; TERMINATION
OF TRUST; AMENDMENT; MERGERS, ETC.
Section 8.1 Limited Existence................................... 36
Section 8.2 Termination of Trust................................ 36
Section 8.3 Amendment Procedure................................. 37
Section 8.4 Merger, Consolidation and Sale of Assets............ 39
ARTICLE IX
HOLDERS
Section 9.1 Meetings of Holders and Preferred Holders........... 39
Section 9.2 Voting.............................................. 40
Section 9.3 Notice of Meeting and Record Date................... 40
Section 9.4 Quorum and Required Vote............................ 40
Section 9.5 Proxies, etc........................................ 41
Section 9.6 Reports............................................. 42
Section 9.7 Holder and Preferred Holder Action
by Written Consent......................... 42
ARTICLE X
MISCELLANEOUS
Section 10.1 Filing............................................. 42
Section 10.2 Governing Law...................................... 43
Section 10.3 Counterparts....................................... 43
Section 10.4 Reliance by Third Parties.......................... 43
Section 10.5 Provisions in Conflict with Law
or Regulations............................. 43
Section 10.6 Use of the Name "BlackRock"........................ 44
DECLARATION OF TRUST
OF
BLACKROCK MQE INVESTORS
October 30, 1996
DECLARATION OF TRUST made as of October 30, 1996, by the
undersigned (together with all other persons from time to time duly
elected, qualified and serving as Trustees in accordance with the
provisions of Article II hereof, the "Trustees"), and by the holders of
units of beneficial interest to be issued hereunder as hereinafter
provided;
WHEREAS, the Trustees desire to establish a business
trust under the laws of the State of Delaware for the investment of
funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest
in the trust assets be divided into transferable units of beneficial
interest, as hereinafter provided; and
WHEREAS, the Trustees desire that Trust created and
operated hereby be treated as a partnership for United States federal
income tax purposes;
NOW, THEREFORE, the Trustees hereby declare that all
money and property contributed to the trust established hereunder shall
be held and managed in trust for the benefit of holders, from time to
time, of the units of beneficial interest issued hereunder and subject
to the provisions hereof.
ARTICLE I
NAME, INVESTMENT OBJECTIVE AND DEFINITIONS
Section 1.1 Name, Principal Office and Registered Agent.
The name of the trust created hereby is the "BlackRock MQE Investors"
(the "Trust").
The post office address of the principal office of the
Trust is 345 Park Avenue, New York, New York 10154. The name of the
registered agent of the Trust in the State of Delaware is The
Corporation Trust Company, a Delaware corporation, and the post office
address of the registered agent is 1209 Orange Street, Wilmington,
Delaware 19801.
Section 1.2 Investment Objective. The Trust will seek to
achieve high total returns through investment primarily in Subordinated
Debentures of Annington Finance No. 3 Limited or its affiliates, Warrants,
exercisable into common stock, of Annington Homes Limited or its
affiliates, and other securities issued in respect of such securities and,
at the discretion of the Trustees, by becoming subject to acquiring the NIF
of Annington Group Finance Limited or its affiliates and other securities
issued in respect of the NIF.
Section 1.3 Definitions. Wherever they are
used herein, the following terms have the following re-
spective meanings:
(a) "Administrator" means State Street Bank and Trust
Company or any successor or assign thereto furnishing administrative
services to the Trust.
(b) "Affiliate" means any Affiliate as defined in the
Rules adopted pursuant to Section 12 of the Securities Exchange Act of
1934, as amended from time to time.
(c) The terms "Affiliated Person," "Commission" and
"Interested Person" have the meanings given them in the 1940 Act.
(d) "BlackRock" means BlackRock Financial Management,
Inc., the Trust's Manager, and any permitted successor or assign
thereto.
(e) "Board" means the Board of Trustees of the Trust.
(f) "Business Day" means any day other than Saturdays,
Sundays and holidays on which banks in the City of New York or the New
York Stock Exchange are not open for business.
(g) "By-Laws" means the By-Laws referred to in Section
3.10 hereof, as from time to time amended.
(h) "Capital Calls" means such calls for payment of the
unpaid amounts of a Holder's Capital Commitment as the Trust may issue
from time to time in accordance with this Declaration.
(i) "Capital Commitments" means the aggregate amount of
funds committed to the Trust pursuant to subscription agreements between
the Trust and each Holder.
(j) "Capital Contribution" means a Capital Commitment
which has been paid to the Trust.
(k) "Commission" means the Securities and Exchange
Commission.
(l) "Code" means the Internal Revenue Code of 1986, as
amended.
(m) "Custodian" means any person other than the Trust who
has custody of any Trust Property as required by Section 17(f) of the
1940 Act, but does not include a system for the central handling of
securities described in said Section 17(f).
(n) "Declaration" means this Declaration of Trust as
amended from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein" and "hereunder" shall be deemed to
refer to this Declaration rather than the article or section in which
such words appear.
(o) "Delaware Act" means Chapter 38 of Title 12 of the
Delaware Code entitled "Treatment of Delaware Business Trusts" as
amended from time to time.
(p) "Hedging" means the utilization of Treasury,
mortgage, Eurodollar, Gilt, Sterling (and any other British Pound
instruments) and currency forwards, futures and options (on cash and
futures) and interest rate, currency and mortgage swaps, caps and floors
and other financial instruments, provided that the Trust may utilize
these instruments solely for the purposes of hedging the investment
risks of individual securities and of the portfolio as a whole and not
for speculative purposes.
(q) "Holder" means a record owner of outstanding Units.
(r) "Manager" means BlackRock Financial Management, Inc.
and any permitted successor or assign thereto furnishing investment
advisory services to the Trust.
(s) "NIF" means the Note Issuance Facility pursuant to
which working capital may be provided by the Trust to Annington Group
Finance Limited and its affiliates and other securities issued in
respect of the NIF.
(t) "Person" means and includes individuals,
corporations, partnerships, trusts, associations, joint ventures and
other entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof, whether domestic or
foreign.
(u) "Preferred Holder" means a record owner of
outstanding Preferred Units.
(v) "Preferred Units" means the preferred units of
beneficial interest in the Trust as described in Section 5.1 hereof and
includes fractions of Preferred Units as well as whole Preferred Units.
(w) "Quorum" means a majority of Trustees including at
least one (1) Preferred Trustee.
(x) "Subordinated Debt" means subordinated debt
instruments to be issued by Annington Finance No. 3 Limited or its
affiliates and other securities issued in respect of such securities.
(y) "Units" means the units of beneficial interest in the
Trust as described in Section 5.1 hereof and includes fractions of Units
as well as whole Units.
(bb) "Total Assets" means the value of the Trust's total
assets determined in accordance with the Valuation Policies.
(cc) "Transfer Agent" means State Street Bank and Trust
Company, and its Affiliate, Boston Financial Data Services, and any
successor or assign thereto furnishing transfer agency services to the
Trust.
(dd) "Trust" means BlackRock MQE Investors created
hereby.
(ee) "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
(ff) "Trustee" or "Trustees" means the person who has
signed the Declaration as a trustee, so long as he shall continue in
office in accordance with the terms hereof, and all other persons who
may from time to time be duly appointed or elected, qualified and
serving as Trustees in accordance with the provisions hereof, and
references herein to a Trustee or the Trustees shall refer to such
person or persons in their capacity as trustees hereunder.
(gg) "Valuation Policies" mean the policies and
guidelines approved from time to time by the Trustees.
(hh) "Warrants" mean warrants exercisable for common
stock of Annington Homes Limited or its affiliates and other securities
issued in respect of such securities.
(ii) "1940 Act" means the Investment Company Act of
1940, the Rules and Regulations thereunder and any order applicable to
the Trust granted thereunder, in each case as amended from time to time.
ARTICLE II
TRUSTEES
Section 2.1 Number of Trustees. The number of Trustees
initially shall be three (3), and thereafter the number of Trustees
shall be such number as shall be fixed from time to time by a written
instrument signed by a majority of the Trustees; provided, however, that
the number of Trustees shall in no event be less than three (3). No
reduction in the number of Trustees shall have the effect of removing
any Trustee from office prior to the expiration of his term unless the
Trustee is specifically removed pursuant to Section 2.2 of this Article
II at the time of the decrease.
The initial Trustee shall be:
Laurence D. Fink
The initial Trustees to be elected by the Preferred
Holders shall be:
Donald G. Drapkin
Kendrick R. Wilson
Section 2.2 Election and Term of Office of Trustees.
Except as otherwise provided in the Declaration, each Preferred Holder
shall be entitled to one vote for each Preferred Unit held on each
matter submitted to a vote of Holders and Preferred Holders of the Trust
and the Holders and Preferred Holders shall vote together as a single
class. Notwithstanding the preceding sentence, whenever a Trustee is to
be elected by the Preferred Holders, the Preferred Holders of
outstanding Preferred Units shall be entitled as a class, and to the
exclusion of the Holders of Units, to elect up to two Trustees
("Preferred Trustees"). In the event that the Declaration is amended to
eliminate the classification of the Trustees, the Preferred Holders
shall be entitled as a class, and to the exclusion of the Holders of
Units, to elect two Trustees. The Holders owning outstanding Units and
the Preferred Holders owning the outstanding Preferred Units, voting as
a single class, shall elect the balance of the Trustees. Plurality
voting shall govern the election of Trustees. Each Trustee elected or
appointed to office shall hold office until his successor shall have
been elected or appointed and shall have qualified or until his earlier
death, resignation or removal; except that (a) any Trustee may resign
his position (without need for prior or subsequent accounting) by an
instrument in writing signed by him and delivered to the other Trustees,
which shall take effect upon such delivery or upon such later date as is
specified therein; (b) any Trustee may be removed (provided that if
the aggregate number of Trustees after such removal shall be less than
the minimum number required by Section 2.1 hereof, his successor shall
be appointed or, if so required, elected, as soon as possible) with
cause, at any time by written instrument, signed by at least two-thirds
of the remaining Trustees, specifying the date when such removal shall
become effective; (c) any Trustee who requests in writing to be retired,
who has become incapacitated by illness or injury, or who has become
mentally incompetent may be retired by resolution by a majority of the
other Trustees, specifying the date of his retirement; and (d) any
Trustee may be removed with or without cause at any meeting of Holders
and Preferred Holders by a vote of 75% of the outstanding Units and
outstanding, if any, Preferred Units, voting in the aggregate;
notwithstanding the foregoing, any Preferred Trustee may be removed with
or without cause at any meeting of Preferred Holders by a vote of 75% of
the Preferred Units, if any, then outstanding. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall
execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property held in the name of the resigning or removed
Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as
the remaining Trustees shall require as provided in the preceding
sentence. As used in this Section 2.2, "cause" means (x) a Trustee's
willful failure or refusal to perform reasonable duties specified by
this Declaration and such failure or refusal continues for or is not
otherwise cured within four weeks after written notice thereof is sent
to the Trustee by the remaining Trustees of the Trust, provided,
however, that if such failure is incurable within such time it shall
have been material; (y) a Trustee's knowing violation of any applicable
law or any action other than voting that results in material injury to
the Trust; and (z) any breach (not covered by clauses (x) or (y) above)
of any of the provisions of this Declaration if such breach is material
and continues or is otherwise not cured within four weeks after written
notice thereof is sent to the Trustee by the remaining Trustees of the
Trust.
Section 2.3 Vacancies among Trustees. If a Trustee ceases
to hold office for any reason, or if the Trustees shall determine to
increase the number of Trustees as permitted under Section 2.1, a
vacancy shall occur. A resolution certifying the existence of such
vacancy by a majority of the Trustees shall be conclusive evidence of
the existence of such vacancy. Subject to the following provisions of
this Section 2.3, in the case of a vacancy, the remaining Trustees may
fill such vacancy by nominating and appointing such other person as they
in their discretion shall see fit. Notwithstanding the preceding sen-
tence, in the event of a Preferred Trustee vacancy, the remaining
Preferred Trustee may fill such Preferred Trustee vacancy by
nominating and appointing such other person as the remaining Preferred
Trustee in his discretion shall see fit. If no Trustee or Preferred
Trustee, as the case may be, exists to appoint another Trustee to fill a
vacancy, the vacancy is to be filled by a vote pursuant to Section
2.2.
Section 2.4 Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, incompetence or incapacity to perform
the duties of a Trustee, or any one of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms
of this Declaration. Whenever a vacancy in the number of Trustees shall
occur, until such vacancy is filled as provided in Section 2.3, the
Trustees in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by the Declaration.
Section 2.5 Committees. The Trustees may by resolution
appoint committees consisting of less than the whole number (but not
less than three) of Trustees then in office, which committees may be
empowered to act for and bind the Trustees and the Trust, as if the acts
of such committee were the acts of all the Trustees then in office, to
such extent as the Trustees shall determine.
The committees of the Trustees shall include a valuation
committee and an audit committee. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided
otherwise in this Declaration, any action of any such committee may be
taken at a meeting by vote of a majority of the members present (whether
in person or by telephone) provided that a quorum is present or without
a meeting by written consent of all of the members. No committee can
take any action that would circumvent any Board level voting
requirements. Subject to the foregoing restrictions, 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 committees
consisting in whole or in part of persons who are not trustees of the
Trust; provided, however, that no such committee shall have or may
exercise any authority or power of the Board in the management of the
business or affairs of the Trust.
Section 2.6 Delegation of Power. Any Trustee may, by
power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of
executing any registration statement or amendment thereto filed with the
Commission or making any other government filing.
The Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of
the Trust or the names of the Trustees or otherwise as the Trustees may
deem expedient, to the extent such delegation is not prohibited by the
1940 Act.
Section 2.7 Meetings. Meetings of the Trustees shall be
held from time to time upon the call of the Chairman, if any, the
President, the Secretary or any Trustee. Regular meetings of the
Trustees may be held at a time and place fixed by the By-Laws or by
resolution of the Trustees. Notice of any in-person meetings of the
Board of Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy
by overnight courier) not less than ten Business Days before such
meeting. Notice of any telephonic meetings of the Trustees or any
committee thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier)
not less than five Business Days before a meeting. Notices shall contain
a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Trustee
at a meeting shall constitute a waiver of notice of such meeting except
where a Trustee attends a meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in
this Declaration of Trust, any action of the Trustees may be taken at a
meeting by vote of a majority of the Trustees present (whether in
person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Trustees.
Section 2.8 Officers. The Trustees shall annually elect a
President, a Secretary and a Treasurer and may elect a Chairman. The
Trustees may elect or appoint or may authorize the Chairman, if any, or
President to appoint such other officers with such powers as the
Trustees may deem to be advisable. A Chairman shall, and the Pres-
ident, Secretary and Treasurer may, but need not, be a Trustee.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1 General. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of
the Trust to the same extent as if the Trustees were the sole owners of
the Trust Property in their own right, but with such powers of
delegation as may be permitted by the Declaration. The Trustees shall
have power to conduct the activities of the Trust and maintain offices
both within and without the State of Delaware, in any and all states of
the United States of America, in the District of Columbia, and in any
and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of
foreign governments and, subject to the other provisions of this
Declaration, to do all such other things and execute all such
instruments as the Trustees deem necessary, proper or desirable in
order to promote the interests of the Trust although such things are
not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of the Declaration, the
presumption shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be
construed as limiting and/or restricting the aforesaid general powers of
the Trustees. Such powers of the Trustees may be exercised without order
of or resort to any court.
Section 3.2 Investments. (a) Subject to the other
provisions of this Declaration, the Trustees shall have the power:
(i) to operate as and carry on
the business of an investment company, and exer-
cise all of the powers necessary or appropriate
to the conduct of such operations;
(ii) to subscribe for, invest
in, hold for investment, trade or reinvest in:
(A) the Subordinated Debt;
(B) the Warrants;
(C) the NIF;
(D) Treasury, mortgage, Eurodollar, Gilt,
Sterling (and any other British Pound instruments) and
currency forwards, futures and options (on cash and
futures) and interest rate, currency and mortgage
swaps, caps and floors and other financial instruments,
provided that the Trust may utilize these instruments
solely for the purposes of Hedging;
(E) financing arrangements, including reverse
repurchase agreements and dollar rolls;
(F) U.S. Government securities including U.S.
Treasury securities and securities issued by agencies
or instrumentalities of the U.S. Government;
(G) asset-backed securities that are rated in
one of the four highest rating categories by a nationally
recognized rating agency;
(H) corporate debt securities that are rated in
one of the four highest rating categories by a nationally
recognized rating agency;
(I) short-term investments that have a
remaining term to maturity at the time of purchase of no
greater than one year, including commercial paper rated
not lower than A-1/P-1 and other money market
instruments of similar credit standing, non-contingent
interest bearing deposits in banks chartered by or within
the United States with long-term ratings at least A-and
money market mutual funds; and
(J) subject to compliance with the 1940 Act,
any other type of asset investment in which is made in
furtherance of the Trust's investment objective and after
having received approval by a majority of the Trustees.
(iii) to exercise all rights, powers and
privileges of ownership or interest in all securities and
repurchase agreements included in the Trust Property, including
the right to vote thereon and otherwise act with respect thereto
and to do all acts for the preservation, protection, improvement
and enhancement in value of all such securities and repurchase
agreements;
(iv) subject to Sections 4.1 and 4.4, and the
leverage limitations of the 1940 Act, to leverage its assets to
the degree permitted by the 1940 Act; and to secure such
leverage by mortgaging, pledging or otherwise subjecting as
security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation, contract or
engagement of any other Person;
(v) subject to Sections 4.1 and 4.4, to aid by
further investment any corporation, company, trust, association
or firm, any obligation of or interest in which is included in
the Trust Property or in the affairs of which the Trustees in
their capacity as Trustees hereunder have any direct or
indirect interest; to do all acts and things designed to
protect, preserve, improve or enhance the value of such
obligation or interest; to guarantee or become surety on any or
all other contracts, stocks, bonds, notes, debentures and other
obligations of any such corporation, company, trust, association
or firm; and
(vi) to carry on any other business in
connection with or incidental to any of the foregoing powers, to
do everything necessary, suitable or proper for the
accomplishment of any purpose or the attainment of any object or
the furtherance of any power hereinbefore set forth, and to do
every other act or thing incidental or appurtenant to or
connected with the aforesaid purposes, objects or powers.
(b) The Trustees shall not be limited to investing in
obligations maturing before the termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be
made by fiduciaries.
(c) The Trust and the Manager will use their respective
best efforts to ensure that the Trust qualifies each year and elects to
be treated as a partnership under the Internal Revenue Code of 1986, as
amended.
(d) The Trust and the Manager will use their respective
best efforts to ensure that the Trust at all times is an investment
company for purposes of the 1940 Act and is duly registered as such
under the 1940 Act.
Section 3.3 Legal Title. Legal title to all the Trust
Property shall be vested in the Trustees as joint tenants except that
the Trustees shall have power to cause legal title to any Trust Property
to be held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee, on
such terms as the Trustees may determine. The right, title and interest
of the Trustees in the Trust Property shall vest automatically in each
Person who may hereafter become a Trustee. Upon the termination of the
term of office, resignation, removal or death of a Trustee he shall
automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
Section 3.4 Duties and Obligations of the Manager. (a)
Subject to the direction and control of the Trustees, the Manager shall
(i) act as investment adviser for and supervise and manage the
investment and reinvest-ment of the Trust's assets and in connection
therewith have complete discretion, subject to the Trust's restrictions
and limitations on investments as set forth in the Declaration, in
purchasing and selling securities and other assets for the Trust and in
voting, exercising consents and exercising all other rights appertaining
to such securities and other assets on behalf of the Trust; (ii)
supervise continuously the investment program of the Trust and the
composition of its investment portfolio; (iii) supervise the operations
and employees of the Trust's Affiliates; (iv) arrange, subject to the
provisions of this Section 3.4 hereof, for the purchase and sale of
securities and other assets held in the investment portfolio of the
Trust; (v) arrange for the administration of all other affairs of the
Trust and its Affiliates and, in this regard, provide supervision of
third parties engaged in such administration; (vi) maintain all of the
Trust's books and records other than those maintained by a third party
administrator, transfer agent, custodian or accountant; and (vii)
provide the Trust with adequate office space and all necessary office
equipment and services.
(b) The Manager will use its best efforts to (i) cause
the Trust's outstanding securities (other than short-term paper) to be
beneficially owned at all times by more than 100 persons as determined
in accordance with the provisions of Section 3(c)(1) of the 1940 Act and
(ii) cause the Trust not to be a company described in Sections 3(c)(5)
and/or 3(c)(6) of the 1940 Act. The Manager will provide the Trustees a
compliance report at each quarterly meeting reviewing each factor
related to the Trust's regulatory and tax obligations described in
Section 3.2(c) and Section 3.2(d).
(c) Subject to Section 3.4(h) hereof, in the performance
of its duties under this Agreement, the Manager shall at all times
conform to, and act in accordance with, any requirements imposed by (i)
the provisions of the 1940 Act and of the Investment Advisers Act of
1940, including any rules or regulations in force there-under; (ii) any
other applicable provision of law; (iii) the provisions of the
Declaration and By-Laws, as such documents are amended from time to
time; (iv) the investment objective, policies and restrictions of the
Trust as set forth in the Trust's registration statement on Form N-2,
as amended from time to time, the Memorandum, and any resolutions
adopted by requisite approval of the Trustees and/or requisite approval
of Unit Holders and Preferred Unit Holders; and (v) any other policies
and determinations of the Trustees. In addition, the Manager shall use
its best efforts to cause the Trust not to engage in any transaction
involving any person known to the Manager to be subject to Sections
17(a), 17(d) or 17(e) of the 1940 Act and the rules thereunder with
respect to the Trust such that any such person would violate any such
provision of the 1940 Act or the rules thereunder.
(d) The Manager will bear all costs and expenses of its
partners, directors, officers and employees, any overhead incurred in
connection with its duties hereunder, the costs of any compensation of
any officers or Trustees of the Trust who are partners, directors,
officers or employees of the Manager and all other costs and expenses of
the Trust not expressly stated in the sections below to be borne by the
Trust.
(e) The Manager will be responsible for paying any
organizational and offering expenses of the Trust in excess of an
aggregate of $750,000.
(f) In the event of the dissolution, bankruptcy,
insolvency or resignation of the Manager or upon the request of the
Trust, the Manager will return its Units to the Trust who may, unless
the Trust, within 90 days of such event, award such Units and investment
advisory responsibilities to another party; otherwise, the Trust will
promptly wind up its affairs.
(g) Nothing shall prevent the Manager or any director,
officer, employee or other affiliate thereof from acting as investment
adviser for any other person, firm or corporation, or from engaging in
any other lawful activity, and shall not in any way limit or restrict
the Manager or any of its directors, 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 Manager will undertake no activities which,
in its judgment, will adversely affect the performance of its
obligations under this Declaration.
(h) Other investment companies or accounts which the
Manager manages may also own the same investments as the Trust.
Investment decisions for the Trust are made independently from those of
such other investment companies or accounts; however, from time to time,
the same investment decision may be made for more than one company or
account. Subject to the foregoing, when two or more investment companies
or accounts managed by the Manager seek to purchase or sell the same
securities, the securities actually purchased or sold will be allocated
among the companies and accounts on a good faith equitable basis by the
Manager in its discretion in accordance with the accounts' various
investment objectives. In some cases, this system may adversely affect
the price or size of the position obtainable for the Trust. In other
cases, however, the ability of the Trust to participate in volume
transactions may produce better execution for the Trust.
Section 3.5 Portfolio Transactions and Brokerage. The
Manager shall, for the purchase and sale of the Trust's portfolio
securities, employ such securities dealers as will, in the reasonable
judgment of the Manager, result in the Trust's obtaining 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 positioning the securities involved. Consistent with this
requirement, the Manager is authorized to direct the execution of the
Trust's portfolio transactions to dealers and brokers furnishing
statistical information or research reasonably deemed by the Manager to
be useful or valuable to the performance of its investment advisory
functions for the Trust.
Section 3.6 Contracts with Service Providers. (a) The
form and terms of any investment advisory agreement and placement agent
agreements, and any amendments thereto, and any other contracts required
to be so approved under the 1940 Act, must be approved by a majority of
the Trustees who are not Interested Persons of the Trust.
(b) Any agreement of the character described in Section
3.6(a) may be entered into with any Person, although one or more of any
Affiliated Person of the Trust or any Affiliated Person of any such
Affiliated Person may be an officer, partner, director, trustee,
shareholder or holder of any other direct or indirect equity interest,
or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of
any such relationship; nor shall any Person holding such relationship be
disqualified from voting upon or executing any such contract; nor shall
any Person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of
said contract or accountable for any profit realized directly or
indirectly therefrom.
Section 3.7 Issuance and Purchase of Securities. Subject
to Section 5.4 and the following sentence, the Trustees shall have the
power to issue, sell, retire, cancel, hold, resell, reissue, dispose of,
transfer, and otherwise deal in Units and Preferred Units and subject to
the provisions set forth in Articles V, VI and VII hereof, to apply to
any such retirement or cancellation of Units or Preferred Units any
funds or property of the Trust whether capital or surplus or otherwise,
to the full extent now or hereafter permitted by the laws of the State
of Delaware governing business corporations.
Section 3.8 Collection and Payment. The Trustees shall
have power to collect all property due to the Trust; to pay all claims,
including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations by virtue of
which any property is owed to the Trust; and to enter into releases,
agreements and other instruments.
Section 3.9 Expenses. The Trustees shall have the power
to incur and pay any expenses which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of the
Declaration, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the compensation
of all officers and Trustees. No Trustee or officer of the Trust who is
a partner, director, officer or employee of the Manager will receive
compensation from the Trust. The Trust will pay all costs of
establishing the Trust up to $750,000.
