File No. _________________
As filed with the Securities and Exchange Commission on December 5, 1997
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
(X) REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
BLK SUBSIDIARY INC.
(Exact Name of Registrant as Specified in Charter)
345 PARK AVENUE
NEW YORK, NEW YORK 10154
(Address of Principal Executive Offices) (Zip Code)
(212) 754-5560
(Registrant's Telephone Number, including Area Code)
RALPH L. SCHLOSSTEIN, PRESIDENT
BLK SUBSIDIARY INC.
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
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
-----------
BLK SUBSIDIARY INC.
FORM N-2
CROSS REFERENCE SHEET
Part A
Item No. Caption Prospectus Caption
-------- ------- ------------------
1. Cover Page . . . . . . . . . Not Applicable
2. Inside Front and Outside Back
Cover Page . . . . . . . . . Not Applicable
3. Fee Table and Synopsis . . . Fee Table and
Synopsis; Expense
Information
4. Financial Highlights . . . . Not Applicable
5. Plan of Distribution . . . . Not Applicable
6. Selling Shareholders . . . . Not Applicable
7. Use of Proceeds . . . . . . . Not Applicable
8. General Description of the
Registrant . . . . . . . . . General Description
of the Registrant;
General; Investment
Objectives and
Policies; Risk
Factors
9. Management . . . . . . . . . Management; General
Description of the
Registrant; General
10. Capital Stock, Long-Term Debt,
and Other Securities . . . . Capital Stock, Long-
Term Debt and Other
Securities; Capital
Stock; General
Description of the
Registrant; General;
Taxes; Outstanding
Securities;
11. Defaults and Arrears on Senior
Securities . . . . . . . . . Not Applicable
12. Legal Proceedings . . . . . . Not Applicable
13. Table of Contents of Statement
of Additional Information . .
Not Applicable
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;
General
17. Investment Objective and
Policies . . . . . . . . . . Not Applicable
18. Management . . . . . . . . . Management
19. Control Persons and Principal
Holders of Securities . . . . Control Persons
20. Investment Advisory and Other
Services . . . . . . . . . . Management
21. Brokerage Allocation and Other
Practices. . . . . . . . Not Applicable
22. Tax Status . . . . . . . . . Tax Status; Taxation
of the Fund
23. Financial Statements . . . . Not Applicable
Part C
Item No.
--------
Information required to be included in Part C is set forth, under
the appropriate item so numbered, in Part C of this registration
statement.
PART A
ITEM 1. COVER PAGE
Not Applicable.
ITEM 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGE
Not Applicable.
ITEM 3. FEE TABLE AND SYNOPSIS
1. Expense Information
Annual Expenses
Management Fees . . . . . . . . . . . . . . . .40%
Interest Payments on Borrowed Funds . . . . . 2.84%
Other Expenses. . . . . . . . . . . . . . . . .23%
Total Annual Expenses . . . . . . . . . . . . 3.47%
-----------------------------------------------------------------------
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: $35.00 $107.00 $180.00 $375.00
----------------------------------------------------------------------
The purpose of the preceding table is to assist the investor in
understanding the various costs and expenses that an investor in
BLK Subsidiary Inc. (the "Fund") will bear directly or
indirectly.
"Other Expenses" are based on estimated amounts for the current
fiscal year. The example above should not be considered a
representation of future expenses, which may be higher or lower.
2. Not Applicable.
3. Not Applicable.
ITEM 4. FINANCIAL HIGHLIGHTS
Not Applicable.
ITEM 5. PLAN OF DISTRIBUTION
Not Applicable.
ITEM 6. SELLING SHAREHOLDERS
Not Applicable.
ITEM 7. USE OF PROCEEDS
Not Applicable.
ITEM 8. GENERAL DESCRIPTION OF THE REGISTRANT
8.1. General. The Fund was incorporated under the laws of the
State of Maryland on August 11, 1997, and is a diversified
closed-end management investment company. The Fund was
incorporated solely for the purpose of receiving all or a
substantial portion of the assets of The Blackrock 2001 Term
Trust Inc., incorporated under the laws of the State of Maryland
on June 23, 1992 (the "2001 Term Trust").
8.2. Investment Objective and Policies. The Fund's investment
objective is to manage a portfolio of investment grade fixed
income securities while providing cash flow definition to the
2001 Term Trust. No assurance can be given that the Fund's
investment objective will be achieved.
The Fund will seek to achieve high monthly income by investing
primarily in Corporate Debt Securities rated BBB or better,
Mortgage-Backed Securities and Commercial Mortgage-Backed
Securities, and other fixed income securities that mature on or
about December 31, 2001. The Fund may also invest in various
instruments designed to hedge interest rate risk and its effects
on the market value of the Fund's securities investments.
All of the Fund's assets will be invested in securities that are
(i) issued or guaranteed by the United States government or one
of its agencies or instrumentalities, (ii) rated at least BBB- by
Standard & Poor's Corporation ("S&P") or Baa3 by Moody's
Investors Service, Inc. ("Moody's") at the time of investment or
(iii) with respect to no more than 20% of the Fund's assets,
determined by the Adviser to be of comparable credit quality at
the time of assessment of credit risk and do not take into
account potential changes in market value. Securities issued by
the U.S. government or its agencies or instrumentalities or
guaranteed thereby are generally considered to be of the same or
higher credit quality as privately issued securities rated AAA by
S&P or Aaa by Moody's.
The Fund may also invest its assets in other types of debt
securities including those issued by non-U.S. issuers, including
Municipal Securities, Asset Backed Securities and Corporate Debt
Securities.