Section 3.10 Manner of Acting; By-Laws. Except as
otherwise provided herein or in the By-Laws, any action to be taken by
the Trustees may be taken by a majority of the Trustees present (whether
in person or by telephone) at a meeting of Trustees, provided that a
Quorum is present, including any meeting held by means of a conference
telephone circuit or similar communications equipment by means of which
all persons participating in the meeting can hear each other, or by
written consents of all the Trustees. Subject to the requirements of the
1940 Act, the Board, by affirmative vote of a majority thereof, shall
have the exclusive right to amend, alter or repeal the By-Laws at any
meeting of the Board, except any particular By-Law which is specified
as not subject to alteration or repeal by the Board.
Section 3.11 Miscellaneous Powers. Subject to the other
provisions of this Declaration, the Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust; (b) enter
into joint ventures, partnerships and any other combinations or
associations in furtherance of the Trust's investment objective; (c)
remove Trustees and elect and remove such officers as they consider
appropriate, and appoint from their own number, and terminate, any one
or more committees which may exercise some or all of the power and
authority of the Trustees as the Trustees may determine; (d) purchase,
and pay for out of Trust Property its allocable share of premiums
therefor, insurance policies insuring the Holders and Preferred Holders,
Trustees, officers, investment advisors, distributors, selected dealers
or independent contractors of the Trust against claims arising by reason
of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) to the extent per-
mitted by Section 4.2, indemnify any person with whom the Trust has
dealings, including the Manager, Transfer Agent, Administrator,
Custodian and selected dealers to such extent as the Trustees shall
determine; (f) determine and change the fiscal year of the Trust and the
method by which its accounts shall be kept; and (g) adopt a seal for the
Trust but the absence of such seal shall not impair the validity of any
instrument executed on behalf of the Trust.
Section 3.12 Interested Transactions. Without in any way
limiting or imposing further requirements with respect to Sections
3.6(b) or 9.7, subject to compliance with the 1940 Act, no agreement or
transaction between the Trust, on the one hand, and one or more of the
Trustees or officers of the Trust, or any entity in or with respect to
which any Trustee or officer of the Trust has any official position or
financial interest, on the other hand, shall be void or voidable solely
for that reason or solely because such Trustee or officer attends or
participates in the meeting of the Trustees or a committee of Trustees
that authorizes such agreement or transaction, or solely because his
attendance is counted toward a quorum of a committee or Quorum of the
Board of Trustees or his vote is counted toward such authorization, if:
(1) the material facts as to his relationship or interest and as to
the agreement or transaction are disclosed to or known by the remaining
Trustees or such committee, and the Trustees or such committee
authorizes the agreement or transaction by the requisite vote required
pursuant to this Declaration, excluding any Trustee subject to the
foregoing provisions whose vote is counted toward such authorization
even though the remaining Trustees are less than the otherwise required
number; (2) such material facts are disclosed to or known by the Holders
and Preferred Holders asked to vote on such agreement or transaction,
and such agreement or transaction is specifically approved in good faith
by the Holders and Preferred Holders; or (3) such agreement or
transaction is fair to the Trust at the time it is approved or
ratified by the Trustees, or committee thereof or the Holders and
Preferred Holders.
ARTICLE IV
LIMITATIONS OF LIABILITY OF HOLDERS,
PREFERRED HOLDERS, TRUSTEES AND OTHERS
Section 4.1 No Personal Liability of Holders, Preferred
Holders, Trustees, etc. No Holder or Preferred Holder of the Trust shall
be subject in such capacity to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or
affairs of the Trust. Holders and Preferred Holders shall have the same
limitation of personal liability as is extended to stockholders of a
private corporation for profit incorporated under the general
corporation law of the State of Delaware. No Trustee or officer of the
Trust shall be subject in such capacity to any personal liability
whatsoever to any Person, other than the Trust or its Holders and
Preferred Holders, in connection with Trust Property or the affairs of
the Trust, save only liability to the Trust or its Holders and Preferred
Holders arising from bad faith, willful misfeasance, gross negligence
(negligence in the case of those Trustees or officers who are partners,
shareholders, directors, officers or employees of the Manager
("Affiliated Indemnit-ees")) or reckless disregard for his duty to such
Person; and, subject to the foregoing exception, all such Persons shall
look solely to the Trust Property for satisfaction of claims of any
nature arising in connection with the affairs of the Trust. If any
Holder or Preferred Holder, Trustee or officer, as such, of the Trust,
is made a party to any suit or proceeding to enforce any such liability,
subject to the foregoing exception, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnify and hold each
Holder and Preferred Holder harmless from and against all claims and
liabilities to which such Holder or Preferred Holder may become subject
by reason of his being or having been a Holder or Preferred Holder, and
shall reimburse such Holder or Preferred Holder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Holder or Preferred Holder under
this Section 4.1 shall not exclude any other right to which such Holder
or Preferred Holder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Holder or Preferred Holder in any appropriate situation even though not
specifically provided herein.
Section 4.2 Mandatory Indemnification. (a) The Trust
hereby agrees to indemnify the Trustees and officers of the Trust, the
Manager and each of the Manager's partners, 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 in this Section 4.2 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 Trust
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 negli-
gence (negligence in the case of 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 Trust-
ees.
(b) Notwithstanding the foregoing, no indemnification
shall be made hereunder unless there has been a determination (1) by a
final decision on the merits by a court or other body of competent
jurisdiction before whom the issue of entitlement to indemnification
hereunder was brought that such indemnitee is entitled to indemnifi-
cation hereunder or, (2) in the absence of such a decision, by (i) a
majority vote of a quorum of those Trustees who are neither "interested
persons" of the Trust (as defined in Section 2(a)(19) of the 1940 Act)
nor parties to the proceeding ("Disinterested Non-Party Trustees"), that
the indemnitee is entitled to indemnification hereunder, or (ii) if
such quorum is not obtainable or even if obtainable, if such majorities
so direct, independent legal counsel in a written opinion conclude that
the indemnitee should be entitled to indemnification hereunder. All
determinations to make advance payments in connection with the expense
of defending any proceeding shall be authorized and made in accordance
with the immediately succeeding paragraph (c) below.
(c) The Trust shall make advance payments in connection
with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Trust receives a
written affirmation by the indemnitee of the indemnitee's good faith
belief that the standards of conduct necessary for indemnification have
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that he is entitled to such indemnification and
if a majority of the Trustees determines that the applicable standards
of conduct necessary for indemnification appear to have been met. In
addition, at least one of the following conditions must be met: (1) the
indemnitee shall provide adequate security for his undertaking, (2) the
Trust shall be insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of the Disinterested Non-Party
Trustees, or if a majority vote of such quorum so directs, independent
legal counsel in a written opinion, shall conclude, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that
there is substantial reason to believe that the indemnitee ultimately
will be found entitled to indemnification.
(d) The rights accruing to any indemnitee under these
provisions shall not exclude any other right to which he may be lawfully
entitled.
(e) Subject to any limitations provided by the 1940 Act
and this Declaration, the Trust shall have the power and authority to
indemnify other Persons providing services to the Trust to the full
extent provided by law as if the Trust were a corporation organized
under the Delaware General Corporation Law provided that such indem-
nification has been approved by a majority of the Trustees.
Section 4.3 No Bond Required of Trustees. Subject to
Section 4.2(c)(i), no Trustee shall be obligated to give any bond or
other security for the performance of any of his duties hereunder.
Section 4.4 No Duty of Investigation; Notice in Trust
Instruments, etc. No purchaser, lender, transfer agent or other Person
dealing with the Trustees or any officer of the Trust shall be bound to
make any inquiry concerning the validity of any transaction purporting
to be made by the Trustees or by said officer or be liable for the
application of money or property paid, loaned or delivered to or on the
order of the Trustees or of said officer. Every obligation, contract,
instrument, certificate, Unit or Preferred Unit other security of the
Trust or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as
Trustees under this Declaration or in their capacity as officers of
the Trust. Every written obligation, contract, instrument, certificate,
Unit or Preferred Unit, other security of the Trust or undertaking made
or issued by the Trustees or by any officer of the Trust shall recite
that the same is executed or made by them not individually, but as
Trustees under this Declaration or as an officer of the Trust, and that
the obligations of the Trust under any such instrument are not binding
upon any of the Trustees or Holders or Preferred Holders, individually,
but bind only the Trust estate, and may contain any further recital
which they or he may deem appropriate, but the omission of such recital
shall not operate to bind the Trustees or Holders or Preferred Holders
individually.
Section 4.5 Reliance on Experts, etc. Each Trustee or
officer of the Trust shall, in the performance of his duties, be fully
and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of
account or other records of the Trust, upon an opinion of counsel, or
upon reports made to the Trust by any of its officers or agents selected
with reasonable care by the Trustees or officers of the Trust,
regardless of whether such officer or agent may also be a Trustee.
ARTICLE V
UNITS OF BENEFICIAL INTEREST
Section 5.1 Beneficial Interest. The interest of the
beneficiaries hereunder shall be divided into Units of beneficial
interest with par value of $.01 per Unit. The number of Units of
beneficial interest authorized hereunder is 100,000,000 Units. The Trust
is also authorized to issue up to 200 Preferred Units, par value $.01,
per Preferred Unit. The Preferred Units will pay cumulative dividends
when, as and if declared by the Trustees at the rate of 10% per year,
will have a liquidation preference equal to $500 per Preferred Unit plus
accumulated and unpaid dividends, will be redeemable in whole or in part
at any time at liquidation preference and will have all voting and other
rights required by the 1940 Act. All Units or Preferred Units issued
hereunder including, without limitation, Units or Preferred Units issued
in connection with a dividend in Units or Preferred Units or a split of
Units or Preferred Units, shall be fully paid and non-assessable upon
payment in full of such consideration not less than the par value
thereof as may be determined by the Trustees.
The designations and powers, preferences and rights, and
the qualifications, limitations and restrictions of the Units and
Preferred Units are as set forth in this Declaration.
Section 5.2 Rights of Holders and Preferred Holders. The
ownership of the Trust Property of every description and the right to
conduct any business hereinbe-fore described are vested exclusively in
the Trustees, and the Holders and Preferred Holders shall have no right
to call for any partition or division of any property, profits, rights
or interests of the Trust nor can they be called upon to assume any
losses of the Trust or suffer any assessment of any kind by virtue of
their ownership of Units and Preferred Units if fully paid. The Units
and Preferred Units shall be personal property giving only the rights in
this Declaration specifically set forth herein, the Delaware Act and any
other applicable laws of the State of Delaware. Other than a preference
for the Preferred Units with respect to dividends and liquidation
preference, the Units and Preferred Units shall not entitle the holder
to preference, preemptive, appraisal, conversion or exchange rights,
except as the Trustees may determine with respect to any class or series
of Units or Preferred Units, as the case may be.
Section 5.3 Trust Only. It is the intention of the
Trustees to create only the relationship of Trustee and beneficiary
between the Trustees and each Holder or Preferred Holder, although the
Trustees, Holders and Preferred Holders recognize and intend that the
Trust will constitute a partnership for United States federal income tax
purposes. It is not the intention of the Trustees to create a general
partnership, limited partnership (other than for tax purposes), joint
stock association, corporation, bailment or any form of legal
relationship other than a trust. Nothing in the Declaration shall be
construed to make the Holders or Preferred Holders, either by themselves
or with the Trustees, partners and members of a joint stock association.
Section 5.4 Issuance of Units and Preferred Units. The
Trustees in their discretion may issue Units and Preferred Units to
Persons from whom the Trust has accepted, on or prior to November 1,
1996, binding agreements to subscribe for Units or Preferred Units, as
the case may be. All issuances of Units and Preferred Units shall be in
accordance with the terms of the relevant forms of subscription
agreements. The maximum aggregate dollar amount of Units for which
subscription agreements may be accepted is $75 million and the maximum
aggregate dollar amount of Preferred Units for which subscription
agreements may be accepted is $100,000. In connection with the issuance
of Units and Preferred Units, the Trustees may issue fractional Units
and Preferred Units, as the case may be. Contributions to the Trust may
be accepted for whole Units and/or 1/1,000ths of a Unit or integral
multiples thereof. Fractional Preferred Units may not be issued.
Section 5.5 Capital Calls. All Capital Calls required of
the Holders will be made on a pro rata basis in proportion to each
respective Holder's undrawn Capital Commitment to the Trust.
Section 5.6 Register of Units and Preferred Units. A
register or registers shall be kept at the principal office of the Trust
or at an office of the Transfer Agent which shall contain the names and
addresses of the Holders and Preferred Holders and the number of Units
and Preferred Units held by them respectively and a record of all
transfers thereof. Such register shall be conclusive as to who are the
holders of the Units or Preferred Units and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the
rights of Holders or Preferred Holders, as the case may be. No Holder or
Preferred Holder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the
By-Laws provided, until he has given his address to the Transfer Agent
or such other officer of the Trustees as shall keep the said register
for entry thereon.
Section 5.7 Transfer of Units. (a) The Units and
Preferred Units shall be transferable only with the prior written
consent of the Trust and the Manager, which may be withheld for any
reason or without reason. Without limiting the generality of the
foregoing, the Trust and the Manager shall withhold consent to a
transfer of Units and Preferred Units if the Trust would be required to
register such transfer or any class of its securities under the
securities laws of any jurisdiction, if the transferee would disqualify
the Trust from being eligible to pay performance fees, if any, under
Rule 205-3 of the Investment Advisers Act of 1940, as amended, or in the
absence of a written opinion of reputable counsel requested by the Trust
to the effect that the transfer of Units or Preferred Units constitutes
a private transaction exempt from registration under U.S. securities
laws. In addition, the Trust and Manager shall not consent to any
transfer which would cause the Trust to terminate for tax purposes under
Section 708 of the Code or would cause the Trust to be treated as a
publicly traded partnership under section 7704(b) of the Code. Any
amendment to this Section requires unanimous Trustee approval.
(b) The Units and Preferred Units shall be transferable
on the records of the Trust only by the record holder thereof or by his
agent thereunto duly authorized in writing, upon delivery to the
Trustees or the Transfer Agent of a duly executed instrument of
transfer, together with any certificate or certificates (if issued) for
such Units or Preferred Units and such evidence of the genuineness of
each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be
recorded on the register of the Trust. Until such record is made, the
Holder or Preferred Holder of record shall be deemed to be the holder of
such Units or Preferred Units, as the case may be, for all purposes
hereunder and neither the Trustees nor any Transfer Agent or registrar
nor any officer of the Trust shall be affected by any notice of the
proposed transfer.
(c) Any Person becoming entitled to any Units or
Preferred Units in consequence of the death, bankruptcy, or incompetence
of any Holder or Preferred Holder or otherwise by operation of law shall
not be recorded on the register of Units or Preferred Units, as the case
may be, as the holder of such Units or Preferred Units until such time
that the Trustees consent to such recordation; until such record is
made, the Holder or Preferred Holder of record shall be deemed to be the
holder of such Units or Preferred Units, as the case may be, for all
purposes hereunder and neither the Trustees nor any Transfer Agent or
registrar nor any officer of the Trust shall be affected by any notice
of such death, bankruptcy or incompetence, or other operation of law.
Section 5.8 Notices. Unless otherwise provided herein,
any and all notices to which any Holder or Preferred Holder may be
entitled and any and all communications shall be deemed duly served or
given if mailed, postage prepaid, addressed to any such Holder or
Preferred Holder of record at his last known address as recorded on the
register of the Trust. Such notice shall be effective on the fifth
Business Day after it is so given or served.
Section 5.9 Distribution. The Trust shall distribute from
time to time, rather than reinvest, all net proceeds from its investment
activities in excess of amounts needed by the Trust for working capital.
Notwithstanding the preceding sentence, pending distribution, such net
proceeds may be invested in instruments detailed in Section
3.2(a)(ii)(C)-(H).
ARTICLE VI
DETERMINATION OF NET ASSET VALUE
Section 6.1 Net Asset Value. The net asset value (the
"NAV") of the Units will be calculated quarterly as of each January 31,
April 30, July 31 and October 31, in connection with each issuance of
Units by the Trust, as of each distribution declaration date (after
giving effect to the relevant declaration), as of the first anniversary
of the Trust's operations, as of the date on which the Trust terminates,
and more frequently as determined by the Manager or a majority of the
Trustees (each such date hereinafter referred to as an "NAV
Determination Date"), in accordance with Valuation Policies and
guidelines approved from time to time by a majority of the Trustees.
ARTICLE VII
CAPITAL ACCOUNTS OF HOLDERS
AND OPERATION THEREOF
Section 7.1 Capital Accounts; Division of Net Income and
Net Loss.
(a) Establishment and Maintenance of Capital Accounts.
The Trust shall establish and maintain a separate account (the "Capital
Account") for each Holder and each Preferred Holder. The initial balance
of the Capital Account for each Holder or Preferred Holder shall be such
person's portion of its capital commitment that has been called pursuant
to Section 5.5 hereof (a "Capital Contribution") to the Trust. The
Capital Account of each Holder or Preferred Holder shall be increased by
(i) the dollar amount of any additional contributions made by such
Holder or Preferred Holder, and (ii) allocations to such Holder or
Preferred Holder of income and gain (including income exempt from tax).
The Capital Account of each Holder or Preferred Holder shall be
decreased by (i) the dollar amount of any distributions made to such
Holder, (ii) the fair market value of any property distributed to such
Holder or Preferred Holder (net of any liabilities to which such
property is subject), and (iii) allocations to such Holder or Preferred
Holder of loss and deduction (including expenditures not deductible in
computing the Trust's income or loss for Federal income tax purposes).
(b) Compliance with Regulations. Notwithstanding any
other provision of this Agreement to the contrary, the foregoing
provisions of Section 7.1(a) regarding the maintenance of Capital
Accounts shall be construed so as to comply with the provisions of the
Treasury Regulations promulgated pursuant to section 704 of the Code.
The Manager and Trustees are hereby authorized to modify the foregoing
provisions to the minimum extent necessary to comply with such Treasury
Regulations. Any such modifications shall be made in a manner that does
not alter the Holders' or Preferred Holders' rights to distributions
under Article V as if all investments had been sold in the year prior to
the liquidation of the Trust.
Section 7.2 General Partner Deficit Make-up. Upon
dissolution of the Partnership, the General Partner shall contribute to
the Partnership an amount equal to the lesser of (a) the aggregate
deficit balances, if any, in its Capital Account and (b) the excess of
(i) 1.01% of the total Capital Contributions of the Limited Partners of
the Partnership over (ii) any capital previously contributed by the
General Partner or such lesser amount described in Section 4.04 of Rev.
Proc. 89-12, 1989-1 C.B. 798.
Section 7.3 Allocation of Net Income from Operations. The
Net Income of the Trust for each Fiscal Year shall be allocated as
follows:
(a) First, the Holders who have negative balances in
their Capital Accounts, in proportion to the respective amounts of such
negative balances;
(b) Second, to the Preferred Holders to the extent of
distributions declared and paid with respect to the Preferred Units held
by such Preferred Holders;
(c) Third, to the Holders pro rata in accordance with
such Holders' respective Capital Contributions until each such Holder
has been allocated an amount equal to a cumulative five percent return
on Capital Contributions;
(d) Fourth, to the Manager in an amount equal to a
cumulative return of one percent of all Capital Contributions; and
(e) Fifth, to the Holders pro rata in accordance with
such Holders' respective Capital Accounts.
Section 7.4 Allocation of Net Loss. Net Loss of the Trust
for each Fiscal Year shall be allocated as follows:
(a) First, one percent to the Manager and 99 percent to
the Holders (other than the Manager); provided, however, that no
Holder's Capital Account (other than the Capital Account of the Manager)
may be reduced below zero by reason of a distribution of Net Loss
pursuant to this section, pro rata in accordance with and to the extent
of the aggregate positive balances of the Holders' Capital Accounts; and
(b) The balance, if any, to the Manager.
Section 7.5 Tax Allocations. Allocations of Trust Net
Income and Net Loss shall be made to the Holders and Preferred Holders
for Federal, state and other tax purposes in accordance with the
provisions of this Article VII. In the event the allocations set forth
in this Article VII are disallowed by the Internal Revenue Service, such
allocations shall be deemed to be amended to the minimum extent
necessary to conform with section 704 of the Code.
Section 7.6 Allocation to Manager. Notwithstanding
anything to the contrary that may be expressed or implied in this
Agreement, the interest of the Manager in each item of Trust income,
gain, loss, deduction and credit shall be equal to at least one percent
of each of those items at all times during the existence of the Trust.
Section 7.7 Assignment During Fiscal Year. If a Holder's
or Preferred Holder's interest in the Trust is transferred at any time
other than at the end of a Fiscal Year of the Trust, each item of
income, gain, loss, deduction and credit attributable to such interest
for the Fiscal Year in which the transfer occurs shall be divided and
allocated proportionately between the transferor and the transferee in
the same ratio as the number of days in the Fiscal Year respectively
before and after the date the transfer is recognized by the Trust bears
to the number of days in such Fiscal Year.
Section 7.8 Qualified Income Offset. If any Holder or
Preferred Holder unexpectedly receives any adjustment, allocation or
distribution described in Treasury Regulation section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Trust income and gain
shall be specially allocated to such Holder or Preferred Holder in an
amount and manner sufficient to eliminate any deficit in its Capital
Account created by such adjustment, allocation or distribution as soon
as practicable. This Section 7.8 is intended to constitute a "qualified
income offset" within the meaning of Treasury Regulation section 1.704-
1(b)(2)(ii)(d)(3).
Section 7.9 Book-Ups. The Manager may adjust the fair
market values of all the Trust's assets to equal their respective gross
fair market values, as determined by the Trustees or the Valuation
Committee, as of the following times:
(a) (i) the acquisition of an additional Unit by any new
or existing Holder or Preferred Holder in exchange for more than a de
minimis Capital Contribution; (ii) the distribution by the Trust to a
Holder or Preferred Holder of property as consideration for all or any
part of a Unit owned by the Holder or Preferred Holder; (iii) at such
times as the Manager shall determine in order to carry out the purposes
for which the Trust is established, and (iv) the liquidation of the
Trust within the meaning of Treasury Regulations section l.704-
l(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses
(i), (ii) and (iii) above shall be made only if the Manager reasonably
determines that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Holders and Preferred Holders in
the Trust;
(b) the distribution of any Trust asset to any Holder or
Preferred Holder, which distribution shall be treated as made for an
amount equal to the gross fair market value of such asset on the date of
distribution; and
(c) the fair market values of Trust assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code section 734(b) or Code section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Treasury Regulations
section l.704-l(b)(2)(iv)(m) and section 754 of the Code; provided,
however, that fair market values shall not be adjusted pursuant to this
subsection (c) to the extent the Manager determines that an adjustment
pursuant to subsection (a) above is necessary or appropriate in
connection with a transaction that would otherwise result in an
adjustment pursuant to this subsection (c).
Section 7.10 Taxation as Partnership. The Trust shall be
treated as a partnership for United States federal income tax purposes
and the Holders and Preferred Holders agree not to take any action
inconsistent with the Trust's classification as a partnership for United
States federal income tax purposes.
Section 7.11 Election to be Treated as Partnership. If,
subsequent to the formation of the Trust, Treasury Regulations or other
administrative rules are promulgated that would allow the Trust to make
an election to be treated as either a partnership or an association
taxable as a corporation for United States federal income tax purposes,
the Tax Matters Partner (as defined below) shall promptly make an
election to be treated as a partnership for federal income tax purposes.
In addition, if a retroactive election to be treated as a partnership
for United States federal income tax purposes is permitted by such
Treasury Regulations or other administrative rules, then the Tax Matters
Partner shall make such retroactive election effective as of the date of
formation of the Trust. By executing the form of Subscription Agreement,
each of the Holders and Preferred Holders hereby consents to any
election (including both retroactive and prospective elections) made by
the Tax Matters Partner and consents to take any action necessary,
including, without limitation, the execution of any forms and documents,
for the Trust to be treated as a partnership for United States federal
income tax purposes.
Section 7.12 Tax Matters Partner. The Manager shall act
as the Tax Matters Partner ("Tax Matters Partner") of the Trust under
Section 6231 of the Code and the Treasury Regulations thereunder. Each
Holder and Preferred Holder hereby consents to such designation and
agrees that upon the request of the Holder or Preferred Holder it will
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or
appropriate to evidence such consent. Upon the resignation, death, legal
incompetency, or bankruptcy of the Manager, a successor to serve in such
capacity shall be designated by a majority vote of the remaining Holders
and Preferred Holders voting in the aggregate. The Tax Matters Partner
may employ experienced tax counsel to represent the Trust in connec-
tion with any audit or investigation of the Trust by the Internal
Revenue Service ("IRS"), and in connection with all subsequent
administrative and judicial proceedings arising out of such audit. The
fees and expenses of such counsel shall be a Trust expense and shall be
paid by the Trust. Such counsel shall be responsible for representing
the Trust; it shall be the responsibility of the Holders and Preferred
Holders, at their own expense, to employ tax counsel to represent their
respective separate interests. The Tax Matters Partner shall keep the
Holders and Preferred Holders informed of all administrative and
judicial proceedings as required by Section 6223(g) of the Code and
shall furnish to each Holder and Preferred Holder a copy of each notice
or other communication received by the Tax Matters Partner from the IRS
except such notice or communication sent directly to the Holders or
Preferred Holders by the IRS. All expenses incurred by the Tax Matters
Partner in serving in such capacity shall be Trust expenses and shall
be paid by the Trust.
Section 7.13 Right to Make Section 754 Election. The
Manager may, in its sole discretion, make or revoke, on behalf of the
Trust, an election under Section 754 of the Code and the Tax Matters
Partner shall take all action necessary to give effect to such election
or revocation. Each Holder or Preferred Holder shall, upon request of
Manager, promptly at such Holder's or Preferred Holder's cost supply the
Tax Matters Partner information necessary to give effect to such
election and/or revocation.
Section 7.14 Special Tax Allocations.
(a) Minimum Gain Chargeback. Except as otherwise provided
in Treasury Regulations section 1.704-2(f), notwithstanding any other
provision of this Article VII, if there is a net increase in Partnership
Minimum Gain during any Fiscal Year, each Holder or Preferred Holder
shall be specially allocated items of Trust income and gain for such
Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Holder's or Preferred Holder's share, if any, of the net
decrease in Partnership Minimum Gain, determined in accordance with
Treasury Regulations section 1.704-2(g). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Holder or Preferred Holder pursuant
thereto. The items to be so allocated shall be determined in accordance
with Treasury Regulations sections 1.704-2(f)(6) and 1.704-2(j)(2). This
Section 7.14(a) is intended to comply with the minimum gain chargeback
requirement in Treasury Regulations section 1.704-2(f) and shall be
interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulations section 1.704-2(i)(4), notwithstanding
any other provision of this Article VII, if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to a Partner
Nonrecourse Debt during any Fiscal Year, each Holder or Preferred Holder
who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Treasury Regulations section 1.704-2(i)(5), shall be specially
allocated items of Trust income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Holder's
or Preferred Holder's share of the net decrease in Partner Nonrecourse
Debt Minimum Gain attributable to such Partner Nonrecourse Debt, deter-
mined in accordance with Treasury Regulations section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each
Holder or Preferred Holder pursuant thereto. The items to be so allo-
cated shall be determined in accordance with Treasury Regulations
sections 1.704-2(i)(4) and 1.704(j)(2). This Section 7.14(b) is intended
to comply with the minimum gain chargeback requirement in Treasury
Regulations section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(c) Nonrecourse Deductions. Any Nonrecourse Deductions
for any Fiscal Year shall be specially allocated among the Holders and
Preferred Holders in accordance with Treasury Regulations section
1.704-2.
(d) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Fiscal Year shall be specially allocated
to the Holder or Preferred Holder who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations section 1.704-2(i)(1).
Section 7.15 No Deficit Makeup. Notwithstanding anything
herein to the contrary, upon the liquidation of the Trust, no Holder or
Preferred Holder shall be required to make any Capital Contribution to
the Trust in respect of any deficit in such Holder's or Preferred
Holder's Capital Account.
Section 7.16 Certain Definitions. For the purposes of
this Article VII, unless the context otherwise requires:
(a) "Adjusted Capital Account Deficit" means, with
respect to any Holder, the deficit balance, if any, in such Holder's
Capital Account as of the end of the relevant fiscal year, after giving
effect to the following adjustments: (a) credit to such Capital Account
any amounts which such Holder is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore
pursuant to Treasury Regulations section 1.704-2(g) and Treasury
Regulations section 1.704-2(i) (5) and (b) debit to such Capital
Account the items described in Treasury Regulations sections 1.704-
l(b)(2)(ii)(d)(4),(5) and (6).
(b) "Net Income" means the net income generated by the
Trust with respect to a Fiscal period, as determined for U.S. Federal
income tax purposes, provided that such income shall be increased by the
amount of all income during such period that is exempt from U.S. Federal
income tax and decreased by the amount of all expenditures made by the
Trust during such period which are not deductible for U.S. Federal
income tax purposes and which do not constitute capital expenditures.
(c) "Net Loss" means the net loss generated by the
Trust with respect to a Fiscal Period, as determined for U.S. Federal
income tax purposes, provided that such loss shall be decreased by the
amount of all income during such period which is exempt from U.S.
Federal income tax and increased by the amount of all expenditures made
by the Trust during such period which are not deductible for U.S.
Federal income tax purposes and which do not constitute capital
expenditures.
(d) "Nonrecourse Deductions" has the meaning set forth in
Treasury Regulations section l.704-2(b)(l).
(e) "Partner Nonrecourse Debt" has the meaning set forth
in Treasury Regulations section 1.704-2(b)(4).
(f) "Partner Nonrecourse Debt Minimum Gain" has the
meaning set forth in Treasury Regulations section 1.704-2(i)(2).
(g) "Partner Nonrecourse Deductions" has the meaning set
forth in Treasury Regulations section 1.704-2(i)(1).
(h) "Partnership Minimum Gain" has the meaning set forth
in Treasury Regulations section 1.704-2(b)(2).
(i) "Treasury Regulations" mean the Income Tax
Regulations promulgated under the Code, as such regulations may be
amended from time to time.
ARTICLE VIII
LIMITED EXISTENCE; TERMINATION
OF TRUST; AMENDMENT; MERGERS, ETC.
Section 8.1 Limited Existence. (a) Unless terminated
earlier, the Trust shall terminate on December 31, 2021, subject to no
more than two separate one-year extensions approved by holders of a
majority of the Trust's Units and Preferred Units. The Trust will also
terminate and promptly wind up affairs upon (i) a determination to do
so by a vote of the holders of 75% of the Units of the Trust and 75% of
the Preferred Units (if any) then outstanding or (ii) the dissolution,
bankruptcy, insolvency or resignation (each, a Disabling Event") of the
Manager, unless all remaining Holders agree to continue the activities
of the Trust within 90 days of such Disabling Event.
Section 8.2 Termination of Trust. Upon the termination of
the Trust:
(a) The Trust shall carry on no business except for the
purpose of winding up its affairs;
(b) The Trustees shall proceed to wind up the affairs of
the Trust and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to
one or more persons at public or private sale for consideration which
may consist in whole or in part of cash, securities or other property of
any kind, discharge or pay its liabilities, and to do all other acts
appropriate to liquidate its business;
(c) After paying or adequately providing for the payment
of all liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees shall distribute the remaining Trust Property, in cash only
among the Holders in accordance with their respective Capital Accounts,
after giving effect to the rights of the Preferred Holders; and
(d) After termination of the Trust and distribution to
the Holders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust an instrument in writing
setting forth the fact of such termination, and the Trustees shall
thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Holders and Preferred
Holders shall thereupon cease.
Section 8.3 Amendment Procedure. (a) Except as otherwise
provided herein and except as otherwise required by law, this
Declaration may be amended upon such terms and conditions authorized at
any meeting of Holders and Preferred Holders called for that purpose by
the affirmative vote of not less than two-thirds of the Units and
Preferred Units, voting in the aggregate, outstanding and entitled to
vote, or by an instrument or instruments in writing without a meeting
executed by Holders and Preferred Holders with respect to not less than
two-thirds of such Units and Preferred Units, voting in the aggregate.
Where separate class voting is required by the 1940 Act, an affirmative
vote of not less than two-thirds of such class shall be necessary to
amend such term or condition. The Trustees may also amend this
Declaration without the vote or consent of Holders and Preferred Holders
to change the name of the Trust, to cure or correct any inconsistent
provision hereof, or if they deem it necessary to conform this
Declaration to the requirements of applicable federal securities laws or
regulations or the requirements of the regulated investment company
provisions of the Code, but the Trustees shall not be liable for failing
so to do.
(b) No amendment may be made which would change any
rights with respect to any Units or Preferred Units by reducing the
amount payable thereon upon liquidation of the Trust or by diminishing
or eliminating any voting rights pertaining thereto, except with the
unanimous vote or consent of the holders of the Units and/or Preferred
Units so affected. No amendment may be made to Section 10.6 of this
Declaration without the prior written consent of BlackRock.
(c) Nothing contained in this Declaration shall permit
the amendment of this Declaration to impair the exemption from personal
liability of the Holders and Preferred Holders, Trustees or officers of
the Trust or to permit assessment upon Holders and Preferred Holders in
excess of the amounts set forth in their subscription agreements.
(d) No amendment may be made under this Section 8.3 which
shall amend, alter, change or repeal any of the provisions of Sections
2.2(d), 8.1, 8.2, 8.3, 8.4 or any other Holder or Preferred Holder
voting requirements unless the amendment, alteration, change or repeal
shall receive the affirmative vote or consent of not less than 75% of
the Units and 75% of the Preferred Units (if any) then outstanding. Such
affirmative vote or consent shall be in addition to the vote or consent
of the holders of Units and Preferred Units otherwise required by this
Declaration or by law, whether now or hereafter authorized.
(e) No amendment may be made under this Section 8.3 which
shall amend, alter, change or repeal any voting requirement applicable
to Trustees, unless the proposed amendment, alteration, change or repeal
shall receive the affirmative approval in the form of a vote of a
majority of the Trustees.
(f) The provisions relating directly or indirectly to
cumulative voting may not be amended without the approval of each Holder
and Preferred Holder which would be entitled through cumulative voting
to elect a Trustee if the entire Board was then being elected.
Section 8.4 Merger, Consolidation and Sale of Assets. The
Trust may merge or consolidate with any other corporation, association,
trust, partnership or other organization or may sell, lease or exchange
all or substantially all of the Trust Property, including its good will,
upon such terms and conditions and for such consideration when and as
authorized at any meeting of Holders called for the purpose by the
affirmative vote of not less than two-thirds of the Units entitled to
vote.
ARTICLE IX
HOLDERS
Section 9.1 Meetings of Holders and Preferred Holders.
Annual meetings of the Holders and Preferred Holders shall not be
required. A meeting of Holders or Preferred Holders may be called at any
time by a majority of the Trustees and shall be called by any Trustee
for any proper purpose upon written request of Holders or Preferred
Holders of the Trust holding in the aggregate not less than 20% of the
outstanding Units or Preferred Units, as the case may be: with respect
to matters requiring voting by the Holders and/or Preferred Holders,
such request specifying the purpose or purposes for which such meeting
is to be called; or, in the case of a meeting for the purpose of voting
on the question of removal of any Trustee or Trustees, upon written
request of the Holders and/or Preferred Holders entitled to vote on the
removal of such Trustee or Trustees holding in the aggregate not less
than 10% of the outstanding Units or Preferred Units; or, in the case of
a meeting for the purpose of voting on the question of removal of the
independent public accountants of the Trust, upon written request of
Holders and/or Preferred Units, holding in the aggregate not less than
10% of the outstanding Units or Preferred Units, as the case may be. Any
Meeting shall be held within or without the State of Delaware on such
day and at such time as the Trustees shall designate and, in the case of
any meeting called by a Trustee as a result of a Holder's written
request, within sixty (60) days of such written request or such longer
period as is approved by the Trustee calling such meeting.
Section 9.2 Voting. Holders or Preferred Holders shall
have no power to vote on any matter except matters on which a vote of
Holders and/or Preferred Holders is required by applicable law, this
Declaration, ByLaws or resolution of the Trustees. Voting by the Trust's
Holders or Preferred Holders shall be in accordance with any provisions
set forth in the Declaration of Trust.
Section 9.3 Notice of Meeting and Record Date. Notice of
all meetings of Holders and/or, if required, Preferred Holders stating
the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Holder and/or, if required, Preferred Holder
entitled to vote thereat at his registered address, mailed at least 10
Business Days and not more than 90 days before the meeting. Only the
business stated in the notice of the meeting shall be considered at such
meeting. Any adjourned meeting may be held as adjourned without further
notice. For the purposes of determining the Holders and/or, if required,
Preferred Holders who are entitled to notice of and to vote at any
meeting, the Trustees may, without closing the transfer books, fix a
date not more than 90 days prior to the date of such meeting of Holders
and/or, if required, Preferred Holders as a record date for the
determination of the Persons to be treated as Holders and Preferred
Holders of record for such purposes.
Section 9.4 Quorum and Required Vote. The holders of a
majority of outstanding Units and/or, if required, Preferred Units
entitled to vote thereat of the Trust present in person or by proxy
shall constitute a quorum at any meeting of the Holders and/or, if
required, Preferred Holders for purposes of conducting business on which
a vote of Holders and/or, if required, Preferred Holders of the Trust is
being taken. Subject to any provision of the 1940 Act, this Declaration
or (to the extent authorized) a resolution of the Trustees specifying a
greater or lesser vote requirement for the transaction of any item of
business at any meeting of Holders and/or, if required, Preferred
Holders, the affirmative vote of a majority of the Units and/or, if
required, Preferred Units present in person or represented by proxy and
entitled to vote on the subject matter shall be the act of the Holders
or Preferred Holders with respect to such matter. Except as otherwise
provided in this Declaration, each whole Unit and Preferred Unit shall
be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Unit shall be entitled to a proportionate fractional
vote. Until Units and Preferred Units are issued, the Trustees may
exercise all rights of Holders and Preferred Holders and may take any
action required by law, this Declaration or the By-Laws to be taken by
Holders and Preferred Holders. The By-Laws may include further
provisions, not inconsistent with this Declaration, for Holder and Pre-
ferred Holder votes and meetings and related matters. If at any meeting
of Holders and Preferred Holders one or more of the Holders or Preferred
Holders is not present in person or by proxy and has not indicated in
writing that it chooses not to be present, the Trust shall adjourn such
meeting for a period of two Business Days for the purpose of determining
whether such Holder or Preferred Holder desires (if necessary) to be
present at such meeting and, if so, shall adjourn such meeting for a
further period of 10 Business Days for the purpose of permitting such
Holder or Preferred Holder to be present at such meeting.
Section 9.5 Proxies, etc. At any meeting of Holders and
Preferred Holders, any Holders or Preferred Holders entitled to vote
thereat may vote by properly executed proxy, provided that no proxy
shall be voted at any meeting unless it shall have been placed on file
with the Secretary, or with such other officer of the Trust as the
Secretary may direct, for verification prior to or simultaneously with
the time at which such vote shall be taken. Pursuant to a resolution of
a majority of the Trustees, proxies may be solicited in the name of one
or more Trustees or one or more of the officers of the Trust. Only
Holders and Preferred Holders of record shall be entitled to vote. When
any Unit or Preferred Unit is held jointly by several persons, any one
of them may vote at any meeting in person or by proxy in respect of
such Unit or Preferred Units, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or
their proxies so present disagree as to any vote to be cast, such vote
shall not be received in respect of such Unit or Preferred Units. A
proxy purporting to be executed by or on behalf of a Holder or Pre-
ferred Holder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Unit or Preferred Unit is a minor
or a person of unsound mind, and subject to guardianship or to the
legal control of any other person as regards the charge or management of
such Unit or Preferred Unit, he may vote by his guardian or such other
person appointed or having such control, and such vote may be given in
person or by proxy.
Section 9.6 Reports. Holders of Units will receive and
holders of Preferred Units will receive upon request with respect to the
Trust: (i) annual reports with audited annual financial statements and
(ii) semiannual reports with unaudited financial statements. Holders of
Units and holders of Preferred Units will receive tax information
sufficient to enable the holder of Units and Preferred Units to make all
necessary tax filings.
Section 9.7 Holder and Preferred Holder Action by Written
Consent. Any action which may be taken by Holders or Preferred Holders
by vote may be taken without a meeting if the holders entitled to vote
thereon of the same proportion of Units or Preferred Units required for
approval of such action at a meeting of Holders and Preferred Holders
consent to the action in writing and the written consents are filed with
the records of the meetings of Holders and Preferred Holders. Such
consent shall be treated for all purposes as a vote taken at a meeting
of Holders and Preferred Holders. The Trust shall promptly notify all
Holders and Preferred Holders, as the case may be, including
non-consenting Holders and Preferred Holders, of the results of any
action so taken.
ARTICLE X
MISCELLANEOUS
Section 10.1 Filing. This Declaration and any amendment
hereto shall be filed and recorded in such places as may be required
under the laws of Delaware and may also be filed or recorded in such
other places as the Trustees deem appropriate. A restated Declaration,
integrating into a single instrument all of the provisions of the
Declaration which are then in effect and operative, may be executed from
time to time by a majority of the Trustees and shall upon filing with
the Secretary of the State of Delaware or lodging with the permanent
records of the Trust, be conclusive evidence of all amendments contained
therein and may thereafter be referred to in lieu of the original
Declaration and the various amendments thereto.
Section 10.2 Governing Law. This Declaration of Trust and
the Trust created hereunder shall be governed by and construed and
administered according to the Delaware Act and the other applicable laws
of the State of Delaware. The Trust shall be of the type commonly called
a Delaware business trust, and, subject to any limitations expressed
herein, the Trust may exercise all powers or privileges which are
ordinarily exercised by such a trust under Delaware law and the absence
of a specific reference herein to any such power or privilege shall not
imply that the Trust may not exercise such power or privilege.
Section 10.3 Counterparts. This Declaration may be
simultaneously executed in several counterparts, each of which shall be
deemed to be an original, and such counterparts, together, shall
constitute one and the same instrument, which shall be sufficiently
evidenced by any such original counterpart.
Section 10.4 Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust
appears to be a Trustee hereunder, certifying: (a) the number or
identity of Trustees or Holders or Preferred Holders, (b) the due
authorization of the execution of any instrument or writing, (c) the
form of any vote passed at a meeting of Trustees or Holders or Preferred
Holders, (d) the fact that the number of Trustees or Holders or
Preferred Holders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (e) the form
of any ByLaws adopted by or the identity of any officers elected by the
Trustees, or (f) the existence of any fact or facts which in any manner
relate to the affairs of the Trust, shall be conclusive evidence as to
the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5 Provisions in Conflict with Law or
Regulations. (a) The provisions of the Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of
such provisions are in conflict with the 1940 Act, the regulated
investment company provisions of the Code, or any amendments or
successor statute thereto, or with other applicable laws and
regulations, the conflicting provision shall be deemed not to constitute
and never to have constituted a part of the Declaration; provided,
however, that such determination shall not affect any of the remaining
provisions of the Declaration or render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of the Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall apply only to such provision in such jurisdiction
and shall not in any manner affect such provision in any other
jurisdiction or any other provision of the Declaration in any jurisdic-
tion.
Section 10.6 Use of the Name "BlackRock". BlackRock has
consented to the use by the Trust of the identifying word or name
"BlackRock" in the name of the Trust. Such consent is conditioned upon
the employment of BlackRock, its successors or any Affiliate thereof, as
Manager of the Trust. The name or identifying word "BlackRock" may be
used from time to time in other connections and for other purposes by
BlackRock or Affiliated entities. BlackRock may require the Trust to
cease using "BlackRock" in the name of the Trust if the Trust ceases to
employ, for any reason, BlackRock, an Affiliate, or any successor to
BlackRock as Manager of the Trust.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above written.
/s/ Laurence D. Fink /s/ Donald G. Drapkin
- ------------------------- --------------------------
Laurence D. Fink Donald G. Drapkin
being a member of the being a member of the
Board of Trustees of the Board of Trustees of the
Trust Trust
/s/ Kendrick R. Wilson, III
- --------------------------
Kendrick R. Wilson, III
being a member of the
Board of Trustees of the
Trust
State of )
) ss:
County of )
Then personally appeared before me Laurence D. Fink,
Kendrick R. Wilson, III, and Donald G. Drapkin who acknowledged the
foregoing instrument to be his free act and deed and the free act and
deed of the Trustee of BlackRock MQE Investors.
Before me,
------------------------
Notary Public
My Commission Expires: ___________________
BY-LAWS
OF
BLACKROCK MQE INVESTORS
ARTICLE I
Offices
Section 1. Principal Office. The principal
office of BlackRock MQE Investors (the "Trust") shall be
in the City of Wilmington, State of Delaware.
Section 2. Principal Executive Office. The
principal executive offices of the Trust shall be at 345
Park Avenue, New York, New York 10154.
Section 3. Other Offices. The Trust may have
such other offices in such places as the Trustees may
from time to time determine.
ARTICLE II
Meetings of Holders and Preferred Holders
Section 1. No Annual Meeting. No annual
meeting of the holders (the "Holders") of units of
beneficial interest (the "Units") or holders (the
"Preferred Holders") of preferred units of beneficial
interest (the "Preferred Units") of the Trust shall be
required to be held for any purpose.
Section 2. Meetings. Meetings of the Holders
and Preferred Holders may be called for any purpose or
purposes as provided by the Declaration of Trust of the
Trust.
Section 3. Place of Meeting. Meetings of the
Holders and Preferred Holders shall be held at such place
within the United States as the Board of Trustees may
from time to time determine.
Section 4. Notice of Meetings; Waiver of
Notice. Notice of the place, date and time of the
holding of each meeting of the Holders and Preferred
Holders and the purpose or purposes of each meeting shall
be given in accordance with the Declaration of Trust of
the Trust. Notice by mail shall be deemed to be duly
given when deposited in the United States mail addressed
to the Holder or Preferred Holder at his address as it
appears on the records of the Trust, with postage thereon
prepaid.
Notice of any meeting of Holders or Preferred
Holders shall be deemed waived by any Holder or Preferred
Holder 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 Trustees,
after the adjournment, shall fix a new record date for an
adjourned meeting, or the adjournment is for more than
sixty 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
Holders and/or, if required, Preferred Holders, the
holders of a majority of the Units and/or, if required,
Preferred Units 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 Declaration of Trust. In the
absence of a quorum no business may be transacted, except
that the holders of a majority of the Units and/or, if
required, Preferred Units 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 Units and/or, if
required, Preferred Units shall be so present. At any
such adjournment 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 Units and/or Preferred Units of
the Trust in excess of a majority thereof which may be
required by the laws of the State of Delaware, the
Investment Company Act of 1940, as amended, or other
applicable statute, the Declaration of Trust, 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 Units and/or, if required,
Preferred Units of the Trust required for action in
respect of such other matter or matters.
Section 6. Organization. At each meeting of
the Holders and/or Preferred Holders, the Chairman of the
Board (if one has been designated by the Board), or in
the absence or inability of the Chairman of the Board 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 absence 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 Holders and/or Preferred
Holders shall be as determined by the chairman of the
meeting.
Section 8. Voting. Except as otherwise
provided by statute or the Declaration of Trust, each
holder of record of Units and/or Preferred Units of the
Trust having voting power shall be entitled at each
meeting of the Holders and/or Preferred Holders to one
vote for every such Unit and/or Preferred Unit standing
in such Holder's and/or Preferred Holder's name on the
record of Holders and Preferred Holders of the Trust 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 thirtieth day before the meeting.
Each Holder and/or Preferred Holder entitled to
vote at any meeting of Holders and/or Preferred Holders,
as the case may be, may authorize another person or
persons to act for him by a proxy signed by such Holder
and/or Preferred 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 Holder and/or Preferred Holder executing
it, except in those cases where such proxy states that it
is irrevocable and where an irrevocable proxy is
permitted by law. Except as otherwise provided by
statute, the Declaration of Trust or these By-Laws, any
corporate action to be taken by vote of the Holders
and/or Preferred Holders shall be authorized by a
majority of the total votes cast at a meeting of Holders
and/or Preferred Holders by the holders of Units and/or
Preferred Units, as the case may be, 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 trustees, 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
advisable, any such vote need not be by ballot. On a
vote by ballot, each ballot shall be signed by the Holder
and/or Preferred Holder voting, or by his proxy, if there
be such proxy, and shall state the number of Units
and/or Preferred Units, as the case may be, voted.
Section 9. Fixing of Record Date. The Board
of Trustees may set a record date for the purpose of
determining Holders and/or Preferred Holders entitled to
vote at any meeting of the Holders and/or Preferred
Holders. 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 Holders and/or
Preferred Holders. All persons who were holders of
record of Units and/or Preferred Units 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 Holders and/or Preferred
Holders, 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 Holder or Preferred Holder 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 Units and/or Preferred
Units outstanding and the voting powers of each, the
number of Units and/or Preferred Units 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 Holders and
Preferred Holders. On request of the chairman of the
meeting or any Holder and/or Preferred Holder, as the
case may be, entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, request
or matter determined by them and shall execute a
certificate of any fact found by them. No trustee or
candidate for the office of trustee shall act as
inspector of an election of trustees. Inspectors need
not be Holders or Preferred Holders.
ARTICLE III
Board of Trustees
Section 1. General Powers. Except as
otherwise provided in the Declaration of Trust, the
business and affairs of the Trust shall be managed under
the direction of the Board of Trustees. All powers of
the Trust may be exercised by or under authority of the
Board of Trustees except as conferred on or reserved to
the Holders and Preferred Holders by law or by the
Declaration of Trust or these By-Laws.
Section 2. Election and Term of Trustees. The
Trustees as to which vacancies exist shall be elected by
written ballot at a meeting of Holders and/or Preferred
Holders, as the case may be, held for that purpose unless
otherwise provided by statute or the Declaration of
Trust. The term of office of each trustee shall be from
the time of his election and qualification until the
expiration of his term as provided in the Declaration of
Trust.
Section 3. 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 4. 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 Trustees.
Section 5. Special Meetings. Special meetings
of the Board may be called by any Trustee of the Trust
or by the Chairman of the Board or the President or
Secretary.
Section 6. No Annual Meeting. No annual
meeting of the Board of Trustees shall be required to be
held.
Section 7. Waiver of Notice of Meetings.
Notice of any special meeting need not be given to any
trustee 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 where a Trustee attends a meeting for the express
purpose of objecting to the transaction of any business
on the ground that the meeting has not been lawfully
called or convened. 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 8. Quorum. A quorum for all meetings
of the Trustees shall be as specified in the Declaration
of Trust. In the absence of a quorum at any meeting of
the Board, a majority of the members of the Board 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 trustees 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 trustees. 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 9. 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,
another Trustee selected by a majority of the trustees
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 secretary of the meeting and keep the minutes thereof.