In order to maintain its tax status as a pass-though entity, the
Fund will be required to distribute substantially all of its net
investment income each year, including accrued income on its Zero
Coupon Securities, for which no cash is received until their
maturity. The Fund intends to make such dividend payments in
cash. In order to generate sufficient cash to pay these
dividends, however, the Fund will be required in certain
instances to apply principal returned on investments to such
payments in lieu of reinvesting such amounts and may be required
to liquidate a portion of its assets from time to time.
The Adviser believes that it will be able to manage the Fund's
assets without realizing capital losses which are not offset, for
federal income tax purposes, by capital gains over the life of
the Fund on the disposition of its other assets.
The Fund expects to use various investment techniques, including
engaging in hedging transactions and short sales, selling covered
call options to enhance income or reduce fluctuations in net
asset value, investing in restricted or illiquid securities,
making forward commitments, entering into repurchase agreements,
reverse repurchase agreements, and dollar rolls, investing in
Eurodollar instruments and lending its portfolio securities.
Under current market conditions, the Fund intends to borrow an
amount equal to approximately 30% of its total assets (including
the amount borrowed) although its investment restrictions permit
such borrowings in amounts up to 33 1/3% of its total assets
(including the amount borrowed). The Fund will only borrow when
the Adviser believes that such borrowings will benefit the Fund.
Borrowing by the Fund creates an opportunity for increased
income, but, at the same time, creates special risks.
For purposes of both the foregoing and Item 8.3:
(a) "Mortgage-Backed Securities" are securities that directly or
indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property, including pass-
through securities, such as Ginnie Mae, Fannie Mae and Freddie
Mac Certificates (as defined herein) and collateralized mortgage
obligations ("CMOs"). The yield and credit characteristics of
Mortgage-Backed Securities differ in a number of respects from
Corporate Debt Securities and other traditional debt securities.
(b) "CMO Residuals" are securities issued in connection with
CMOs that generally represent the excess cash flow from the
Mortgage Assets underlying such CMOs after payment of principal
and interest on the other CMO securities and related
administrative expenses. CMO residuals may be issued as either
(i) debt obligations of the CMO issuer or (ii) equity interests
in such issuer or the Mortgage Assets underlying the related CMO.
The yield to maturity on these securities is highly sensitive to
prepayments on the related underlying Mortgage Assets. In
certain circumstances, the Fund may fail to recoup fully its
initial investment in a CMO Residual. Under current market
conditions, the Fund expects that it will invest approximately
15% of its assets in these securities and in no event will the
Fund invest more than 40% of its assets in such securities.
(c) "Zero Coupon Securities" are debt obligations which do not
entitle the holder to periodic payments prior to maturity and are
issued and traded at a discount from their face amounts. The
discount varies depending on the time remaining until maturity,
prevailing interest rates, liquidity of the security and the
perceived credit quality of the issuer. Zero Coupon Securities
may be created by separating the interest and the principal
components of securities (i) issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities or (ii)
issued or guaranteed by tax exempt issuers such as state or local
governments or their agencies or instrumentalities (collectively,
"Municipal Issuers") or (iii) issued by private issuers. In
addition, they may be issued directly by private or tax exempt
issuers.
(d) "Other Municipal Securities" are debt securities other than
Zero Coupon Securities issued by Municipal Issuers the income
from which is generally exempt from federal taxation.
(e) "Asset-Backed Securities" have similar structural
characteristics to Mortgage-Backed Securities. However, the
underlying assets are not mortgage loans or interests in mortgage
loans but include assets such as motor vehicle installment sales
or installment loan contracts, leases or various types of real
and personal property, and receivables from revolving credit
(credit card) agreements.
(f) "Corporate Debt Securities" are securities which typically
have fixed or variable interest rates and a fixed maturity, which
may be subject to early redemption. Such securities provide for
payment of interest and principal and have maturities ranging
from one month to thirty years or more.
Investment Limitations. The Fund's investment objective and the
following investment restrictions are fundamental and cannot be
changed without the approval of the holders of a majority of the
Fund's outstanding voting securities (defined in the Investment
Company Act of 1940 (the "1940 Act") as the lesser of (a) more
than 50% of the outstanding shares or (b) 67% or more of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented). All other investment
policies or practices are considered by the Fund not to be
fundamental and accordingly may be changed without stockholder
approval. If a percentage restriction on investment or use of
assets set forth below is adhered to at the time a transaction is
effected, later changes in percentage resulting from changing
market values will not be considered a deviation from policy.
The Fund may not:
(1) with respect to 75% of its total assets, invest
more than 5% of the value of its total assets (taken at
market value at time of purchase) in the outstanding
securities of any one issuer, or own more than 10% of the
outstanding voting securities of any one issuer, in each
case other than securities issued or guaranteed by the U.S.
government or any agency or instrumentality thereof;
(2) invest 25% or more of the value of its total
assets in any one industry;
(3) issue senior securities (including borrowing
money, including on margin if margin securities are owned
and through entering into reverse repurchase agreements) in
excess of 33 1/3% of its total assets (including the amount
of senior securities issued but excluding any liabilities
and indebtedness not constituting senior securities) except
that the Fund may borrow up to an additional 5% of its total
assets for temporary purposes; or pledge its assets other
than to secure such issuances or in connection with hedging
transactions, short sales, when-issued and forward
commitment transactions and similar investment strategies.
The Fund's obligations under interest rate swaps are not
treated as senior securities;
(4) make loans of money or property to any person,
except through loans of portfolio securities, the purchase
of fixed income securities consistent with the Fund's
investment objectives and policies or the acquisition of
securities subject to repurchase agreements;
(5) underwrite the securities of other issuers, except
to the extent that in connection with the disposition of
portfolio securities or the sale of its own shares the Fund
may be deemed to be an underwriter;
(6) purchase real estate or interests therein other
than Mortgage-Backed Securities