Section 10. Compensation. Trustees may
receive compensation for services to the Trust in their
capacities as trustees or otherwise in such manner and in
such amounts as may be fixed from time to time by the
Board.
Section 11. Manager. The Board may delegate
the duty of management of the assets and the
administration of the Trust's operations to one or more
individuals or entities pursuant to a written contract or
contracts which have obtained the requisite approvals,
including the requisite approvals of renewals thereof, of
the Board of Trustees and/or the Holders and/or Preferred
Holders of the Trust in accordance with the provisions of
the Investment Company Act of 1940, as amended, and the
Declaration of Trust.
ARTICLE IV
Officers, Agents and Employees
Section 1. Number of Qualifications. The
officers of the Trust shall be a President, a Secretary
and a Treasurer, each of whom shall be elected by the
Board of Trustees. The Board of Trustees 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
Trustees, each to hold office 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 and such
agents, as may be necessary or desirable for the business
of the Trust. 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
Trust 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 not be necessary to make it effective.
Section 3. Removal of Officer, Agent or
Employee. Any officer, agent or employee of the Trust
may be removed by the Board of Trustees 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 Trustees. 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 Trust shall not of itself create
contract rights.
Section 4. Vacancies. A vacancy in any
office, 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
election or appointment to such office.
Section 5. Compensation. The officers of the
Trust shall not be compensated by the Trust.
Section 6. Bonds or Other Security. If
required by the Board, any officer, agent or employee of
the Trust 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 require.
Section 7. President. The President shall be
the chief executive officer of the Trust. He shall have,
subject to the control of the Board of Trustees, general
charge of the business and affairs of the Trust. He may
employ and discharge employees and agents of the Trust,
except such as shall be appointed by the Board, and he
may delegate these powers.
Section 8. Vice President. Each Vice
President shall have such powers and perform such duties
as the Board of Trustees 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
Trust, except those which the Trust 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 amended) 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 Trust;
(b) keep full and accurate accounts of
receipts and disbursements in books belonging to the
Trust;
(c) cause all moneys and other valuables
to be deposited to the credit of the Trust;
(d) receive, and give receipts for,
moneys due and payable, to the Trust from any source
whatsoever;
(e) disburse the funds of the Trust and
supervise the investment of its funds as ordered or
authorized by the Board or any authorized agent of the
Trust, 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 Holders and Preferred Holders;
(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 Trust and affix and attest the seal to all
documents to be executed on behalf of the Trust under its
seal;
(d) see that the books, reports,
statements, 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 Trust, 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
trustee.
ARTICLE V
Units and Preferred Units of Beneficial Interest
Section 1. Book-Entry. Units and Preferred
Units of the Trust will be issued in book entry form and
holders of Units and Preferred Units will not be entitled
to Unit and Preferred Unit certificates unless the Board
approves the issuance of Unit and Preferred Unit
certificates.
Section 2. Books of Accounts and Record of
Holders and Preferred Holders. There shall be kept at
the principal executive offices of the Trust correct and
complete books and records of account of all the business
and transactions of the Trust.
Section 3. Transfers of Units and Preferred
Units. Transfers of Units and Preferred Units of the
Trust shall be made on the Unit and Preferred Unit
records of the Trust 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
Units and/or Preferred Units 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 Trust shall be entitled to recognize
the exclusive rights of a person in whose name any
Unit(s) and/or Preferred Unit(s) stand on the record of
Holders and Preferred Holders as the owner of such
Unit(s) and/or Preferred Unit(s) for all purposes,
including, without limitation, the rights to receive
dividends or other distributions, and to vote as such
owner, and the Trust shall not be bound to recognize any
equitable or legal claim to or interest in any such
Unit(s) and/or Preferred Unit(s) on the part of any other
person.
Section 4. Regulations. The Board may make
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
Units and/or Preferred Units of the Trust. 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.
Section 5. Fixing of a Record Date for
Dividends 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 Trustees fixes a
record date as the record date for the determination of
the Holders and/or Preferred Holders entitled to receive
any such dividend or distribution, only the Holders
and/or Preferred Holders, as the case may be, of record
at the time so fixed shall be entitled to receive such
dividend or distribution.
Section 6. Information to Holders and/or
Preferred Holders and Others. Any Holder or Preferred
Holder of the Trust or his agent may inspect and copy
during usual business hours the Trust's By-Laws, minutes
of the proceedings of its Holders and/or Preferred
Holders, annual statements of its affairs, voting trust
agreements on file at its principal office and any of its
other books or records.
ARTICLE VI
Seal
The seal of the Trust shall be circular in form
and shall bear, in addition to any other emblem or device
approved by the Board of Trustees, the name of the Trust,
the year of its formation and words "Seal" and
"Delaware". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any
other manner reproduced.
ARTICLE VII
Fiscal Year
Unless otherwise determined by the Board, the
fiscal year of the Trust shall end on the 31st day of
December.
ARTICLE VIII
Depositories and Custodians
Section 1. Depositories. The funds of the
Trust shall be deposited with such banks or other
depositories as the Board of Trustees of the Trust 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 Trustees
of the Trust may from time to time determine. Every
arrangement entered into with any bank or other company
for the safe keeping of the securities and investments of
the Trust shall contain provisions complying with the
Investment Company Act of 1940, as amended, and the
general rules and regulations thereunder.
ARTICLE IX
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 shall be designated from time to time by or
pursuant to the terms of any resolution adopted by the
Board of Trustees.
Section 2. Sale or Transfer of Securities.
Stock certificates, bonds or other securities at any time
owned by the Trust may be held on behalf of the Trust or
sold, transferred or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to
authorization by the Board and, when so authorized to be
held on behalf of the Trust or sold, transferred or
otherwise disposed of, may be transferred from the name
of the Trust by the signature of the President or a Vice
President or the Treasurer or pursuant to any procedure
approved by the Board of Trustees, subject to applicable
law.
ARTICLE X
Independent Public Accountants
The firm of independent public accountants
which shall sign or certify the financial statements of
the Trust which are filed with the Securities and
Exchange Commission shall be selected annually by the
Board of Trustees and ratified by the Holders and
Preferred Holders in accordance with the provisions of
the Investment Company Act of 1940, as amended.
ARTICLE XI
Annual Statement
The books of account of the Trust shall be
examined by an independent firm of public accountants at
the close of each annual period of the Trust and at such
other times as may be directed by the Board. A report to
the Holders and Preferred Holders based upon each such
examination shall be mailed to each Holder and Preferred
Holder of the Trust of record, and to each Holder and
Preferred Holder of record of each entity that is a
Holder and/or Preferred Holder of record of the Trust, 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 Trust or such Holder or
Preferred Holder. Such annual statement shall also be
available at any meeting of Holders and/or Preferred
Holders held during the twelve-month period after such
statement is first available and shall be placed on file
at the Trust's principal office in the State of Delaware.
Each such report shall show the assets and liabilities of
the Trust as of the close of the annual or other period
covered by the report and the securities in which the
funds of the Trust were then invested. Such report shall
also show the Trust's income and expenses for the period
from the end of the Trust's fiscal year to the close of
the annual or other period covered by the report and any
other information required by the 1940 Act, as amended,
and shall set forth such other matters as the Board or
such firm of independent public accountants shall
determine.
ARTICLE XII
Amendments
The Board of Trustees, by affirmative vote of a
majority thereof, shall have the exclusive right to
amend, alter or repeal these By-Laws at any meeting of
the Board, except any particular By-Law which is
specified as not subject to alteration or repeal by the
Board of Trustees, subject to the requirements of the
Investment Company Act of 1940, as amended.
ARTICLE XIII
Holder and Preferred Holder Liability
No Holder or Preferred Holder of the Trust
shall be subject to any personal liability whatsoever to
any person in connection with the Trust property or the
acts, obligations or affairs of the Trust. Holders and
Preferred Holders shall have the same limitation on
personal liability that is extended to stockholders of a
private corporation for profit incorporated under the
general corporation law of the State of Delaware.
CUSTODIAN CONTRACT
Between
BLACKROCK MQE INVESTORS
and
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN CONTRACT
This Contract between BlackRock MQE Investors,
a business trust organized and existing under the laws of
Delaware, having its principal place of business at 345
Park Avenue, New York, NY 10154 hereinafter called the
"Trust", and State Street Bank and Trust Company, a
Massachusetts Trust Company, having its principal place
of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian".
WITNESSETH: That in consideration of the
mutual covenants and agreements hereinafter contained,
the parties hereto agree as follows:
1. Custodian, Sub-Custodians and Agents
1.1 Employment of Custodian and Property to be Held by
It. The Trust hereby employs the Custodian as the
custodian of its assets pursuant to the provisions
of the Trust's Declaration of Trust, dated October
30, 1996, as amended (the "Declaration of Trust").
The Trust 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
securities owned by the Trust from time to time, and
the cash consideration received by it for such new
or treasury units of beneficial interest ("Units")
of the Trust or such new treasury preferred units of
beneficial interest ("Preferred Units") as may be
issued or sold from time to time. The Custodian
shall not be responsible for any property of the
Trust held or received by the Trust and not
delivered to the Custodian.
The Trust intends to become the holder of certain
debt securities and warrants issued by Annington
Finance No. 3 Limited or its affiliates (each an
"Annington Security" and collectively the "Annington
Securities"). The Trust desires to cause the
Custodian to hold in safekeeping as its agent the
Annington Securities and to receive, deposit or
disburse, as the case may be, any payments
associated therewith as may be communicated to the
Custodian in Proper Instructions pursuant to the
Custodian Contract which may include the free
delivery of cash or securities by the Custodian
without the receipt of securities or cash, as the
case may be, therefor. The Trust hereby
acknowledges and agrees that the Custodian's sole
duty with respect to the Annington Securities shall
be to (i) hold the Annington Securities and any
related documents as the Trust may deliver to the
Custodian from time to time in safekeeping and (ii)
to receive, deposit or disburse, as the case may be,
any payments in connection therewith properly
identified as related to a specific Annington
Security and, in the case of disbursements, in
accordance with a Proper Instruction. Without
limiting the generality of the foregoing, the
Custodian shall have no obligation with respect to
any Annington Security to (i) authenticate the
validity or enforceability of any Annington
Securities; or (ii) preserve any rights against
prior parties or the exercise of any right or to
perform any obligation in connection therewith.
With respect to each Annington Security to be held
by the Custodian hereunder in accordance with the
provisions hereof, the Trust shall (i) cause the
Annington Security to be delivered to the Custodian
or a foreign sub-custodian appointed pursuant to
Section 3 hereof at such address as the Custodian
may direct and (ii) cause the Custodian or such
foreign sub-custodian be named as its agent for
purposes of receipt of any payments thereunder and,
in connection therewith, the Trust shall designate
the DDA account number to which such payment shall
be posted. Custodian shall in no event be
responsible to monitor any income or other payments
that may be due and payable with respect to the
Annington Securities and shall only be responsible
to post any such payment as may be actually received
for the account of the Trust.
1.2 Employment of Sub-Custodians. Upon receipt of
"Proper Instructions" (within the meaning of Section
2.14), the Custodian shall from time to time employ
one or more sub-custodians, and such employment, and
the level of responsibility or liability such sub-
custodian has to the Custodian, shall be approved by
the Trustees and by a majority of the Investors'
Trustees (as such term is defined in the Declaration
of Trust) of the Trust; provided that in the absence
of bad faith, negligence or willful misconduct on
the part of the Custodian, the Custodian shall have
no more or less responsibility or liability to the
Trust on account of any actions or omissions of any
sub-custodian so employed than any such sub-
custodian has to the Custodian. If the Custodian's
actions or omissions relative to a sub-custodian are
in bad faith, with negligence or willful misconduct,
the employment of any sub-custodian shall not
relieve the Custodian of its responsibilities or
liabilities hereunder.
1.3 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
custodian, as its agent to carry out such of the
provisions of 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. Duties of the Custodian with Respect to Property of
the Trust Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Trust
all non-cash property, including all securities
owned by the Trust, other than (a) securities which
are maintained pursuant to Section 2.9 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 and certain federal agencies,
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 2.9.
2.2 Delivery of Securities. The Custodian shall release
and deliver securities owned by the Trust 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 Trust and receipt of
payment therefor;
2) Upon the receipt of payment in connection
with any repurchase agreement related to
such securities entered into by the Trust;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.9 hereof;
4) To the depository agent in connection with
tender or other similar offers for
portfolio securities of the Trust;
5) To the issuer thereof or its agent when
such securities are called, redeemed,
retired 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
transfer into the name of the Trust 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 1.3 or into the name
or nominee name of any sub-custodian
appointed pursuant to Article 1; or for
exchange for a different number of bonds,
certificates or other evidence
representing the same aggregate 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
account of the Trust, to the broker or its
clearing 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, willful
misconduct, or lack of good faith;
8) For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the
issuer of such securities, or pursuant 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
exercise of such warrants, rights or
similar securities or the surrender of
interim receipts or temporary securities
for definitive securities; provided that,
in any such case, the new securities and
cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans
of securities made by the Trust, but only
against receipt of adequate collateral as
agreed upon from time to time by the
Custodian and the Trust, which may be in
the form of cash or obligations issued by
the United States government, its agencies
or instrumentalities, except that in
connection with any loans for which
collateral is to be credited to the
Custodian's account in the book-entry
system authorized by the U.S. Department
of the Treasury, the Custodian will not be
held liable or responsible for the
delivery of securities owned by the Trust
prior to the receipt of such collateral;
11) For delivery as security in connection
with any borrowings by the Trust requiring
a pledge of assets by the Trust, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the
provisions of any agreement among the
Trust, the Custodian and a broker-dealer
registered under the Securities 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
transactions by the Trust;
13) For delivery in accordance with the
provisions of any agreement among the
Trust, 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 organizations, regarding
account deposits in connection with
transactions by the Trust; and
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 of the Trust and certified by the
Secretary or an Assistant Secretary,
specifying the securities to be delivered,
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 Trust or in the name
of any nominee of the Trust or of any nominee of the
Custodian which nominee shall be assigned
exclusively to the Trust, unless the Trust has
authorized in writing the appointment of a nominee
to be used in common with other registered
investment companies having the same investment
advisor as the Trust, or in the name or nominee name
of any agent appointed pursuant to Section 1.3 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 Trust
under the terms of this Contract shall be in "street
name" or other good delivery form. If, however, the
Trust directs the Custodian to maintain securities
in "street name", the Custodian shall utilize its
best efforts only to timely collect income due the
Trust on such securities and to notify the Trust on
a best efforts basis only of relevant corporate
actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and
maintain a separate bank account or accounts in the
name of the Trust, subject only to draft or order by
the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Trust,
other than cash maintained by the Trust 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 Trust 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
majority of the Board of Trustees of the Trust.
Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable
by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual
agreement between the Trust and the Custodian, the
Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the
Trust as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of
checks received in payment for Units or Preferred
Units of the Trust which are deposited into the
Trust's account.
2.6 Collection of Income. Subject to the provisions of
Section 1.1 and 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 Trust 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
Trust'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. The Custodian shall
utilize its best efforts only to timely collect all
income due the Trust on securities loaned pursuant
to the provisions of Section 2.2(10).
2.7 Payment of Trust Monies. Upon receipt of Proper
Instructions, which may be continuing instructions
when deemed appropriate by the parties, the
Custodian shall pay out monies of the Trust in the
following cases only:
1) Upon the purchase of securities, options,
futures contracts or options on futures
contracts for the account of the Trust 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 Trust 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 effected through a
Securities System, in accordance with the
conditions set forth in Section 2.9
hereof; (c) in the case of a purchase
involving the Direct Paper System, in
accordance with the conditions set forth
in Section 2.9; (d) in the case of
repurchase agreements entered into between
the Trust 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 Federal Reserve Bank with
such securities or (ii) against delivery
of the receipt evidencing purchase by the
Trust of securities owned by the Custodian
along with written evidence of the
agreement by the Custodian to repurchase
such securities from the Trust or (e) for
transfer to a time deposit account of the
Trust in any bank, whether domestic or
foreign, such transfer may be effected
prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant
to Proper Instructions from the Trust as
defined in Section 2.14;
2) Upon making of a capital contribution to
any partnership of which the Trust is a
partner but only against written evidence
of a corresponding increase in the capital
account;
3) In connection with conversion, exchange or
surrender of securities owned by the Trust
as set forth in Section 2.2 hereof;
4) For the payment of any expense or
liability incurred by the Trust, including
but not limited to the following payments
for the account of the Trust: interest,
taxes, administrative (except to the
extent required to be paid by the Trust's
investments advisors) management,
accounting, transfer agent and legal fees,
and operating expenses of the Trust
whether or not such expenses are to be in
whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends or other
distributions declared pursuant to the
governing documents of the Trust;
6) For payment of the amount of dividends
received in respect of securities sold
short;
7) 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 Trust
signed by an officer of the Trust and
certified by its Secretary or an Assistant
Secretary, specifying the amount of such
payment, 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 Deposit of Trust Assets in Securities Systems. The
Custodian may deposit and/or maintain securities
owned by the Trust 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,
collectively 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
Trust in a Securities System provided that
such securities are represented in an
account of the Custodian in the Securities
System which shall not include any assets
of the Custodian other than assets held as
a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect
to securities of the Trust which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Trust;
3) The Custodian shall pay for securities
purchased for the account of the Trust
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 Trust.
The Custodian shall transfer securities
sold for the account of the Trust upon (i)
receipt of advice from the Securities
System that payment for such securities
has been transferred to the Account, and
(ii) the making of an entry on the records
of the Custodian to reflect such transfer
and payment for the account of the Trust.
Copies of all advice from the Securities
System of transfers of securities for the
account of the Trust shall identify the
Trust, be maintained for the Trust by the
Custodian and be provided to the Trust at
its request. Upon request, the Custodian
shall furnish the Trust confirmation of
each transfer to or from the account of
the Trust in the form of written advice or
a notice and shall furnish to the Trust
copies of daily transaction sheets
reflecting each day's transactions in the
Securities System for the account of the
Trust;
4) The Custodian shall provide the Trust with
any report obtained by the Custodian on
the Securities System's accounting system,
internal accounting control and procedures
for safeguarding securities deposited in
the Securities System;
5) The Custodian shall have received the
initial or annual certificate, as the case
may be, required by Article 9 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be
liable to the Trust for any loss or damage
to the Trust resulting from use of the
Securities System by reason of any
negligence, misfeasance or misconduct 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 Trust, it shall be
entitled to be subrogated to the rights of
the Custodian with respect to any claim
against the Securities System or any other
person which the Custodian may have as a
consequence of any such loss or damage if
and to the extent that the Trust has not
been made whole for any such loss or
damage.
2.9 Trust Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by the Trust 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
Trust in the Direct Paper System only if
such securities are represented in an
account of the Custodian in the Direct
Paper System which shall not include any
assets of the Custodian other than assets
held as a fiduciary, custodian or
otherwise for customers;
3) The Custodian shall have received the
initial or annual certificate, as the case
may be, required by Article 9 hereof;
4) The records of the Custodian with respect
to securities of the Trust which are
maintained in the Direct Paper System
shall identify by book-entry those
securities belonging to the Trust;
5) The Custodian shall pay for securities
purchased for the account of the Trust
upon the making of an entry on the records
of the Custodian to reflect such payment
and transfer of securities to the account
of the Trust. The Custodian shall
transfer securities sold for the account
of the Trust upon the making of an entry
on the records of the Custodian to reflect
such transfer and receipt of payment for
the account of the Trust;
6) The Custodian shall furnish the Trust
confirmation of each transfer to or from
the account of the Trust, in the form of
written advice or a notice, of Direct
Paper on the next business day following
such transfer and shall furnish to the
Trust copies of daily transaction sheets
reflecting each day's transaction in the
Securities System for the account of the
Trust;
7) The Custodian shall provide the Trust with
any report on its system of internal
accounting control as the Trust may
reasonably request from time to time.
2.10 Segregated Account. The Custodian shall upon
receipt of Proper Instructions establish and
maintain a segregated account or accounts for and on
behalf of the Trust, into which account or accounts
may be transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.8 hereof, (i) in accordance
with the provisions of any agreement among the
Trust, 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
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions
by the Trust, (ii) for purposes of segregating cash
or government securities in connection with options
purchased, sold or written by the Trust or commodity
futures contracts or options thereon purchased or
sold by the Trust, (iii) for the purposes of
compliance by the Trust 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
companies 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 Trust 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.
2.11 Ownership Certificates for Tax Purposes. The
Custodian shall execute ownership and other
certificates and affidavits for all federal and
state tax purposes in connection with receipt of
income or other payments with respect to securities
of the Trust held by it and in connection with
transfers of securities.
2.12 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly
executed by the registered holder of such
securities, if the securities are registered
otherwise than in the name of the Trust or a nominee
of the Trust, all proxies, without indication of the
manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies,
all proxy soliciting materials and all notices
relating to such securities.
2.13 Communications Relating to Trust Portfolio
Securities. Subject to the provisions of Section
2.3, the Custodian shall transmit promptly to the
Trust all written information (including, without
limitation, pendency of calls and maturities of
securities and expirations of rights in connection
therewith and notices of exercise of call and put
options written by the Trust and the maturity of
futures contracts purchased or sold by the Trust)
received by the Custodian from issuers of the
securities being held for the Trust. With respect
to tender or exchange offers, the Custodian shall
transmit promptly to the Trust 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 Trust desires to take
action with respect to any tender offer, exchange
offer or any other similar transaction, the Trust
shall notify the Custodian at least three business
days (or such shorter period as the Custodian may
agree) prior to the date on which the Custodian is
to take such action.
2.14 Proper Instructions. Proper Instructions as used
throughout this Article 2 means a writing signed or
initialed by one or more person or persons as the
Board of Trustees shall have from time to time
authorized. Each such writing shall set forth the
specific 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
involved. The Trust 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 authorization by the
Board of Trustees of the Trust accompanied by a
detailed description of procedures approved by the
Board of Trustees. Proper Instructions may include
communications effected directly between
electromechanical or electronic devices provided
that the Board of Trustees and the Custodian are
satisfied that such procedures afford adequate
safeguards for the Trust'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
2.10.
2.15 Actions Permitted without Express Authority. The
Custodian may in its discretion, without express
authority from the Trust:
1) make payments to itself or others for
minor out of pocket expenses of handling
securities or other similar items relating
to its duties under this Contract,
provided that all such payments shall be
accounted for to the Trust;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Trust, checks, drafts and other negotiable
instruments; 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 Trust
except as otherwise directed by the Board
of Trustees of the Trust.
2.16 Evidence of Authority. The Custodian shall be
protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or
paper reasonably believed by it to be genuine and to
have been properly executed by or on behalf of the
Trust. The Custodian may receive and accept a
certified copy of a vote of the Board of Trustees of
the Trust as conclusive evidence (a) of the
authority of any person to act in accordance with
such vote or (b) of any determination 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.
2.17 Advances. The Custodian shall have no obligation to
advance any funds on behalf of the Trust for any
purpose nor to permit any bank account maintained by
the Trust to become overdrawn.
3. Duties of the Custodian with Respect to Property of
the Trust Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Trust
hereby authorizes and instructs the Custodian to
employ as sub-custodians for the Trust's securities
and other assets maintained outside the United
States the foreign banking institutions and foreign
securities depositories designated on Schedule A
hereto ("foreign sub-custodians"). Upon receipt of
"Proper Instructions", as defined in Section 5 of
this Contract, together with a certified resolution
of the Trust's Board of Trustees, the Custodian and
the Trust may agree to amend Schedule A hereto from
time to time to designate additional foreign banking
institutions and foreign securities depositories to
act as sub-custodian. Upon receipt of Proper
Instructions, the Trust may instruct the Custodian
to cease the employment of any one or more such sub-
custodians for maintaining custody of the Trust's
assets.
3.2 Assets to be Held. The Custodian shall limit the
securities and other assets maintained in the
custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1)
of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such
amounts as the Custodian or the Trust may determine
to be reasonably necessary to effect the Trust's
foreign securities transactions. The Custodian
shall identify on its books as belonging to the
Trust, the foreign securities of the Trust held by
each foreign sub-custodian.
3.3 Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Custodian
and the Trust, assets of the Trusts shall be
maintained in foreign securities depositories only
through arrangements implemented by the foreign
banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold
securities and other non-cash property for all of
its customers, including the Trust, with a foreign
sub-custodian in a single account that is identified
as belonging to the Custodian for the benefit of its
customers, provided, however, that (i) the records
of the Custodian with respect to securities and
other non-cash property of the Trust which are
maintained in such account shall identify by book-
entry those securities and other non-cash property
belonging to the Trust and (ii) the Custodian shall
require that securities and other non-cash property
so held by the foreign sub-custodian be held
separately from any assets of the Foreign Sub-
custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each
agreement with a foreign banking institution shall
be substantially in the form set forth in Exhibit 1
hereto and shall provide that: (a) the Trust's
assets will not be subject to any right, charge,
security interest, lien or claim of any kind in
favor of the foreign banking institution or its
creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial
ownership of the Trust's assets will be freely
transferable without the payment of money or value
other than for custody or administration; (c)
adequate records will be maintained identifying the
assets as belonging to the Trust; (d) officers of or
auditors employed by, or other representatives of
the Custodian, including to the extent permitted
under applicable law the independent public
accountants for the Trust, will be given access to
the books and records of the foreign banking
institution relating to its actions under its
agreement with the Custodian; and (e) assets of the
Trust held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or
its agents.
3.6 Access of Independent Accountants of the Trust.
Upon request of the Trust, the Custodian will use
its best efforts to arrange for the independent
accountants of the Trust to be afforded access to
the books and records of any foreign banking
institution employed as a foreign sub-custodian
insofar as such books and records relate to the
performance of such foreign banking institution
under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to
the Trust from time to time, as mutually agreed
upon, statements in respect of the securities and
other assets of the Trust held by foreign sub-
custodians, including but not limited to an
identification of entities having possession of the
Trust's securities and other assets and advices or
notifications of any transfers of securities to or
from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of
the Trust indicating, as to securities acquired for
the Trust, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except
as otherwise provided in paragraph (b) of this
Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, mutatis mutandis to
the foreign securities of the Trust held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract
to the contrary, settlement and payment for
securities received for the account of the Trust and
delivery of securities maintained for the account of
the Trust may be effected in accordance with the
customary established securities trading or
securities processing practices and procedures in
the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving
later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name
of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Trust
agrees to hold any such nominee harmless from any
liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement
pursuant to which the Custodian employs a foreign
banking institution as a foreign sub-custodian shall
require the institution to exercise reasonable care
in the performance of its duties and to indemnify
and hold harmless, the Custodian and the Trust from
and against any loss, damage, cost, expense,
liability or claim arising out of or in connection
with the institution's performance of such
obligations. At the election of the Trust, it shall
be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a
foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim
if and to the extent that the Trust has not been
made whole for any such loss, damage, cost, expense,
liability or claim.
3.10 Liability of Custodian. The Custodian shall be
liable for the acts or omissions of a foreign
banking institution to the same extent as set forth
with respect to sub-custodians generally in this
Contract and, regardless of whether assets are
maintained in the custody of a foreign banking
institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph
3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism
or any loss where the sub-custodian has otherwise
exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in
delegating custody duties to State Street London
Ltd., the Custodian shall not be relieved of any
responsibility to the Trust for any loss due to such
delegation, except such loss as may result from (a)
political risk (including, but not limited to,
exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State
Street London Ltd. not caused by political risk) due
to Acts of God, nuclear incident or other losses
under circumstances where the Custodian and State
Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Custodian
advances cash or securities for any purpose on
behalf of the Trust including the purchase or sale
of foreign exchange or of contracts for foreign
exchange, 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 Trust shall
be security therefor and should the Trust fail to
repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of
such Trusts assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall
furnish annually to the Trust, during the month of
June, information concerning the foreign sub-
custodians employed by the Custodian. Such
information shall be similar in kind and scope to
that furnished to the Trust in connection with the
initial approval of this Contract. In addition, the
Custodian will promptly inform the Trust in the
event that the Custodian learns of a material
adverse change in the financial condition of a
foreign sub-custodian or any material loss of the
assets of the Trust or in the case of any foreign
sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its
unitholders' equity will decline below $200 million
(U.S. dollars or the equivalent thereof) or that its
unitholders' equity has declined below $200 million
(in each case computed in accordance with generally
accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise
set forth in this Contract, the provisions hereof
shall not apply where the custody of the Trusts
assets are maintained in a foreign branch of a
banking institution which is a "bank" as defined by
Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section
26(a) of said Act. The appointment of any such
branch as a sub-custodian shall be governed by
paragraph 1 of this Contract.
(b) Cash held for the Trust in the United Kingdom
shall be maintained in an interest bearing account
established for the Trust with the Custodian's
London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd.
or both.
3.14 Tax Law. The Custodian shall have no responsibility
or liability for any obligations now or hereafter
imposed on the Trust or the Custodian as custodian
of the Trust by the tax law of the United States of
America or any state or political subdivision
thereof. It shall be the responsibility of the
Trust to notify the Custodian of the obligations
imposed on the Trust or the Custodian as custodian
of the Trust by the tax law of jurisdictions other
than those mentioned in the above sentence,
including responsibility for withholding and other
taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such
tax law shall be to use reasonable efforts to assist
the Trust with respect to any claim for exemption or
refund under the tax law of jurisdictions for which
the Trust has provided such information.
4. Duties of Custodian with Respect to the Books of
Account
The Custodian shall keep the books of account of the
Trust. The parties acknowledge that it is the
responsibility of the Trust to ascertain the value of the
Annington Securities and the proper financial and tax
accounting therefor and to communicate such information
in a timely manner to the Custodian. The Custodian shall
be entitled to rely on such information without
undertaking any independent verification thereof. If
requested by the Trust, the Custodian will calculate the
net asset value of the Units and Preferred Units of the
Trust at such times as the Trust and the Custodian may
agree. The Custodian shall be entitled to rely on
information furnished by the Trust as to the value of the
Annington Securities in making any such calculations
without undertaking any independent verification thereof.
5. 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 Trust 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 Trust 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 Trust and employees and agents of the
Securities and Exchange Commission. The Custodian shall,
at the Trust's request, supply the Trust with a
tabulation of securities owned by the Trust and held by
the Custodian and shall when requested to do so by the
Trust and for such compensation as shall be agreed upon
between the Trust and the Custodian, include certificate
numbers in such tabulations.
6. Opinion of Trust's Independent Accountant
The Custodian shall take all reasonable action, as
the Trust may from time to time request, to obtain from
year to year favorable opinions from the Trust's
independent accountants with respect to its activities
hereunder in connection with the preparation of the
Trust's Form N-2, and Form N-SAR or other annual reports
to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
7. Reports to Trust by Independent Public Accountants
The Custodian shall provide the Trust, at such times
as the Trust may reasonably require, with reports 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
Trust 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.
8. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian,
as agreed upon from time to time between the Trust and
the Custodian. The Custodian shall provide monthly to
the Trust a calculation of the fees payable to the
Custodian.
9. Responsibility of Custodian
So long as and to the extent that it is in the
exercise of good faith and 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, consent, 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 good faith and non-
negligence in carrying out the provisions of this
Contract.
The Custodian shall be entitled to receive, and act
upon, advice of counsel (which counsel shall be selected
by the Custodian with reasonable care based on such
counsel's professional competence and reputation or shall
be counsel for the Trust) and shall be without liability
for any action reasonable taken pursuant to such advice
in good faith and without negligence.
The Custodian shall be indemnified and held harmless
by the Trust for any action taken by it in carrying out
terms and provisions of this Contract if done in good
faith and without negligence or willful misconduct on the
Custodian's part; provided that: (i) the Custodian shall
not be entitled to indemnification in those situations
where the Custodian is liable to the Trust pursuant to
Section 2.9(6) hereof, (ii) the Custodian will use all
reasonable care to identify and notify the Trust promptly
concerning any situation which presents, or appears
likely to present, the probability of such a claim for
indemnification against the Trust, and (iii) in any case
in which the Trust may be asked to so indemnify and hold
harmless the Custodian, the Trust shall have been fully
and promptly advised of all pertinent facts concerning
the situation in question. The Trust, using counsel of
its choice, shall have the option to defend the Custodian
against any claim which may be a subject of this
indemnification and shall be given timely notice by the
Custodian to permit it to exercise that option as early
as possible with respect to such claim. In the event the
Trust so elects to defend the Custodian, the Trust will
notify the Custodian, and thereupon the Trust shall take
over complete defense of the claim, and after it does so,
the Custodian shall incur no further legal or other
expenses for which it shall be entitled to
indemnification from the Trust. The Custodian shall in
no case confess any claim or make any compromise in any
case in which the Trust will be asked to indemnify the
Custodian, except with the Trust's prior written consent.
If the Custodian, its affiliates, subsidiaries or
agents, advances cash or securities for any purpose on
behalf of the Trust (including but not limited to
securities settlements and settlement of foreign exchange
contracts) or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges,
expenses or assessments 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, willful misconduct or lack of good faith,
any property at any time held for the account of the
Trust shall be security therefor and should the Trust
fail to repay the Custodian promptly, the Custodian shall
be entitled to utilize available cash and to dispose of
the Trust assets to the extent necessary to obtain
reimbursement.
10. 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 ninety
(90) days after the date of such delivery or mailing;
provided, however, that the Custodian shall not act under
Section 2.8 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Trust has
approved the initial use of a particular Securities
System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of
Trustees has reviewed the use by the Trust of such
Securities System, as required in each case by Rule 17f-4
under the Investment Company Act of 1940, as amended and
that the Custodian shall not act under Section 2.9 hereof
in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper
System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of
Trustees has reviewed the use by the Trust of the Direct
Paper System; provided further, however, that the Trust
shall not amend or terminate this Contract in
contravention of any applicable federal or state
regulations, or any provision of the Declaration of
Trust, and further provided, that the Trust may at any
time by action of its Board of Trustees (i) substitute
another bank or trust company for the Custodian 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 or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Trust 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 reasonable out of pocket,
costs, expenses and disbursements.
11. Successor Custodian
If a successor custodian shall be appointed by the
Board of Trustees of the Trust, 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
custodian all of the Trust's securities held in a
Securities System or Direct Paper 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
Trust, 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
Custodian 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 or New York, New
York, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last
published report, of not less than $250.000,000, 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 Trust's securities held in
any Securities System or Direct Paper System. Upon
agreeing to be bound by the terms of this contract such
bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other
properties remain in the possession of the Custodian
after the date of termination hereof owing to failure of
the Trust 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 compensation 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.
12. Interpretive and Additional Provisions
In connection with the operation of this Contract,
the Custodian and the Trust 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 a 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 Trust. No interpretive or additional
provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
13. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of
The Commonwealth of Massachusetts.
14. Prior Contracts
This Contract supersedes and terminates, as of the
date hereof, all prior contracts between the Trust and
the Custodian relating to the custody of the Trust's
assets.
15. Unitholder Communications
Securities and Exchange Commission Rule 14b-2
requires 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, we need you to indicate whether you authorize
us to provide your name, address, and share position to
requesting companies whose stock you own. If you tell us
"no", we will not provide this information to requesting
companies. If you tell us "yes" or do not check either
"yes" or "no" below, we are required by the rule to treat
you as consenting to disclosure of this information for
all securities owned by you or any funds or accounts
established by you. For your protection, the Rule
prohibits the requesting company from using your name and
address for any purpose other than corporate
communications. Please indicate below whether you
consent or object by checking one of the alternatives
below.
YES [ ] You are authorized to release our name,
address, and share positions.
NO [X] You are not authorized to release our
name, address, and share positions.
16. Disclaimer of Liability
Notwithstanding anything to the contrary contained
in this Agreement, the parties hereto acknowledge and
agree that, as provided in Section 4.4 of the Declaration
of Trust, this Agreement is executed by the Trustees
and/or officers of the Trust, not individually but as
such Trustees and/or officers of the Trust, and the
obligations hereunder are not binding upon any of the
Trustees or Unitholders individually but bind only the
estate of the Trust.
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 1st day of November, 1996.
ATTEST BLACKROCK MQE INVESTORS
By:/s/ Wesley R. Edens
Name: Wesley R. Edens
Title: Chief Operating Officer
ATTEST STATE STREET BANK AND TRUST
COMPANY
By:/s/ Ronald E. Logue
Ronald E. Logue
Executive Vice President
Schedule A
The following foreign banking institutions and foreign
securities depositories have been approved by the Board of
Trustees of Blackrock MQE Investors for use as sub-
custodians for the Trust's securities and other assets:
(Insert banks and securities depositories)
Certified:
Trust's Authorized Officer
Date:
TABLE OF CONTENTS
Page
1. Custodian, Sub-Custodians and Agents . . . . . . . 1
1.1 Employment of Custodian and Property to be
Held by It . . . . . . . . . . . . . . . . . 1
1.2 Employment of Sub-Custodians . . . . . . . . 2
1.3 Appointment of Agents . . . . . . . . . . . . 3
2. Duties of the Custodian with Respect to Property
of the Trust Held By the Custodian . . . . . . . . 3
2.1 Holding Securities . . . . . . . . . . . . . 3
2.2 Delivery of Securities . . . . . . . . . . . 3
2.3 Registration of Securities . . . . . . . . . 6
2.4 Bank Accounts . . . . . . . . . . . . . . . . 7
2.5 Availability of Federal Funds . . . . . . . . 7
2.6 Collection of Income . . . . . . . . . . . . 8
2.7 Payment of Trust Monies . . . . . . . . . . . 8
2.8 Deposit of Trust Assets in Securities
Systems . . . . . . . . . . . . . . . . . . . 10
2.9 Trust Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . 12
2.10 Segregated Account . . . . . . . . . . . . . 13
2.11 Ownership Certificates for Tax Purposes . . . 14
2.12 Proxies . . . . . . . . . . . . . . . . . . . 14
2.13 Communications Relating to Trust Portfolio
Securities . . . . . . . . . . . . . . . . . 15
2.14 Proper Instructions . . . . . . . . . . . . . 15
2.15 Actions Permitted without Express Authority . 16
2.16 Evidence of Authority . . . . . . . . . . . . 16
2.17 Advances . . . . . . . . . . . . . . . . . . 17
3. Duties of the Custodian with Respect to Property
of the Trust Held Outside of the United States . . 17
3.1 Appointment of Foreign Sub-Custodians . . . . 17
3.2 Assets to be Held . . . . . . . . . . . . . . 17
3.3 Foreign Securities Depositories . . . . . . . 17
3.4 Holding Securities . . . . . . . . . . . . . 18
3.5 Agreements with Foreign Banking Institutions 18
3.6 Access of Independent Accountants of the
Trust . . . . . . . . . . . . . . . . . . . . 18
3.7 Reports by Custodian . . . . . . . . . . . . 19
3.8 Transactions in Foreign Custody Account . . . 19
3.9 Liability of Foreign Sub-Custodians . . . . . 20
3.10 Liability of Custodian . . . . . . . . . . . 20
3.11 Reimbursement for Advances . . . . . . . . . 21
3.12 Monitoring Responsibilities . . . . . . . . . 21
3.13 Branches of U.S. Banks . . . . . . . . . . . 21
3.14 Tax Law . . . . . . . . . . . . . . . . . . . 22
4. Duties of Custodian with Respect to the Books of
Account . . . . . . . . . . . . . . . . . . . . . 22
5. Records . . . . . . . . . . . . . . . . . . . . . 23
6. Opinion of Trust's Independent Accountant . . . . 23
7. Reports to Trust by Independent Public
Accountants . . . . . . . . . . . . . . . . . . . 23
8. Compensation of Custodian . . . . . . . . . . . . 24
9. Responsibility of Custodian . . . . . . . . . . . 24
10. Effective Period, Termination and Amendment . . . 25
11. Successor Custodian . . . . . . . . . . . . . . . 26
12. Interpretive and Additional Provisions . . . . . . 27
13. Massachusetts Law to Apply . . . . . . . . . . . . 28
14. Prior Contracts . . . . . . . . . . . . . . . . . 28
15. Unitholder Communications . . . . . . . . . . . . 28
16. Disclaimer of Liability . . . . . . . . . . . . . 29
REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT
between
BLACKROCK MQE INVESTORS
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
----
1. Terms of Appointment; Duties of the Bank . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . 5
3. Representations and Warranties of the Bank . . . . . . . 6
4. Representations and Warranties of the Trust . . . . . . 6
5. Data Access and Proprietary Information . . . . . . . . 7
6. Indemnification . . . . . . . . . . . . . . . . . . . . 9
7. Standard of Care . . . . . . . . . . . . . . . . . . . . 11
8. Covenants of the Trust and the Bank . . . . . . . . . . 11
9. Termination of Agreement . . . . . . . . . . . . . . . . 12
10. Assignment . . . . . . . . . . . . . . . . . . . . . . . 12
11. Amendment . . . . . . . . . . . . . . . . . . . . . . . 13
12. Massachusetts Law to Apply . . . . . . . . . . . . . . . 13
13. Force Majeure . . . . . . . . . . . . . . . . . . . . . 13
14. Consequential Damages . . . . . . . . . . . . . . . . . 14
15. Merger of Agreement . . . . . . . . . . . . . . . . . . 14
16. Disclaimer of Liability . . . . . . . . . . . . . . . . 14
REGISTRAR, TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the 1st day of November, 1996, by
and between BlackRock MQE Investors, a Delaware business
trust, having its principal office and place of business
at 345 Park Avenue, New York, New York 10154 (the
"Trust"), 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 Trust desires to appoint the Bank as its
registrar, transfer agent, and dividend disbursing agent
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
----------------------------------------
1.1 Subject to the terms and conditions set forth in
this Agreement, the Trust hereby appoints the Bank
to act as, and the Bank agrees to act as registrar,
transfer agent and dividend disbursing agent for the
Trust's authorized and issued units of its
beneficial interest ("Units") and preferred units of
its beneficial interest (the "Preferred Units").
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 Trust and
the Bank, the Bank shall:
(i) Issue and record the appropriate number
of Units and Preferred Units as
authorized and hold such Units and
Preferred Units in the appropriate
holder of Units (a "Holder") or the
holder of Preferred Units (a "Preferred
Holder");
(ii) Effect transfers of Units and Preferred
Units by the registered owners thereof
upon receipt of appropriate
documentation including the written
consent of the Trust;
(iii) Prepare and transmit payments for
dividends and distributions declared by
the Trust;
(iv) Mail to the purchaser confirmation of
its purchase and notice of the holding
referred to in clause (I);
(v) In connection with dividends and other
distributions, instruct the Custodian
to wire or otherwise electronically
transfer net investment income and
capital gain dividends or distributions
to each Holder or Preferred Holder
specifying the amount thereof to be so
transferred to such Holder or Preferred
Holder;
(vi) Prepare and file with the Internal
Revenue Service and with the
appropriate state agencies, and, if
required, mail to Holders and Preferred
Holders such returns for reporting any
information as to the federal income
tax consequences of dividends and
distributions paid, credited or
withheld as are required on the part of
the Trust to be so filed and mailed;
(vii) Prepare and mail an individual monthly
statements to each Holder and Preferred
Holder showing all activity in such
Holder's or Preferred Holder's account
for the month. Upon request, from a
Holder or Preferred Holder, the Bank
shall prepare and mail a year-to-date
statement showing all the activity in
such Holder's or Preferred Holder's
account on a year-to-date basis;
(viii) Mail to the Holders and Preferred
Holders reports and proxy material,
proxy cards and other material supplied
to it by the Trust in connection with
Holder or Preferred Holder meetings of
the Trust and receive, examine and
tabulate returned proxies and certify
the vote to the Trust, all as and to
the extent requested by the Trust;
(ix) Promptly answer all inquiries by
Holders and Preferred Holders
pertaining to their accounts maintained
by the Bank hereunder; and
(x) Cooperate with the Trust and the
Trust's independent public accountants
in connection with (a) the preparation
of reports to Holders and Preferred
Holders, to the Securities and Exchange
Commission (including all required
periodic and other reports), to state
securities commissioners, and to
others, (b) annual and other audits of
the books and records of the Trust, and
(c) other matters of a like nature.
1.3 Listed herein are additional services that more
fully define the services listed in Section 1.2.
The Bank shall perform the following services:
(a) Account Maintenance Services:
* Establishing new accounts
* Preparation and mailing of W-9 solicitation
to new accounts without T.I.N.'s
* Address changes
* Processing T.I.N. changes
* Processing routine and non-routine
transfers of ownership
* Issuance of credit certificates
* Posting debit and credit transactions
* Providing a daily transfer journal of
ownership changes
* Responding to written Holder of Preferred
Holder communications
* Responding to Holder and Preferred Holder
telephone inquiries
* Placing stop transfers
* Releasing stop transfers
* Replacing lost certificates
* Registration of credit certificates
* Effect transfers of Units and/or Preferred
Units by the registered owners thereof upon
receipt of appropriate documentation
including written consent of the Trust.
(b) Distribution Disbursement Services:
* Generate and mail distribution checks with
one enclosure
* Generate and mail interest checks with one
enclosure
* Electronic transfer of funds
* Replace lost distribution checks
* Processing of backup withholding and
remittance
* Preparation and filing of Federal Tax Forms
1099 and 1042
* Preparation and filing of State Tax
Information as directed
* Preparation of escheatment information
(units and distributions)
(c) Distribution Reinvestment Services Provided:
* Processing optional cash investments and
acknowledging same
* The reinvestment of distribution proceeds
for participants
* Participants withdrawal or sell requests
* Preparation, mailing and filing of Federal
Tax Form 1099B for sales
(d) Annual Meeting Services:
* Preparation for the mailing of proxies:
proxy statement, annual report and business
reply envelope
* Providing one set of labels of banks,
brokers and nominees for broker search
* Providing record date list
* Tabulation of returned proxies
* Daily reporting of tabulation results
* Interface support during solicitation
effort
* Providing one Inspector of Election at
annual meeting
* Providing an annual meeting voted list
(e) Addressing and Mailing Services:
* Preparation for the addressing and mailing
of quarterly or semi-annual reports
(f) Informational Services Provided:
* One (1) complete statistical report
- holders by state
- holders by classification code
- holders by share grouping
2. Fees and Expenses
-----------------
2.1 For the performance by the Bank pursuant to this
Agreement, the Trust 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 written agreement between the
Trust and the Bank.
2.2 In addition to the fee paid under Section 2.1 above,
the Trust agrees to reimburse the Bank for
reasonable out-of-pocket expenses, including but not
limited to confirmation production, postage, forms,
telephone, microfilm, microfiche, tabulating
proxies, records storage, or advances incurred bv
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 Trust, will be reimbursed by the
Trust.
2.3 The Trust agrees to pay all fees and reimbursable
expenses within five days following the receipt of
the respective billing notice. Postage and costs of
material for mailing of distributions, proxies,
Trust reports and other mailings to all Holder or
Preferred Holder accounts shall upon the Bank's
request, be advanced to the Bank by the Trust at
least seven (7) days prior to the mailing date of
such materials.
3. Representations and Warranties of the Bank
------------------------------------------
The Bank represents and warrants to the Trust 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 registered as a transfer agent with the
Securities and Exchange Commission as a transfer
agent pursuant to Section 17A(c) of the Securities
and Exchange Act of 1934, as amended.
3.3 It is duly qualified to carry on its business in The
Commonwealth of Massachusetts.
3.4 It is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform this
Agreement.
3.5 All requisite corporate proceedings have been taken
to authorize it to enter into and perform this
Agreement.
3.6 It has and will continue to have access to the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement.
4. Representations and Warranties of the Trust
-------------------------------------------
The Trust represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing
and in good standing under the laws of the State of
Delaware.
4.2 It is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and
perform this Agreement.
4.3 All corporate proceedings required by said
Declaration of Trust and By-Laws have been taken to
authorize it to enter into and perform this
Agreement.
4.4 It is a closed-end, non-diversified investment
company registered under the Investment Company Act
of 1940, as amended.
4.5 It shall make all required filings under federal and
state securities laws.
5. Data Access and Proprietary Information
---------------------------------------
5.1 The Trust acknowledges that the data bases, computer
programs, screen formats, report formats,
interactive design techniques, and documentation
manuals furnished to the Trust by the Bank as part
of the Trust's ability to access certain Trust-
related data ("Customer Data") maintained by the
Bank on data bases under the control and ownership
of the Bank or other third party ("Data Access
Services") constitute copyrighted, trade secret, or
other proprietary information (collectively,
"Proprietary Information") of substantial value to
the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data.
The Trust agrees to treat all Proprietary
Information as proprietary to the Bank and further
agrees that it shall not divulge any Proprietary
Information to any person or organization except as
may be provided hereunder. Without limiting the
foregoing, the Trust agrees for itself and its
employees and agents:
(a) to access Customer Data solely from locations
as may be designated in writing by the Bank and
solely in accordance with the Bank's applicable
user documentation;
(b) to refrain from copying or duplicating in any
way the Proprietary Information;
(c) to refrain from obtaining unauthorized access
to any portion of the Proprietary Information,
and if such access is inadvertently obtained,
to inform the Bank in a timely manner of such
fact and dispose of such information in
accordance with the Bank's instructions;
(d) to refrain from causing or allowing Proprietary
Information acquired hereunder from being
retransmitted to any other computer facility or
other location, except with the prior written
consent of the Bank;
(e) that the Trust shall have access only to those
authorized transactions agreed upon by the
parties; and
(f) to honor all reasonable written requests made
by the Bank to protect at the Bank's expense
the rights of the Bank in Proprietary
Information at common law, under federal
copyright law and under other federal or state
law.
Each party shall take reasonable efforts to advise its
employees of their obligations pursuant to this Section
5. The obligations of this Section shall survive any
earlier termination of this Agreement.
5.2 If the Trust notifies the Bank that any of the Data
Access Services do not operate in material
compliance with the most recently issued user
documentation for such services, the Bank shall
endeavor in a timely manner to correct such failure.
Organizations from which the Bank may obtain certain
data included in the Data Access Services are solely
responsible for the contents of such data and the
Trust agrees to make no claim against the Bank
arising out of the contents of such third-party
data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER
PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.3 If the transactions available to the Trust include
the ability to originate electronic instructions to
the Bank in order to (i) effect the transfer or
movement of cash or Units or Preferred Units or (ii)
transmit Holder or Preferred Holder information or
other information, then in such event the Bank shall
be entitled to rely on the validity and authenticity
of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in
conformity with security procedures established by
the Bank from time to time.
6. Indemnification
---------------
6.1 The Bank shall not be responsible for, and the Trust
shall indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs,
charges, reasonable 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 Trust's lack of good faith, negligence or
willful misconduct which arise out of the
breach of any representation or warranty of the
Trust hereunder.
(c) The reliance on or use by the Bank or its
agents or subcontractors of information,
records, documents or services which (i) are
received by the Bank or its agents or
subcontractors, and (ii) have been prepared,
maintained or performed by the Trust or any
other person or firm on behalf of the Trust
including but not limited to any previous
transfer agent or registrar.
(d) The reliance on, or the carrying out by the
Bank or its agents or subcontractors of any
instructions or requests of the Trust.
(e) The offer or sale of Units or Preferred Units
in violation of any requirement under the
federal securities laws or regulations or the
securities laws or regulations of any state
that such Units or Preferred Units 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 Units or Preferred
Units in such state.
6.2 The Bank shall be responsible for any and all
losses, damages, costs, charges, reasonable counsel
fees, payments, expenses and liability arising out
of acts attributed to the bad faith, negligence or
willful misconduct of the Bank and its agents or
subcontractors.
6.3 At any time the Bank may apply to any officer of the
Trust for instructions, 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 indemnified by the Trust for any
action taken or omitted by it in reasonable reliance
upon such instructions, provided that such action is
taken in good faith and without negligence. The
Bank shall be entitled to receive, and act upon,
advice of counsel (which counsel shall be selected
by the Bank with reasonable care based on such
counsel's professional competence and reputation or
shall be counsel for the Trust) and shall be without
liability for any action reasonably taken pursuant
to such advice in good faith and without negligence.
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 Trust,
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, by machine readable input,
telex, CRT data entry or other similar means
authorized by the Trust and reasonably believed to
be genuine, and shall not be held to have notice of
any change of authority of any person, until receipt
of written notice thereof from the Trust.
6.4 In order that the indemnification provision,
contained in this Section 6 shall apply, upon the
assertion of a claim for which the Trust may be
required to indemnify the Bank, its agents or
subcontractor (the "Covered Persons"), the Covered
Persons shall promptly notify the Trust of such
assertion, and shall keep the Trust advised with
respect to all developments concerning such claim.
The Trust shall have the option, at its election, to
participate with the Covered Persons in the defense
of such claim or to defend against said claim in its
own name or in the name of the Covered Persons and,
in the event that the Trust elects to defend against
said claim in its own name or in the name of the
Covered Persons, the Covered Persons shall incur no
further legal or other expenses for which they shall
be entitled to indemnification from the Trust. No
Covered Person shall in any case confess any claim
or make any compromise in any case in which the
Trust may be required to indemnify the Covered
Persons except with the Trust's prior written
consent.
7. Standard of Care
----------------
The Bank shall at all times act in good faith and
without negligence or willful misconduct and agrees
to use its best efforts within reasonable limits to
insure the accuracy of all services performed under
this Agreement, but assumes no responsibility and
shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad
faith, or willful misconduct or that of its
employees.
8. Covenants of the Trust and the Bank
-----------------------------------
8.1 The Trust shall promptly furnish to the Bank the
following:
(a) A certified copy of the resolution of the Board
of Trustees of the Trust authorizing the
appointment of the Bank and the execution and
delivery of this Agreement,
(b) A copy of the Declaration of Trust and By-Laws
of the Trust and all amendments thereto.
8.2 The Bank hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to
the Trust 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.
8.3 The Bank shall keep records relating to the services
to be performed hereunder, in the form and manner
required by applicable law and otherwise as it may
deem advisable. 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 Trust and will be
preserved, maintained and made available in
accordance with Section 31 of the Investment Company
Act of 1940, as amended, and the Rules thereunder,
and will be surrendered promptly to the Trust on and
in accordance with its request.
8.4 The Bank and the Trust agree that all books,
records, information and data pertaining to the
business of the other party which are exchanged or
received 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 bv law.
8.5 In case of any requests or demands for the
inspection of the Holder and/or Preferred Holder
records of the Trust, the Bank will endeavor to
notify the Trust and to secure instructions from an
authorized officer of the Trust as to such
inspection. The Bank reserves the right, however,
to exhibit the Holder and/or Preferred Holder
records to any person whenever it is advised by its
counsel that it may be held liable for the failure
to exhibit the Holder and/or Preferred Holder
records to such person.
9. Termination of Agreement
------------------------
9.1 This Agreement may be terminated by either party
upon sixty (60) days written notice to the other.
9.2 Should the Trust exercise its right to terminate,
all reasonable out-of-pocket expenses of the Bank
associated with the movement of records and material
will be borne by the Trust.
10. Assignment
----------
10.1 Except as provided in Section 10.3 below, neither
this Agreement nor any rights or obligations
hereunder may be assigned by either party without
the written consent of the other party.
10.2 This Agreement shall inure to the benefit of and be
binding upon the parties and their respective
permitted successors and assigns.
10.3 The Bank may, without further consent on the part of
the Trust, subcontract for the performance hereof
with (i) Boston EquiServe Limited Partnership, a
Massachusetts limited partnership ("Boston
Equiserve") which is duly registered as a transfer
agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended
("Section 17A(c)(2)"); (ii) a Boston EquiServe
affiliate duly registered as a transfer agent
pursuant to Section 17A(c)(2); provided, however,
that the Bank shall be as fully responsible to the
Trust for the acts and omissions of any
subcontractor as it is for its own acts and
omissions.
11. Amendment
---------
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 Trustees of the Trust.
12. Massachusetts Law to Apply
--------------------------
This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the
laws of The Commonwealth of Massachusetts.
13. Force Majeure
-------------
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
transmission 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 otherwise from such causes.
14. Consequential Damages
---------------------
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
hereunder.
15. Merger of Agreement
-------------------
This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior
agreement with respect to the subject matter hereof
whether oral or written.
16. Disclaimer of Liability
-----------------------
Notwithstanding anything to the contrary contained
in this Agreement, the parties hereto acknowledge
and agree that, as provided in Section of the
Declaration of Trust, this Agreement is executed by
the Trustees and/or officers of the Trust by them
not individually but as such Trustees and/or
officers of the Trustees or Holders or Preferred
Holders individually but bind only this estate of
the Trust.
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.
BLACKROCK MQE INVESTORS
By: /s/ Wesley R. Edens
-----------------------------
Name: Wesley R. Edens
Title: Chief Operating Officer
ATTEST:
-----------------------
STATE STREET BANK AND TRUST
COMPANY
By: /s/ David M. Elwood
-----------------------------
Name: David M. Elwood
Title: Vice President
ATTEST:
-----------------------
SUBSCRIPTION PROCEDURES
(Units)
Dear Prospective Investor in BlackRock MQE Investors
To purchase units of beneficial interest (the "Units") in
BlackRock MQE Investors, please carefully follow the subscription
procedures detailed below:
1. Please read the Confidential Private Placement
Memorandum dated October 30, 1996 (together with any supplements
thereto) and appendices thereto and the Subscription Agreement
(collectively, the "Offering Documents"). If you would like to
receive any additional information, or if you have any questions
regarding BlackRock MQE Investors (the "Trust") or the terms of the
offering, please contact Laurence D. Fink ((212) 754-5546), Ralph L.
Schlosstein ((212) 754-5547), Randal A. Nardone ((212) 407-5693) or
Wesley R. Edens ((212) 754-5346) at BlackRock Financial Management,
Inc.;
2. Please complete and sign the Subscription Agreement
enclosed herein (the "Subscription Agreement"). When completing the
Subscription Agreement, please be sure to respond to the inquiries
contained in Sections 6 and 7 of the Subscription Agreement. Please
mail your completed Subscription Agreement to:
BlackRock MQE Investors
c/o BlackRock Financial Management, Inc.
345 Park Avenue
New York, New York 10154
Attention: Randal A. Nardone
3. If you are subscribing for Units on behalf of an entity
(i.e., other than a natural person), please complete the applicable
Exhibit A, B, C or D attached to the Subscription Agreement and
Exhibit E if you are an individual subscribing for Units.
4. The minimum capital commitment (the "Capital
Commitment") per investor for BlackRock MQE Investors, which may be
waived at the sole discretion of BlackRock Financial Management, Inc.
(the "Manager"), is $500,000. Your Capital Commitment will be subject
to periodic capital calls as described in the Offering Documents and
the Subscription Agreement. All capital calls must be paid for by
wire of immediately available funds on the date specified in the
written notice of a capital call, which date shall be no sooner than 5
business days after the date the written notice (except with respect
to the initial capital call, which shall settle on November 1, 1996)
of the capital call is sent to you by the Fund. Payment for
subscription of shares will only be accepted by same day wire
transfer.
The Subscription Agreement is not binding on the Trust or
the Manager until accepted by the Trust and the Manager, each of which
reserves the right to reject, in whole or in part, in its sole
discretion, the subscription made hereby. If the Subscription
Agreement is not accepted by the Trust and the Manager on or prior to
November 1, 1996, and an accepted copy is not thereafter delivered to
you, the Subscription Agreement shall be of no further force and
effect.
Thank you for your interest in BlackRock MQE Investors.
BlackRock Financial Management,
Inc.
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement") made as of this 31st day of
October, 1996 among BlackRock MQE Investors, a Delaware business
trust, with its principal offices at 345 Park Avenue, New York, New
York 10154 (the "Trust"), BlackRock Financial Management, Inc., a
Delaware corporation with its principal office at 345 Park Avenue, New
York, New York 10154 (the "Manager") and the undersigned (the
"Subscriber").
W I T N E S S E T H:
WHEREAS, the Trust is authorized to issue an aggregate of up
to 100,000,000 units of beneficial interest, par value $.01 per unit,
of the Trust (the "Units"), upon the terms and subject to the
conditions hereinafter set forth, and the Subscriber desires to
irrevocably commit, upon the terms and subject to the conditions
hereinafter set forth, to purchase up to a specified aggregate dollar
amount of Units ("Capital Commitment") as set forth on the signature
page hereof;
WHEREAS, the Trust is authorized to issue an aggregate of up
to 200 preferred units of beneficial interest, par value $.01 per
unit, of the Trust (the "Preferred Units"), upon the terms and subject
to the conditions set forth in the form of Subscription Agreement for
such Preferred Units;
NOW, THEREFORE, for and in consideration of the premises and
the mutual representations and covenants hereinafter set forth, the
parties hereto do hereby agree as follows:
1. Subscription for units and Representations and Agreements of
Subscriber
1.1 The Subscriber hereby acknowledges that (a) the Trust
was organized solely for the purpose of investing in warrants
exerciseable for common stock of Annington Homes Limited or its
affiliates, subordinated debentures and, at the discretion of the
Trustees of the Trust, working capital financing of Annington Finance
No. 3 Limited or its affiliates, and other securities issued in
respect of such securities and (b) by executing this Agreement, the
Subscriber irrevocably commits, upon the terms and subject to the
conditions hereinafter set forth, to purchase up to a specified
aggregate dollar amount (net of cash distributions of capital from the
Trust to the Subscriber) of Units of the Trust as set forth upon the
signature page hereof.
1.2 The closing is expected to occur on or about October
31, 1996 (the "Closing"), on which date up to $75 million of total
capital commitments ("Total Trust Commitments") will be sought with
respect to the Trust's Units and up to $100,000 of total capital
contributions ("Preferred Contributions") will be sought with respect
to the Trust's Preferred Units.
1.3 Within 14 days after November 1, 1996, the Trust will
give the Subscriber written notice of the Total Trust Commitments and
the Subscriber's Capital Commitment expressed as a percentage of Total
Trust Commitments.
1.4 As summarized in the Confidential Private Placement
Memorandum dated October 30, 1996 (the "Memorandum"), pursuant to and
subject to all of the terms of the Trust's Declaration of Trust, as
amended from time to time (the "Declaration"), the Trust will
terminate and promptly wind up its affairs at any time if (i) so
approved by holders of 75% of the Trust's Units and 75% of the
Preferred Units (if any) then outstanding or (ii) in the event of the
dissolution, bankruptcy, insolvency or resignation (each, a "Disabling
Event") of the Manager, unless all remaining holders of Units and
Preferred Units (if any) then outstanding agree to continue within 90
days of such Disabling Event.
1.5 The Trust will make capital calls from time to time as
it deems necessary. Undrawn Capital Commitments may be called by the
Trust in any amount; provided that each such capital call will be
expressed as a pro rata percentage of each Subscriber's undrawn
Capital Commitment to the Trust.
1.6 In order to make a capital call on the Subscriber, the
Trust must provide at least 5 business days prior written notice
(except with respect to the initial capital call, which shall settle
on November 1, 1996) of the amount of the call (both as a percentage
of the unpaid portion of the Subscriber's Capital Commitment and as a
dollar amount) and the date (no sooner than 5 business days following
the capital call, except with respect to the initial capital call), on
which immediately available funds must be received by the Trust. Upon
receipt of such funds in the amount of the call, the Trust will issue
in the name of and for the account of the Subscriber that number of
full and fractional Units having an aggregate net asset value equal to
the amount of the capital call from the Subscriber as determined by
the Trust at any time within 48 hours, excluding Saturdays, Sundays
and holidays on which banks in the City of New York or the New York
Stock Exchange are not open for business, prior to the date of such
issuance. Upon the Subscriber's payment in full of the amount of a
call, the Subscriber's undrawn Capital Commitment shall be reduced by
such amount. At or prior to the date of each capital call, the Trust
will advise the Subscriber of the total amount of such Subscriber's
undrawn Capital Commitment, together with details of any return of
capital subsequent to the previous capital call.
1.7 If this Agreement is accepted by the Trust after the
date on which the Trust receives funds in satisfaction of its first
capital call (the "Initial Funding Date"), the Trust will specify in
such acceptance, and the Trust will specify in a written notice to
each of its respective subscribers that has a Capital Commitment
expressed as a percentage of the Total Trust Commitments, the amount
that the new Subscriber and each such percentage subscriber,
respectively, shall pay in immediately available funds within 5
business days after such notice (except with respect to the initial
capital call, which shall settle on November 1, 1996), which amount
shall be sufficient to permit all future capital calls to be made on a
pro rata basis; provided that the Trust will accept new or additional
subscriptions no more frequently than biweekly after the Initial
Funding Date.
1.8 The Subscriber understands and acknowledges (i) that
the Subscriber must bear the economic risk of his investment in the
Units; (ii) that the Units have not been registered under the
Securities Act of 1933 (the "1933 Act") or any state or foreign
securities laws, that the Trust has no intention of doing so and that
the Subscriber has no right to require it to do so and that therefore
such Units cannot be resold or transferred unless they are
subsequently registered under the 1933 Act and applicable state laws
or unless an exemption from such registration is available; (iii) that
the Subscriber is purchasing the Units for investment purposes only
for the account of the Subscriber and not with any view toward a
distribution thereof; (iv) that the Subscriber has no contract,
undertaking, agreement or arrangement with any person to sell,
transfer or pledge to such person or anyone else any of the Units
which the Subscriber hereby subscribes to purchase or any part thereof
or interest therein, and the Subscriber has no present plans to enter
into any such contract, undertaking, agreement or arrangement; (v)
that the Subscriber understands that, except as otherwise provided in
the Declaration, the Units cannot be transferred without the prior
written consent of the Trust and the Manager, which consent may be
withheld for any reason or without reason; (vi) that there will be no
public market for the Units; (vii) that any disposition of the Units
or any interest therein may result in unfavorable tax consequences to
the Subscriber; and (viii) that this Agreement represents an interest
in Units and is subject to the foregoing to the same extent as the
Units.
1.9 The Subscriber recognizes that the purchase of Units
involves a high degree of risk in that (i) the Trust has no operating
history; (ii) an investment in the Trust is highly speculative, and
only investors who can afford the loss of their entire investment
should consider investing in the Trust and the Units; (iii) the
Subscriber may not be able to dispose of his investment; (iv)
transferability of the Units is extremely limited and (v) in the event
of a disposition, the Subscriber could sustain the loss of his entire
investment.
1.10 The Subscriber represents that he is an "accredited
investor" as such term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act, as indicated by the responses to the
questions contained in Section 6 hereof.
1.11 The Subscriber hereby represents that he has been
afforded the opportunity to ask questions of and obtain additional
information concerning the terms and conditions of the offering of the
Units or to verify the information contained in the Confidential
Private Placement Memorandum dated October 30, 1996, as supplemented
from time to time, and the appendices thereto and the Subscription
Agreement (collectively, the "Offering Documents") or otherwise
relative to the Trust, to the extent that the officers and
representatives of the Trust possess such information or can acquire
it without unreasonable effort or expense. All such questions if
asked have been answered satisfactorily and all such information
provided has been found to be fully satisfactory.
1.12 The Subscriber hereby represents that the Subscriber
has received, reviewed carefully and understands fully the Offering
Documents and has consulted with his own investment advisor, attorney
or accountant with respect to the investment contemplated hereby and
its suitability for the Subscriber. The Subscriber has evaluated the
risks of investing in the Units, and has determined that the Units are
a suitable investment for the Subscriber. The Subscriber can bear the
economic risk of this investment and can afford a complete loss of his
investment. In evaluating the suitability of an investment in the
Units, the Investor has not relied upon any representations or other
information (whether oral or written) other than as set forth in the
Offering Documents and other than independent investigations made by
the Subscriber or representative(s) of the Subscriber.
1.13 The Subscriber hereby acknowledges that the offering of
the Units has not been reviewed, endorsed or recommended by the United
States Securities and Exchange Commission (the "Commission") or any
state or foreign regulatory authority and that no federal, state or
foreign authority has made any finding or determination as to the
fairness of the offering of the Units.
1.14 The Subscriber understands that there is no market for
the Units and that no market is expected to develop for the Units.
The Subscriber hereby agrees that it will not dispose of an interest
in this Agreement or any of the Units by way of sale, transfer,
assignment, pledge, hypothecation or any other means other than in
accordance with the provisions set forth in the Declaration (which
provisions are summarized in the Memorandum).
1.15 Any information which the Subscriber has furnished to
the Trust in Section 6 or on the signature page hereof is correct and
complete as of the date of this Agreement and if there should be any
material change, prior to the Closing, in such information or in any
representation or warranty made by the Subscriber herein, the
Subscriber will immediately furnish such revised or corrected
information to the Trust.
1.16 The Subscriber hereby represents that the address or
the addresses of the Subscriber furnished by him on the signature page
hereof is the undersigned's principal residence if he is a natural
person or its principal business address or addresses if it is a
corporation or other entity.
1.17 The representations, warranties, agreements,
undertakings and acknowledgements made by the Subscriber in this
Agreement (the "Covered Items") are made with the intent that they be
relied upon by the Trust in determining the Subscriber's suitability
as a purchaser of the Units, and shall survive any such purchase. The
Subscriber recognizes that the offer of the Units to him was made in
reliance upon his representations and warranties and the
acknowledgments and agreements set forth herein, and hereby agrees to
indemnify, to the extent of the Subscriber's undrawn Capital
Commitment and the Subscriber's interest in the Trust (which shall be
the maximum indemnification liability of the Subscriber for all
purposes hereof), the Trust, the Manager and each of their respective
Affiliates (as defined in the Declaration), and to hold each of them
harmless against, all liabilities, costs or expenses (including
reasonable attorneys' fees) arising as a result of the sale or
distribution of the Units by the Subscriber in violation of the
registration requirements of the 1933 Act (or other applicable law) or
any material misrepresentation or material breach by the Subscriber of
the Covered Items.
2. Representations by, and Covenants of, the Manager and the Trust
2.1 As of the Closing, the Manager, and as of the date of
notice of each call by the Trust (each, a "Subsequent Date"), the
Manager (but only to the best of its knowledge insofar as the Trust is
concerned) and the Trust (but solely as to the Trust and not as to the
Manager) represent, warrant and, where applicable, covenant that (A)
the Trust has been duly organized, and is subsisting and in good
standing, as a business trust under the laws of the State of Delaware
and has the requisite power and authority to conduct its business as
described in the Offering Documents and the Declaration and (B) each
of the Declaration, this Agreement, and any other documents executed
and delivered by the Trust, its Trustees or the Manager in connection
therewith or herewith have been duly authorized, executed and
delivered by such persons, and are the legal, valid and binding
obligations of such persons enforceable in accordance with their
respective terms, except (i) that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (ii)
that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
2.2 As of the Closing and as of each Subsequent Date, the
Manager represents, warrants and, where applicable, covenants that it
has been duly organized, and is subsisting and in good standing, under
the laws of the state of its organization and has the requisite power
and authority to enter into and perform its obligations under the
Declaration.
2.3 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager and the Trust represent, warrant and,
where applicable, covenant that the Units have been duly and validly
authorized and, when delivered and paid for in accordance with this
Agreement, will be duly and validly issued units of beneficial
interest in the Trust and that the Subscriber shall be entitled to all
the benefits of a beneficial owner of the Trust under the Declaration
and the Delaware Act (as defined in the Declaration).
2.4 As of the Closing, the Manager represents and warrants
that the Trust is duly qualified to do business and is in good
standing in the State of New York and is not required by virtue of the
conduct of its business to be qualified as a foreign corporation in
any other jurisdiction.
2.5 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, to the extent within its control, and
the Trust represent, warrant and, where applicable, covenant that the
Trust will use the proceeds from the sale of the Units to invest in
Annington Homes Limited and Annington Finance No 3 Limited and/or
their affiliates and to pay the Trust's expenses.
2.6 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, to the extent within its control, and
the Trust represent, warrant and, where applicable, covenant that
commencing on the Initial Funding Date, the Trust will (i) be an
investment company within the meaning of the Investment Company Act of
1940 (the "1940 Act") and be registered as such under the 1940 Act and
(ii) expect to be entitled to receive the tax treatment afforded a
partnership under the Internal Revenue Code of 1986, as amended.
Without limiting the generality of the foregoing, to the extent within
the control of the Manager, commencing on the Initial Funding Date,
the Trust will be deemed to have outstanding securities (other than
short-term paper) beneficially owned by more than 100 persons as
determined in accordance with provisions of Section 3(c)(1) of the
1940 Act and the Trust will not be a company described in Sections
3(c)(5) and/or 3(c)(6) of the 1940 Act.
2.7 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager (to the best of its knowledge insofar as
the Trust is concerned) and the Trust (but solely as to the Trust and
not as to the Manager), to the best of its knowledge, represent,
warrant and, where applicable, covenant that neither the Trust, nor
the Manager is in default (nor has any event occurred which with
notice, lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition contained in the
Declaration, or in any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness or any lease or
other agreement or understanding, or any license, permit, franchise or
certificate, to which any such person is a party or by which any
thereof is bound or to which the properties of any thereof are
subject, nor is any such person in violation of any statute,
regulation, law, order, writ, injunction, judgment or decree to which
it is subject, which default or violation would materially adversely
affect the business or financial condition of such person or impair
such person's ability to carry out its obligations under this
Agreement, the Declaration or impair the Manager's ability to carry
out its obligations under the Declaration.
2.8 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, and the Trust (but solely as to the
Trust and not as to the Manager), represent, warrant and, where
applicable, covenant that there is no litigation, investigation, or
other proceeding pending or, to the best of its or their knowledge,
threatened against the Trust, the Manager or any of their respective
Affiliates (excluding from such term solely for this purpose any
investor in the Trust other than the Manager or its Affiliates) which,
if adversely determined, would materially adversely affect the
business or financial condition of the Trust or the Manager or the
ability of such person to carry out its obligations under this
Agreement, the Declaration or impair the Manager's ability to carry
out its obligations under the Declaration.
2.9 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, to the best its knowledge, and the
Trust, to the best of its knowledge, represent, warrant and, where
applicable, covenant that neither the Trust nor any person acting on
its behalf has taken any actions that would subject the issuance and
sale of the Units to the registration and prospectus delivery
provisions of the 1933 Act.
2.10 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager and the Trust, represent, warrant and,
where applicable, covenant that the Offering Documents do not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not
misleading in light of the circumstances under which they are or were
made.
2.11 As of the Closing and as of each Subsequent Date, the
Manager represents, warrants and, where applicable, covenants that the
Subscriber has been provided true, complete and correct copies or
forms of all material letters, agreements, undertakings and other
documents by and among the Trust or the Manager or an Affiliate
thereof relative to any such person's purchase of Units of the Trust
or any material terms, conditions, operations, obligations or other
understandings affecting the Trust.
2.12 As of the Closing and as of each Subsequent Date, the
Manager represents, warrants and, where applicable, covenants that the
Manager will reimburse the Trust for, or cause to be paid on behalf of
the Trust, offering and organizational expenses of the Trust in
excess of $750,000.
2.13 The Manager and/or the Trust, as case may be,
acknowledges that the representations, warranties and covenants made
by the Manager and/or the Trust, as the case may be, are made with the
intent that they be relied upon by the Subscriber in committing to
purchase and in purchasing Units and shall survive any such purchase
and that the commitment to purchase, and each purchase of, Units by
the Subscriber was and will be made in reliance upon the
representations, warranties and covenants set forth herein. To the
extent such representations, warranties and covenants are made by the
Manager and the Trust, they are made jointly and severally: provided,
however, that if the Subscriber brings action against only the Trust
or only the Manager, the defending party may implead or seek
contribution from the other and the other will, in addition to any
liability or contribution imposed, be liable to the defending party
for the incremental costs incurred by the defending party in
connection with such impleader or contribution proceeding if (a) the
other is found to be responsible for 25% or more of the aggregate
recovery, (b) the other is found to be responsible for $1,250,000 or
more or (c) the defending party is found to be not responsible for any
amount and the other is found to be responsible for some amount. The
Manager hereby agrees to indemnify, to the extent of the dollar amount
of the Subscriber's Capital Commitment (which shall be the maximum
indemnification liability of the Manager for all purposes hereof), the
Subscriber and any Affiliates, and to hold each of them harmless
against liabilities, costs or expenses (including reasonable
attorneys' fees) arising as a result of the sale or distribution of
the Units by the Trust or the Manager (or any Affiliate of the
Manager) in violation of the registration requirements of the 1933 Act
(or other applicable law) or any material misrepresentation or
material breach by the Manager of its representations, warranties and
covenants made herein.
3. Closing Conditions
3.1 The Subscriber's obligations hereunder are subject to
the fulfillment (or waiver by the Subscriber), prior to or at the time
of the Closing, of the following conditions:
(a) The representations and warranties set forth
herein on the part of the Manager shall be true and correct as if made
on and as of the time of the Closing.
(b) The Closing shall have occurred not later than
October 31, 1996.
(c) The certificate of trust with respect to the Trust
shall have been duly filed in the Office of the Secretary of State of
the State of Delaware.
(d) The Subscriber shall have received opinions dated
the date of the Closing from Skadden, Arps, Slate, Meagher & Flom LLP
in substantially the form attached hereto as Schedule 1 and; if this
Agreement is submitted as of a Subsequent Date, the Subscriber shall
have received opinions dated the date of the Subsequent Date from
Skadden, Arps, Slate, Meagher & Flom in substantially the form
attached hereto as Schedule 2.
3.2 If at the Subsequent Date the Manager fails to tender
to the Subscriber the documents specified herein which are required to
be delivered to the Subscriber at the Subsequent Date or if any of the
conditions specified in Section 3.1 above shall not have been
fulfilled, the Subscriber shall, at its election, be relieved of all
further obligations under this Agreement.
4. Miscellaneous
4.1 Any notice or other communication given hereunder shall
be deemed sufficient if in writing and sent by facsimile with written
confirmation of receipt and a copy of the notice sent by overnight
courier, or if delivered by hand against written receipt therefor,
addressed to BlackRock MQE Investors, c/o BlackRock Financial
Management Inc., 345 Park Avenue, New York, New York 10154, Attention:
Randal A. Nardone (Fax: 212-407-5678), or to the Subscriber at his
address or facsimile number indicated on the signature page of this
Agreement, or in either case such other person, address or facsimile
number as shall have been given by notice to the other party. Notices
shall be deemed to have been given on the date sent or delivered by
hand in accordance with the provisions of this Section 4.1.
4.2 This Agreement shall not be changed, modified or
amended except by a writing signed by the parties hereto, and this
Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by such parties.
4.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement and any other
agreements referred to herein sets forth the entire agreement and
understanding between the parties as to the subject matter thereof and
merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them with respect to such
subject matter. This Agreement may not be assigned without the prior
written consent of each party hereto or the successor to substantially
all of the business of any such person.
4.4 Upon the execution and delivery of this Agreement by
the Subscriber, this Agreement shall become a binding obligation of
the Subscriber with respect to the purchase of Units as herein
provided and shall survive insolvency, merger, consolidation, unit
exchange, sale of assets and the death or disability of the
Subscriber; provided, however, if the Subscription Agreement is not
accepted by the Trust and the Manager on or prior to November 1, 1996
and an accepted copy is not thereafter delivered to the Subscriber,
the Subscription Agreement shall be of no further force and effect.
4.5 Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly agree
that all the terms and provisions hereof shall be construed in
accordance with and governed by the laws of the State of New York,
without regard to principles of conflicts of law.
4.6 The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall
not affect any other provision of this Agreement, which shall remain
in full force and effect.
4.7 It is agreed that a waiver by either party of a breach
of any provision of this Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.
4.8 This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.
5. Notice to Certain State Residents
5.1 In making an investment decision investors must rely on
their own examination of the issuer and the terms of the offering,
including the merits and risks involved. These securities have not
been recommended by any federal or state securities commission or
regulatory authority in any jurisdiction. Furthermore the foregoing
authorities have not confirmed the accuracy or determined the adequacy
of this document. Any representation to the contrary is a criminal
offense.
5.2 These securities are subject to restrictions on
transferability and resale and may not be transferred or resold except
as permitted under the 1933 Act, as amended, and the applicable state
securities laws, pursuant to registration or exemption therefrom.
Investors should be aware that they will be required to bear the
financial risks of this investment.
5.3 The Attorney General of the State of New York has not
passed on or endorsed the merits of this offering. Any representation
to the contrary is unlawful.
5.4 Missouri Residents: The undersigned acknowledges that
the security offered hereby is not registered under the Missouri
Securities Act and may be disposed of only through a registered
broker-dealer in Missouri. The undersigned also acknowledges that it
is a felony to sell securities in violation of the Missouri Securities
Act.
5.5 New Hampshire Residents: Neither the fact that a
registration statement or an application for license has been filed
under Chapter 421-B with the State of New Hampshire nor the fact that
a security is effectively registered or a person is licensed in the
State of New Hampshire constitutes a finding by the Secretary of State
that any document filed under RSA 421-B is true, complete and not
misleading. Neither any such fact nor the fact that an exemption or
exception is available for a security or a transaction means that the
Secretary of State has passed in any way upon the merits or
qualification of, or recommended or given approval to, any person,
security or transaction. It is unlawful to make, or cause to be made,
to any prospective purchaser, customer or client any representation
inconsistent with the provisions of this paragraph.
5.6 Pennsylvania Residents: If a purchaser is a resident
of the Commonwealth of Pennsylvania, he acknowledges and agrees that
(a) the securities purchased by such purchaser cannot be sold for a
period of twelve (12) months from the date of purchase, except as
permitted under section 204.011 of the Pennsylvania Securities
Regulations, and (b) pursuant to section 207(M) of the Pennsylvania
Securities Act, each Pennsylvania resident who accepts an offer to
purchase securities exempted from registration under section 203(D) of
the Pennsylvania Securities Act directly from an issuer or an
affiliate of an issuer has the right to withdraw his acceptance
without incurring any liability to the seller, underwriter, if any, or
any other person within two (2) business days from the date of receipt
by the issuer of his written binding contract of purchase or, in the
case of a transaction in which there is no written binding contract of
purchase, within two (2) business days after he makes the initial
payment for the securities being offered. To accomplish the
withdrawal, you need only send a letter or telegram to the issuer (or
the placement agent if one is listed on the front page of the offering
document) indicating your intention to withdraw. Such letter or
telegram should be sent and postmarked prior to the end of the
aforementioned second business day. If you are sending a letter, it
is prudent to send it by certified mail, return receipt requested, to
ensure that it is received and also to evidence the time when it was
mailed. Should you make the request orally, you should ask for
written confirmation that your request has been received.
6. CONFIDENTIAL INVESTOR QUESTIONNAIRE
The Subscriber represents and warrants that he, she or it
comes within each category marked below, and that for any category
marked, he or she has truthfully set forth the factual basis or reason
the Subscriber comes within that category. ALL INFORMATION IN
RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The
undersigned agrees to furnish such additional information as is
reasonably necessary in order for the Trust or the Manager to verify
the answers set forth below.
Please mark each applicable box
( ) a. The undersigned is an individual (not a
partnership, corporation, etc.) whose individual
net worth, or joint net worth with his or her
spouse, presently exceeds $ 1,000,000.
Explanation. In calculating net worth you may
include equity in personal property and real
estate, including your principal residence, cash,
short-term investments, stock and securities.
Equity in personal property and real estate should
be based on the appraised fair market value of such
property less debt secured by such property.
( ) b. The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of
$200,000 in each of the two most recent years, or joint
income with their spouse in excess of $300,000 in each of
those years (in each case including foreign income, tax
exempt income and full amount of capital gains and losses
but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the
current year.
( ) c. The undersigned is a director or executive officer of the
Trust which is issuing and selling the Units.
( ) d. The undersigned is a bank; a savings and loan
association, insurance company, registered investment
company; registered business development company;
licensed small business investment company ("SBIC"); a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000; or an employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment
decision is made by a plan fiduciary which is either a
bank, savings and loan association, insurance company or
registered investment advisor, or (b) the plan has total
assets in excess of $5,000,000 or is a self directed plan
with investment decisions made solely by persons that are
accredited investors.
(describe entity)
( ) e. The undersigned is a business development company as
defined in section 202(a)(22) of the Investment Advisers
Act of 1940;
(describe entity)
( ) f. The undersigned is a corporation, partnership,
Massachusetts or other business trust, or a non-profit
organization within the meaning of Section 501 (c)(3) of
the Internal Revenue Code, in each case not formed for
the specific purpose of acquiring the Units and with
total assets in excess of $5,000,000;
(describe entity)
( ) g. The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the Units, where the purchase is directed by a
"sophisticated person" as defined in Regulation
506(b)(2)(ii). Such "sophisticated person" has the
knowledge and experience in financial and business
matters to capably evaluate the merits and risks of the
prospective investment.
( ) h. The undersigned is an entity all the equity owners of
which are "accredited investors" within one or more of
the above categories. If relying upon this category
alone, each equity owner must complete and sign a
separate copy of this Confidential Investor
Questionnaire.
(describe entity)
( ) i. The undersigned is not within any of the categories above
and is therefore a nonaccredited investor.
( ) j. The undersigned is (i) an individual or company whose
subscription is for at least $500,000 or (ii) an
individual or company whose net worth at the time of
entering into such person's or company's subscription
agreement is at least $1,000,000. For this purpose, the
term "company" generally means a corporation,
partnership, association, joint-stock company, trust, or
any organized group of persons (which may include a
contractual arrangement), whether incorporated or not, or
any receiver, trustee in bankruptcy or liquidating agent
for any of the foregoing. However, the term "company"
does not include a registered investment company, a
business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940 (which
would include a registered business development company)
or any "company" which would be required to register as
an investment company except by virtue of the operation
of Section 3(c)(1) of the Investment Company Act of 1940
unless each of such company's equity holders satisfies
the requirements of clause (i) or (ii) above (taking into
account the definition of company used in such clauses).
THE UNDERSIGNED IS INFORMED OF THE SIGNIFICANCE OF THE FOREGOING
REPRESENTATIONS, AND THEY ARE MADE WITH THE INTENTION THAT THE TRUST
WILL RELY ON THEM.
7. Manner in Which Title to be Held (check one)
a. ( ) Individual Ownership*
b. ( ) Community Property
c. ( ) Joint Tenant with Right of Survivorship (both parties must sign)
d. ( ) Partnership*
e. ( ) Tenants in Common
f. ( ) Corporation*
g. ( ) Trust*
h. ( ) Other
* If Units are being subscribed for by any person other than a
natural person, please complete Exhibit A, B or C, as applicable,
which are attached. If Units are being subscribed for by an
individual, please complete Exhibit D, which is attached.
Capital Commitment (please fill in (a) below): The minimum Capital
Commitment is $500,000.
(a) $
Name(s) Exactly as to Appear on Unit Register
Signature Signature (if purchasing jointly)
Name Typed or Printed Name Typed or Printed
Residence Address Residence Address
City. State and Zip Code City, State and Zip Code
Telephone Telephone
Facsimile Number Facsimile Number
Tax Identification or Social Security Number Tax
Identification or Social Security Number
Dated: , 1996 Dated: , 1996
This Subscription Agreement is agreed to and
accepted as of ________ __, 1996
BlackRock MQE Investors
By:
Name: Wesley R. Edens
Title: Chief Operating Officer
BlackRock Financial Management, Inc.
By:
Name: Ralph L. Schlosstein
Title: President
EXHIBIT A
CERTIFICATE OF PARTNERSHIP INVESTOR
CERTIFICATE OF (the "Partnership")
(Name of Partnership)
The undersigned, constituting all of the partners of the
Partnership who must consent to the proposed investment by the
Partnership hereby certify as follows:
1. That the Partnership commenced business on ____________
and was established pursuant to a Partnership Agreement dated
____________ (the "Agreement").
2. That, as the partners or managing or general partner or
partners of the Partnership, we have the authority to determine, and
have determined, (i) that the investment in, and the purchase of an
interest in BlackRock MQE Investors is of benefit to the Partnership
and (ii) to make such investment on behalf of the Partnership.
3. That _____________________ is authorized to execute all
necessary documents in connection with our investment in
.
IN WITNESS WHEREOF, we have executed this certificate as the
partners of the Partnership this __ day of , 1996, and
declare that it is truthful and correct.
(Name of Partnership)
By:
Partner
By:
Partner
By:
Partner
EXHIBIT B
CERTIFICATE OF CORPORATE INVESTOR
CERTIFICATE OF (the "Corporation")
(Name of Corporation)
The undersigned, being the duly elected and acting
Secretary or Assistant Secretary of the Corporation, hereby
certifies as follows:
1. That the Corporation commenced business on
and was incorporated under the laws of the State of
____________ on ____________.
2. That the following named individuals are duly
elected officers of the Corporation, who hold the
offices set opposite their respective names and who are
duly authorized to execute any and all documents in
connection with the Corporation's investment in
, and that the signatures written
opposite their names and titles are their correct and
genuine signatures.
Name Title Signature
IN WITNESS WHEREOF, I have executed this certificate
and affixed the seal of the Corporation this ___ day of
, 1996, and declared that it is truthful and
correct.
[SEAL]
(Name of Corporation)
By:
Name:
Title:
EXHIBIT C
CERTIFICATE OF TRUST INVESTOR
CERTIFICATE OF (the "Trust")
(Name of Trust or Custodial Relationship)
The undersigned, constituting the Custodian or all of the
Trustees of the Trust, hereby certify as follows:
1. That the Trust was established pursuant to a Trust
Agreement dated ______________ (the "Agreement").
2. That the undersigned is authorized to execute, on
behalf of the Trust, any and all documents in connection with the
Trust's investment in the Trust.
IN WITNESS WHEREOF, I have executed this certificate as an
officer or Trustee of the Trust authorized to execute this
certificate this __ day of , 1996, and declare that
it is truthful and correct.
(Name of Trust or
Custodial Relationship)
By:
Name:
Title:
EXHIBIT D
CERTIFICATE OF LIMITED LIABILITY COMPANY INVESTOR
CERTIFICATE OF (the
"Limited Liability Company")
(Name of Limited Liability Company)
The undersigned, being a duly elected and acting
Manager of the Limited Liability Company, hereby certifies as
follows:
1. That the Limited Liability Company commenced business on
___________ and was organized under the laws of the State of
_________________ on _______________.
2. That a true and correct copy of the Limited Liability
Company Agreement is attached hereto and that, as of the
date hereof, the Limited Liability Company Agreement has not
been amended (except as to any attached amendments) or
revoked and is still in full force and effect.
3. That the Managers of the Limited Liability Company have
determined that the investment in, and purchase of an
interest in, BlackRock MQE Investors is of benefit to the
Limited Liability Company and has determined to make such
investment on behalf of the Limited Liability Company.
Attached hereto is a true, correct and complete copy of
resolutions of the Managers (or an appropriate committee
thereof) of the Limited Liability Company duly authorizing
this investment, and said resolutions have not been revoked,
rescinded or modified and remain in full force and effect.
4. That the following named individuals are duly elected
managers of the Limited Liability Company, who hold the
offices set opposite their respective names and who are duly
authorized to execute any and all documents in connection
with the Limited Liability Company's investment in BlackRock
MQE Investors, and that the signatures written opposite
their names and titles are their correct and genuine
signatures.
Name Title Signature
IN WITNESS WHEREOF, I have executed this certificate
and affixed the seal of the Limited Liability Company this ____
day of _________,1996, and declared that it is truthful and
correct.
[SEAL]
(Name of Limited Liability Company)
By:__________________________
Name:
Title:
EXHIBIT E
CERTIFICATE OF INDIVIDUAL
CERTIFICATE OF (the "Individual")
(Name of Individual)
The undersigned hereby certifies as follows:
1. The Individual (if not using a Purchaser
Representative) has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits
and risks of investing in the Units. The aggregate amount of the
investments of the Individual in, and his commitments to, all
similar investments that are illiquid is reasonable in relation
to his net worth.
2. That the undersigned is authorized to execute on behalf
of the Individual, any and all documents in connection with the
Individual's investment in the Trust, if applicable.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this day of , 1996, and
declared that it is truthful and correct.
(Name of Individual)
By:
Name:
Title:
SUBSCRIPTION PROCEDURES
(PREFERRED UNITS)
Dear Prospective Investor in BlackRock MQE Investors
To purchase preferred units of beneficial interest (the
"Preferred Units") in BlackRock MQE Investors, please carefully follow
the subscription procedures detailed below:
1. Please read the Confidential Private Placement
Memorandum dated October 30, 1996 (together with any supplements
thereto) and appendices thereto and the Subscription Agreement
(collectively, the "Offering Documents"). If you would like to
receive any additional information, or if you have any questions
regarding BlackRock MQE Investors (the "Trust") or the terms of the
offering, please contact Laurence D. Fink ((212) 754-5546), Ralph L.
Schlosstein ((212) 754-5547), Randal A. Nardone ((212) 407-5693) or
Wesley R. Edens ((212) 754-5346) at BlackRock Financial Management,
Inc.;
2. Please complete and sign the Subscription Agreement
enclosed herein (the "Subscription Agreement"). When completing the
Subscription Agreement, please be sure to respond to the inquiries
contained in Sections 6 and 7 of the Subscription Agreement. Please
mail your completed Subscription Agreement to:
BlackRock MQE Investors
c/o BlackRock Financial Management, Inc.
345 Park Avenue
New York, New York 10154
Attention: Randal A. Nardone
3. If you are subscribing for Preferred Units on behalf of
an entity (i.e., other than a natural person), please complete the
applicable Exhibit A, B, C or D attached to the Subscription Agreement
and Exhibit E if you are an individual subscribing for Preferred
Units.
4. The Trust is offering up to 200 Preferred Units to
investors for $500 per Preferred Unit. The Preferred Units will pay
cumulative dividends when, as and if declared by the Trustees at the
rate of 10% per year, will have a liquidation preference per Preferred
Unit equal to $500 plus accumulated and unpaid dividends, will be
redeemable in whole or in part at any time at liquidation preference
and will have certain voting and other rights as required by the 40
Act. Preferred Units are being offered only to "accredited investors"
within the meaning of Regulation D of the 33 Act ("Accredited
Investors").
The Subscription Agreement is not binding on the Trust or
BlackRock Financial Management, Inc. (the "Manager") until accepted by
the Trust and the Manager, each of which reserves the right to reject,
in whole or in part, in its sole discretion, the subscription made
hereby. If the Subscription Agreement is not accepted by the Trust
and the Manager on or prior to November 1, 1996, and an accepted copy
is not thereafter delivered to you, the Subscription Agreement shall
be of no further force and effect.
Thank you for your interest in BlackRock MQE Investors.
BlackRock Financial Management, Inc.
SUBSCRIPTION AGREEMENT
(PREFERRED UNITS)
SUBSCRIPTION AGREEMENT (this "Agreement") made as of this 31st day of
October, 1996 among BlackRock MQE Investors, a Delaware business
trust, with its principal offices at 345 Park Avenue, New York, New
York 10154 (the "Trust"), BlackRock Financial Management, Inc., a
Delaware corporation with its principal office at 345 Park Avenue, New
York, New York 10154 (the "Manager") and the undersigned (the
"Subscriber").
W I T N E S S E T H:
WHEREAS, the Trust is authorized to issue an aggregate of up
to 200 preferred units of beneficial interest, par value $.01 per
unit, of the Trust (the "Preferred Units"), upon the terms and subject
to the conditions hereinafter set forth, and the Subscriber desires to
irrevocably commit, upon the terms and subject to the conditions
hereinafter set forth, to purchase up to a specified aggregate dollar
amount of Preferred Units ("Capital Contribution") as set forth on the
signature page hereof;
WHEREAS, the Trust is authorized to issue an aggregate of up
to 100,000,000 units of beneficial interest, par value $.01 per unit,
of the Trust (the "Units"), upon the terms and subject to the
conditions set forth in the form of Subscription Agreement for such
Units;
NOW, THEREFORE, for and in consideration of the premises and
the mutual representations and covenants hereinafter set forth, the
parties hereto do hereby agree as follows:
1. SUBSCRIPTION FOR PREFERRED UNITS AND REPRESENTATIONS AND
AGREEMENTS OF SUBSCRIBER
1.1 The Subscriber hereby acknowledges that (a) the Trust
was organized solely for the purpose of investing in warrants
exerciseable for common stock of Annington Homes Limited or its
affiliates, subordinated debentures and, at the discretion of the
Trustees of the Trust, working capital financing of Annington Finance
No. 3 Limited or its affiliates, and other securities issued in
respect of such securities and (b) by executing this Agreement, the
Subscriber irrevocably commits, upon the terms and subject to the
conditions hereinafter set forth, to purchase up to a specified
aggregate dollar amount (net of cash distributions of capital from the
Trust to the Subscriber) of Preferred Units of the Trust as set forth
upon the signature page hereof.
1.2 The closing is expected to occur on or about October
31, 1996 (the "Closing"), on which date up to $100,000 of total
capital contributions ("Preferred Contributions") will be sought with
respect to the Trust's Preferred Units and up to $75 million of total
capital commitments ("Total Trust Commitments") will be sought with
respect to the Trust's Units.
1.3 Within 14 days after November 1, 1996, the Trust will
give the Subscriber written notice of the total Preferred
Contributions and the Subscriber's Capital Contribution expressed as a
percentage of Preferred Contributions.
1.4 As summarized in the Confidential Private Placement
Memorandum dated October 30, 1996 (the "Memorandum"), pursuant to and
subject to all of the terms of the Trust's Declaration of Trust, as
amended from time to time (the "Declaration"), the Trust will
terminate and promptly wind up its affairs at any time if (i) so
approved by holders of 75% of the Trust's Units and 75% of the
Preferred Units (if any) then outstanding or (ii) in the event of the
dissolution, bankruptcy, insolvency or resignation (each, a "Disabling
Event") of the Manager, unless all remaining holders of Units and
Preferred Units (if any) then outstanding agree to continue within 90
days of such Disabling Event.
1.5 The Subscriber understands and acknowledges (i) that
the Subscriber must bear the economic risk of his investment in the
Preferred Units; (ii) that the Preferred Units have not been
registered under the Securities Act of 1933 (the "1933 Act") or any
state or foreign securities laws, that the Trust has no intention of
doing so and that the Subscriber has no right to require it to do so
and that therefore such Preferred Units cannot be resold or
transferred unless they are subsequently registered under the 1933 Act
and applicable state laws or unless an exemption from such
registration is available; (iii) that the Subscriber is purchasing the
Preferred Units for investment purposes only for the account of the
Subscriber and not with any view toward a distribution thereof; (iv)
that the Subscriber has no contract, undertaking, agreement or
arrangement with any person to sell, transfer or pledge to such person
or anyone else any of the Preferred Units which the Subscriber hereby
subscribes to purchase or any part thereof or interest therein, and
the Subscriber has no present plans to enter into any such contract,
undertaking, agreement or arrangement; (v) that the Subscriber
understands that, except as otherwise provided in the Declaration, the
Preferred Units cannot be transferred without the prior written
consent of the Trust and the Manager, which consent may be withheld
for any reason or without reason; (vi) that there will be no public
market for the Preferred Units; (vii) that any disposition of the
Preferred Units or any interest therein may result in unfavorable tax
consequences to the Subscriber; and (viii) that this Agreement
represents an interest in Preferred Units and is subject to the
foregoing to the same extent as the Preferred Units.
1.6 The Subscriber recognizes that the purchase of
Preferred Units involves a high degree of risk in that (i) the Trust
has no operating history; (ii) an investment in the Trust is highly
speculative, and only investors who can afford the loss of their
entire investment should consider investing in the Trust and the
Preferred Units; (iii) the Subscriber may not be able to dispose of
his investment; (iv) transferability of the Preferred Units is
extremely limited and (v) in the event of a disposition, the
Subscriber could sustain the loss of his entire investment.
1.7 The Subscriber represents that he is an "accredited
investor" as such term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act, as indicated by the responses to the
questions contained in Section 6 hereof.
1.8 The Subscriber hereby represents that he has been
afforded the opportunity to ask questions of and obtain additional
information concerning the terms and conditions of the offering of the
Preferred Units or to verify the information contained in the
Confidential Private Placement Memorandum dated October 30, 1996, as
supplemented from time to time, and the appendices thereto and the
Subscription Agreement (collectively, the "Offering Documents") or
otherwise relative to the Trust, to the extent that the officers and
representatives of the Trust possess such information or can acquire
it without unreasonable effort or expense. All such questions if
asked have been answered satisfactorily and all such information
provided has been found to be fully satisfactory.
1.9 The Subscriber hereby represents that the Subscriber
has received, reviewed carefully and understands fully the Offering
Documents and has consulted with his own investment advisor, attorney
or accountant with respect to the investment contemplated hereby and
its suitability for the Subscriber. The Subscriber has evaluated the
risks of investing in the Preferred Units, and has determined that the
Preferred Units are a suitable investment for the Subscriber. The
Subscriber can bear the economic risk of this investment and can
afford a complete loss of his investment. In evaluating the
suitability of an investment in the Preferred Units, the Investor has
not relied upon any representations or other information (whether oral
or written) other than as set forth in the Offering Documents and
other than independent investigations made by the Subscriber or
representative(s) of the Subscriber.
1.10 The Subscriber hereby acknowledges that the offering of
the Preferred Units has not been reviewed, endorsed or recommended by
the United States Securities and Exchange Commission (the
"Commission") or any state or foreign regulatory authority and that no
federal, state or foreign authority has made any finding or
determination as to the fairness of the offering of the Preferred
Units.
1.11 The Subscriber understands that there is no market for
the Preferred Units and that no market is expected to develop for the
Preferred Units. The Subscriber hereby agrees that it will not
dispose of an interest in this Agreement or any of the Preferred Units
by way of sale, transfer, assignment, pledge, hypothecation or any
other means other than in accordance with the provisions set forth in
the Declaration (which provisions are summarized in the Memorandum).
1.12 Any information which the Subscriber has furnished to
the Trust in Section 6 or on the signature page hereof is correct and
complete as of the date of this Agreement and if there should be any
material change, prior to the Closing, in such information or in any
representation or warranty made by the Subscriber herein, the
Subscriber will immediately furnish such revised or corrected
information to the Trust.
1.13 The Subscriber hereby represents that the address or
the addresses of the Subscriber furnished by him on the signature page
hereof is the undersigned's principal residence if he is a natural
person or its principal business address or addresses if it is a
corporation or other entity.
1.14 The representations, warranties, agreements,
undertakings and acknowledgements made by the Subscriber in this
Agreement (the "Covered Items") are made with the intent that they be
relied upon by the Trust in determining the Subscriber's suitability
as a purchaser of the Preferred Units, and shall survive any such
purchase. The Subscriber recognizes that the offer of the Preferred
Units to him was made in reliance upon his representations and
warranties and the acknowledgments and agreements set forth herein,
and hereby agrees to indemnify, to the extent of the Subscriber's
Capital Contribution and interest in the Trust (which shall be the
maximum indemnification liability of the Subscriber for all purposes
hereof), the Trust, the Manager and each of their respective
Affiliates (as defined in the Declaration), and to hold each of them
harmless against, all liabilities, costs or expenses (including
reasonable attorneys' fees) arising as a result of the sale or
distribution of the Preferred Units by the Subscriber in violation of
the registration requirements of the 1933 Act (or other applicable
law) or any material misrepresentation or material breach by the
Subscriber of the Covered Items.
2. REPRESENTATIONS BY, AND COVENANTS OF, THE MANAGER AND THE TRUST
2.1 As of the Closing, the Manager, and as of the date of
notice of each call on the holders of Units by the Trust (each, a
"Subsequent Date"), the Manager (but only to the best of its
knowledge insofar as the Trust is concerned) and the Trust (but solely
as to the Trust and not as to the Manager) represent, warrant and,
where applicable, covenant that (A) the Trust has been duly organized,
and is subsisting and in good standing, as a business trust under the
laws of the State of Delaware and has the requisite power and
authority to conduct its business as described in the Offering
Documents and the Declaration and (B) each of the Declaration, this
Agreement, and any other documents executed and delivered by the
Trust, its Trustees or the Manager in connection therewith or herewith
have been duly authorized, executed and delivered by such persons, and
are the legal, valid and binding obligations of such persons
enforceable in accordance with their respective terms, except (i) that
such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.2 As of the Closing and as of each Subsequent Date, the
Manager represents, warrants and, where applicable, covenants that it
has been duly organized, and is subsisting and in good standing, under
the laws of the state of its organization and has the requisite power
and authority to enter into and perform its obligations under the
Declaration.
2.3 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager and the Trust represent, warrant and,
where applicable, covenant that the Preferred Units have been duly and
validly authorized and, when delivered and paid for in accordance with
this Agreement, will be duly and validly issued preferred units of
beneficial interest in the Trust and that the Subscriber shall be
entitled to all the benefits of a beneficial owner of the Trust under
the Declaration and the Delaware Act (as defined in the Declaration).
2.4 As of the Closing, the Manager represents and warrants
that the Trust is duly qualified to do business and is in good
standing in the State of New York and is not required by virtue of the
conduct of its business to be qualified as a foreign corporation in
any other jurisdiction.
2.5 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, to the extent within its control, and
the Trust represent, warrant and, where applicable, covenant that the
Trust will use the proceeds from the sale of the Preferred Units to
invest in Annington Homes Limited and Annington Finance No 3 Limited
and/or their affiliates and to pay the Trust's expenses.
2.6 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, to the extent within its control, and
the Trust represent, warrant and, where applicable, covenant that
commencing on the date on which the Trust receives funds in
satisfaction of its first capital call upon the holders of Units (the
"Initial Funding Date"), the Trust will (i) be an investment company
within the meaning of the Investment Company Act of 1940 (the "1940
Act") and be registered as such under the 1940 Act and (ii) expect to
be entitled to receive the tax treatment afforded a partnership under
the Internal Revenue Code of 1986, as amended. Without limiting the
generality of the foregoing, to the extent within the control of the
Manager, commencing on the Initial Funding Date, the Trust will be
deemed to have outstanding securities (other than short-term paper)
beneficially owned by more than 100 persons as determined in
accordance with provisions of Section 3(c)(1) of the 1940 Act and the
Trust will not be a company described in Sections 3(c)(5) and/or
3(c)(6) of the 1940 Act.
2.7 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager (to the best of its knowledge insofar as
the Trust is concerned) and the Trust (but solely as to the Trust and
not as to the Manager), to the best of its knowledge, represent,
warrant and, where applicable, covenant that neither the Trust, nor
the Manager is in default (nor has any event occurred which with
notice, lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition contained in the
Declaration, or in any indenture, mortgage, deed of trust, credit
agreement, note or other evidence of indebtedness or any lease or
other agreement or understanding, or any license, permit, franchise or
certificate, to which any such person is a party or by which any
thereof is bound or to which the properties of any thereof are
subject, nor is any such person in violation of any statute,
regulation, law, order, writ, injunction, judgment or decree to which
it is subject, which default or violation would materially adversely
affect the business or financial condition of such person or impair
such person's ability to carry out its obligations under this
Agreement, the Declaration or impair the Manager's ability to carry
out its obligations under the Declaration.
2.8 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, and the Trust (but solely as to the
Trust and not as to the Manager), represent, warrant and, where
applicable, covenant that there is no litigation, investigation, or
other proceeding pending or, to the best of its or their knowledge,
threatened against the Trust, the Manager or any of their respective
Affiliates (excluding from such term solely for this purpose any
investor in the Trust other than the Manager or its Affiliates) which,
if adversely determined, would materially adversely affect the
business or financial condition of the Trust or the Manager or the
ability of such person to carry out its obligations under this
Agreement, the Declaration or impair the Manager's ability to carry
out its obligations under the Declaration.
2.9 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager, to the best its knowledge, and the
Trust, to the best of its knowledge, represent, warrant and, where
applicable, covenant that neither the Trust nor any person acting on
its behalf has taken any actions that would subject the issuance and
sale of the Preferred Units to the registration and prospectus
delivery provisions of the 1933 Act.
2.10 As of the Closing, the Manager, and as of each
Subsequent Date, the Manager and the Trust, represent, warrant and,
where applicable, covenant that the Offering Documents do not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not
misleading in light of the circumstances under which they are or were
made.
2.11 As of the Closing and as of each Subsequent Date, the
Manager represents, warrants and, where applicable, covenants that the
Subscriber has been provided true, complete and correct copies or
forms of all material letters, agreements, undertakings and other
documents by and among the Trust or the Manager or an Affiliate
thereof relative to any such person's purchase of Preferred Units of
the Trust or any material terms, conditions, operations, obligations
or other understandings affecting the Trust.
2.12 As of the Closing and as of each Subsequent Date, the
Manager represents, warrants and, where applicable, covenants that the
Manager will reimburse the Trust for, or cause to be paid on behalf of
the Trust, offering and organizational expenses of the Trust in
excess of $750,000.
2.13 The Manager and/or the Trust, as case may be,
acknowledges that the representations, warranties and covenants made
by the Manager and/or the Trust, as the case may be, are made with the
intent that they be relied upon by the Subscriber in committing to
purchase and in purchasing Preferred Units and shall survive any such
purchase and that the commitment to purchase, and each purchase of,
Preferred Units by the Subscriber was and will be made in reliance
upon the representations, warranties and covenants set forth herein.
To the extent such representations, warranties and covenants are made
by the Manager and the Trust, they are made jointly and severally:
provided, however, that if the Subscriber brings action against only
the Trust or only the Manager, the defending party may implead or seek
contribution from the other and the other will, in addition to any
liability or contribution imposed, be liable to the defending party
for the incremental costs incurred by the defending party in
connection with such impleader or contribution proceeding if (a) the
other is found to be responsible for 25% or more of the aggregate
recovery, (b) the other is found to be responsible for $1,250,000 or
more or (c) the defending party is found to be not responsible for any
amount and the other is found to be responsible for some amount. The
Manager hereby agrees to indemnify, to the extent of the dollar amount
of the Subscriber's Capital Contribution (which shall be the maximum
indemnification liability of the Manager for all purposes hereof), the
Subscriber and any Affiliates, and to hold each of them harmless
against liabilities, costs or expenses (including reasonable
attorneys' fees) arising as a result of the sale or distribution of
the Preferred Units by the Trust or the Manager (or any Affiliate of
the Manager) in violation of the registration requirements of the 1933
Act (or other applicable law) or any material misrepresentation or
material breach by the Manager of its representations, warranties and
covenants made herein.
3. Closing Conditions
3.1 The Subscriber's obligations hereunder are subject to
the fulfillment (or waiver by the Subscriber), prior to or at the time
of the Closing, of the following conditions:
(a) The representations and warranties set forth
herein on the part of the Manager shall be true and correct as if made
on and as of the time of the Closing.
(b) The Closing shall have occurred not later than
October 31, 1996.
(c) The certificate of trust with respect to the Trust
shall have been duly filed in the Office of the Secretary of State of
the State of Delaware.
(d) The Subscriber shall have received opinions dated
the date of the Closing from Skadden, Arps, Slate, Meagher & Flom in
substantially the form attached hereto as Schedule 1 and; if this
Agreement is submitted as of a Subsequent Date, the Subscriber shall
have received opinions dated the date of the Subsequent Date from
Skadden, Arps, Slate, Meagher & Flom LLP in substantially the form
attached hereto as Schedule 2.
3.2 If at the Subsequent Date the Manager fails to tender
to the Subscriber the documents specified herein which are required to
be delivered to the Subscriber at the Subsequent Date or if any of the
conditions specified in Section 3.1 above shall not have been
fulfilled, the Subscriber shall, at its election, be relieved of all
further obligations under this Agreement.
4. MISCELLANEOUS
4.1 Any notice or other communication given hereunder shall
be deemed sufficient if in writing and sent by facsimile with written
confirmation of receipt and a copy of the notice sent by overnight
courier, or if delivered by hand against written receipt therefor,
addressed to BlackRock MQE Investors, c/o BlackRock Financial
Management Inc., 345 Park Avenue, New York, New York 10154, Attention:
Randal A. Nardone (Fax: 212-407-5678), or to the Subscriber at his
address or facsimile number indicated on the signature page of this
Agreement, or in either case such other person, address or facsimile
number as shall have been given by notice to the other party. Notices
shall be deemed to have been given on the date sent or delivered by
hand in accordance with the provisions of this Section 4.1.
4.2 This Agreement shall not be changed, modified or
amended except by a writing signed by the parties hereto, and this
Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by such parties.
4.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement and any other
agreements referred to herein sets forth the entire agreement and
understanding between the parties as to the subject matter thereof and
merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them with respect to such
subject matter. This Agreement may not be assigned without the prior
written consent of each party hereto or the successor to substantially
all of the business of any such person.
4.4 Upon the execution and delivery of this Agreement by
the Subscriber, this Agreement shall become a binding obligation of
the Subscriber with respect to the purchase of Preferred Units as
herein provided and shall survive insolvency, merger, consolidation,
unit exchange, sale of assets and the death or disability of the
Subscriber; provided, however, if the Subscription Agreement is not
accepted by the Trust and the Manager on or prior to November 1, 1996
and an accepted copy is not thereafter delivered to the Subscriber,
the Subscription Agreement shall be of no further force and effect.
4.5 Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly agree
that all the terms and provisions hereof shall be construed in
accordance with and governed by the laws of the State of New York,
without regard to principles of conflicts of law.
4.6 The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall
not affect any other provision of this Agreement, which shall remain
in full force and effect.
4.7 It is agreed that a waiver by either party of a breach
of any provision of this Agreement shall not operate, or be construed,
as a waiver of any subsequent breach by that same party.
4.8 This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.
5. NOTICE TO CERTAIN STATE RESIDENTS
5.1 In making an investment decision investors must rely on
their own examination of the issuer and the terms of the offering,
including the merits and risks involved. These securities have not
been recommended by any federal or state securities commission or
regulatory authority in any jurisdiction. Furthermore the foregoing
authorities have not confirmed the accuracy or determined the adequacy
of this document. Any representation to the contrary is a criminal
offense.
5.2 These securities are subject to restrictions on
transferability and resale and may not be transferred or resold except
as permitted under the 1933 Act, as amended, and the applicable state
securities laws, pursuant to registration or exemption therefrom.
Investors should be aware that they will be required to bear the
financial risks of this investment.
5.3 The Attorney General of the State of New York has not
passed on or endorsed the merits of this offering. Any representation
to the contrary is unlawful.
5.4 Missouri Residents: The undersigned acknowledges that
the security offered hereby is not registered under the Missouri
Securities Act and may be disposed of only through a registered
broker-dealer in Missouri. The undersigned also acknowledges that it
is a felony to sell securities in violation of the Missouri Securities
Act.
5.5 New Hampshire Residents: Neither the fact that a
registration statement or an application for license has been filed
under Chapter 421-B with the State of New Hampshire nor the fact that
a security is effectively registered or a person is licensed in the
State of New Hampshire constitutes a finding by the Secretary of State
that any document filed under RSA 421-B is true, complete and not
misleading. Neither any such fact nor the fact that an exemption or
exception is available for a security or a transaction means that the
Secretary of State has passed in any way upon the merits or
qualification of, or recommended or given approval to, any person,
security or transaction. It is unlawful to make, or cause to be made,
to any prospective purchaser, customer or client any representation
inconsistent with the provisions of this paragraph.
5.6 Pennsylvania Residents: If a purchaser is a resident
of the Commonwealth of Pennsylvania, he acknowledges and agrees that
(a) the securities purchased by such purchaser cannot be sold for a
period of twelve (12) months from the date of purchase, except as
permitted under section 204.011 of the Pennsylvania Securities
Regulations, and (b) pursuant to section 207(M) of the Pennsylvania
Securities Act, each Pennsylvania resident who accepts an offer to
purchase securities exempted from registration under section 203(D) of
the Pennsylvania Securities Act directly from an issuer or an
affiliate of an issuer has the right to withdraw his acceptance
without incurring any liability to the seller, underwriter, if any, or
any other person within two (2) business days from the date of receipt
by the issuer of his written binding contract of purchase or, in the
case of a transaction in which there is no written binding contract of
purchase, within two (2) business days after he makes the initial
payment for the securities being offered. To accomplish the
withdrawal, you need only send a letter or telegram to the issuer (or
the placement agent if one is listed on the front page of the offering
document) indicating your intention to withdraw. Such letter or
telegram should be sent and postmarked prior to the end of the
aforementioned second business day. If you are sending a letter, it
is prudent to send it by certified mail, return receipt requested, to
ensure that it is received and also to evidence the time when it was
mailed. Should you make the request orally, you should ask for
written confirmation that your request has been received.
6. CONFIDENTIAL INVESTOR QUESTIONNAIRE
The Subscriber represents and warrants that he, she or it
comes within each category marked below, and that for any category
marked, he or she has truthfully set forth the factual basis or reason
the Subscriber comes within that category. ALL INFORMATION IN
RESPONSE TO THIS PARAGRAPH WILL BE KEPT STRICTLY CONFIDENTIAL. The
undersigned agrees to furnish such additional information as is
reasonably necessary in order for the Trust or the Manager to verify
the answers set forth below.
Please mark each applicable box
( ) a. The undersigned is an individual (not a
partnership, corporation, etc.) whose individual
net worth, or joint net worth with his or her
spouse, presently exceeds $ 1,000,000.
Explanation. In calculating net worth you may
include equity in personal property and real
estate, including your principal residence, cash,
short-term investments, stock and securities.
Equity in personal property and real estate should
be based on the appraised fair market value of such
property less debt secured by such property.
( ) b. The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of
$200,000 in each of the two most recent years, or joint
income with their spouse in excess of $300,000 in each of
those years (in each case including foreign income, tax
exempt income and full amount of capital gains and losses
but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the
current year.
( ) c. The undersigned is a director or executive officer of the
Trust which is issuing and selling the Preferred Units.
( ) d. The undersigned is a bank; a savings and loan
association, insurance company, registered investment
company; registered business development company;
licensed small business investment company ("SBIC"); a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000; or an employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment
decision is made by a plan fiduciary which is either a
bank, savings and loan association, insurance company or
registered investment adviser, or (b) the plan has total
assets in excess of $5,000,000 or is a self directed plan
with investment decisions made solely by persons that are
accredited investors.
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(describe entity)
( ) e. The undersigned is a business development company as
defined in section 202(a)(22) of the Investment Advisers
Act of 1940;
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(describe entity)
( ) f. The undersigned is a corporation, partnership,
Massachusetts or other business trust, or a non-profit
organization within the meaning of Section 501 (c)(3) of
the Internal Revenue Code, in each case not formed for
the specific purpose of acquiring the Preferred Units and
with total assets in excess of $5,000,000;
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(describe entity)
( ) g. The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the Preferred Units, where the purchase is
directed by a "sophisticated person" as defined in
Regulation 506(b)(2)(ii). Such "sophisticated person"
has the knowledge and experience in financial and
business matters to capably evaluate the merits and risks
of the prospective investment.
( ) h. The undersigned is an entity all the equity owners of
which are "accredited investors" within one or more of
the above categories. If relying upon this category
alone, each equity owner must complete and sign a
separate copy of this Confidential Investor
Questionnaire.
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(describe entity)
( ) i. The undersigned is not within any of the categories above
and is therefore a nonaccredited investor.
( ) j. The undersigned is (i) an individual or company whose
subscription is for at least $500,000 or (ii) an
individual or company whose net worth at the time of
entering into such person's or company's subscription
agreement is at least $1,000,000. For this purpose, the
term "company" generally means a corporation,
partnership, association, joint-stock company, trust, or
any organized group of persons (which may include a
contractual arrangement), whether incorporated or not, or
any receiver, trustee in bankruptcy or liquidating agent
for any of the foregoing. However, the term "company"
does not include a registered investment company, a
business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940 (which
would include a registered business development company)
or any "company" which would be required to register as
an investment company except by virtue of the operation
of Section 3(c)(1) of the Investment Company Act of 1940
unless each of such company's equity holders satisfies
the requirements of clause (i) or (ii) above (taking into
account the definition of company used in such clauses).
THE UNDERSIGNED IS INFORMED OF THE SIGNIFICANCE OF THE FOREGOING
REPRESENTATIONS, AND THEY ARE MADE WITH THE INTENTION THAT THE TRUST
WILL RELY ON THEM.
7. Manner in Which Title to be Held (check one)
a. ( ) Individual Ownership*
b. ( ) Community Property
c. ( ) Joint Tenant with Right of Survivorship (both parties must
sign)
d. ( ) Partnership*
e. ( ) Tenants in Common
f. ( ) Corporation*
g. ( ) Trust*
h. ( ) Other
* If Preferred Units are being subscribed for by any person other
than a natural person, please complete Exhibit A, B or C, as
applicable, which are attached. If Preferred Units are being
subscribed for by an individual, please complete Exhibit D, which is
attached.
Capital Contribution (please fill in (a) below): There is no minimum
Capital Contribution.
(a) $
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Name(s) Exactly as to Appear on Stock Register
-------------------------------- ---------------------------------
Signature Signature (if purchasing jointly)
-------------------------------- ---------------------------------
Name Typed or Printed Name Typed or Printed
-------------------------------- ---------------------------------
Residence Address Residence Address
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
City. State and Zip Code City, State and Zip Code
-------------------------------- ---------------------------------
Telephone Telephone
-------------------------------- ---------------------------------
Facsimile Number Facsimile Number
-------------------------------- ---------------------------------
Tax Identification or Tax Identification or
Social Security Number Social Security Number
Dated: ______________, 1996 Dated: ________________, 1996
This Subscription Agreement is agreed to and
accepted as of ________ __, 1996
BlackRock MQE Investors
By: _____________________________
Name: Wesley R. Edens
Title: Chief Operating Officer
BlackRock Financial Management, Inc.
By: _____________________________
Name: Ralph L. Schlosstein
Title: President
EXHIBIT A
CERTIFICATE OF PARTNERSHIP INVESTOR
CERTIFICATE OF _____________________________________ (the "Partnership")
(Name of Partnership)
The undersigned, constituting all of the partners of the
Partnership who must consent to the proposed investment by the
Partnership hereby certify as follows:
1. That the Partnership commenced business on _________________
and was established pursuant to a Partnership Agreement dated
____________ (the "Agreement").
2. That, as the partners or managing or general partner or
partners of the Partnership, we have the authority to determine, and
have determined, (i) that the investment in, and the purchase of an
interest in BlackRock MQE Investors is of benefit to the Partnership
and (ii) to make such investment on behalf of the Partnership.
3. That _____________________ is authorized to execute all
necessary documents in connection with our investment in ____________.
IN WITNESS WHEREOF, we have executed this certificate as the
partners of the Partnership this __ day of _____________, 1996, and
declare that it is truthful and correct.
-------------------------------
(Name of Partnership)
By: ______________________________
Partner
By: ______________________________
Partner
By: ______________________________
Partner
EXHIBIT B
CERTIFICATE OF CORPORATE INVESTOR
CERTIFICATE OF ________________________________ (the "Corporation")
(Name of Corporation)
The undersigned, being the duly elected and acting
Secretary or Assistant Secretary of the Corporation, hereby
certifies as follows:
1. That the Corporation commenced business on
and was incorporated under the laws of the State of
____________ on ____________.
2. That the following named individuals are duly
elected officers of the Corporation, who hold the
offices set opposite their respective names and who are
duly authorized to execute any and all documents in
connection with the Corporation's investment in
____________________, and that the signatures written
opposite their names and titles are their correct and
genuine signatures.
Name Title Signature
-------------------- ----------------- ------------------
-------------------- ----------------- ------------------
-------------------- ----------------- ------------------
IN WITNESS WHEREOF, I have executed this certificate
and affixed the seal of the Corporation this ___ day of
__________, 1996 , and declared that it is truthful and
correct.
[SEAL] _______________________________
(Name of Corporation)
By: ___________________________
Name:
Title:
EXHIBIT C
CERTIFICATE OF TRUST INVESTOR
CERTIFICATE OF _________________________________________ (the "Trust")
(Name of Trust or Custodial Relationship)
The undersigned, constituting the Custodian or all of the
Trustees of the Trust, hereby certify as follows:
1. That the Trust was established pursuant to a Trust
Agreement dated ______________ (the "Agreement").
2. That the undersigned is authorized to execute, on
behalf of the Trust, any and all documents in connection with the
Trust's investment in the Trust.
IN WITNESS WHEREOF, I have executed this certificate as an
officer or Trustee of the Trust authorized to execute this
certificate this __ day of ______________, 1996, and declare that
it is truthful and correct.
_________________________________________
(Name of Trust or Custodial Relationship)
By: _____________________________________
Name:
Title:
EXHIBIT D
CERTIFICATE OF LIMITED LIABILITY COMPANY INVESTOR
CERTIFICATE OF _______________________________________________________
(the "Limited Liability Company") (Name of Limited Liability Company)
The undersigned, being a duly elected and acting
Manager of the Limited Liability Company, hereby certifies as
follows:
1. That the Limited Liability Company commenced business on
___________ and was organized under the laws of the State of
_________________ on _______________.
2. That a true and correct copy of the Limited Liability
Company Agreement is attached hereto and that, as of the
date hereof, the Limited Liability Company Agreement has not
been amended (except as to any attached amendments) or
revoked and is still in full force and effect.
3. That the Managers of the Limited Liability Company have
determined that the investment in, and purchase of an
interest in, BlackRock MQE Investors is of benefit to the
Limited Liability Company and has determined to make such
investment on behalf of the Limited Liability Company.
Attached hereto is a true, correct and complete copy of
resolutions of the Managers (or an appropriate committee
thereof) of the Limited Liability Company duly authorizing
this investment, and said resolutions have not been revoked,
rescinded or modified and remain in full force and effect.
4. That the following named individuals are duly elected
managers of the Limited Liability Company, who hold the
offices set opposite their respective names and who are duly
authorized to execute any and all documents in connection
with the Limited Liability Company's investment in BlackRock
MQE Investors, and that the signatures written opposite
their names and titles are their correct and genuine
signatures.
Name Title Signature
--------------------- --------------------- ------------------
--------------------- --------------------- ------------------
--------------------- --------------------- ------------------
IN WITNESS WHEREOF, I have executed this certificate
and affixed the seal of the Limited Liability Company this ____
day of _________,1996, and declared that it is truthful and
correct.
[SEAL] ___________________________________
(Name of Limited Liability Company)
By:________________________________
Name:
Title:
EXHIBIT E
CERTIFICATE OF INDIVIDUAL
CERTIFICATE OF ___________________________________ (the "Individual")
(Name of Individual)
The undersigned hereby certifies as follows:
1. The Individual (if not using a Purchaser
Representative) has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits
and risks of investing in the Preferred Units. The aggregate
amount of the investments of the Individual in, and his
commitments to, all similar investments that are illiquid is
reasonable in relation to his net worth.
2. That the undersigned is authorized to execute on behalf
of the Individual, any and all documents in connection with the
Individual's investment in the Trust, if applicable.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this ____ day of _____________________, 1996, and
declared that it is truthful and correct.
_________________________________
(Name of Individual)
By:______________________________
Name:
Title:
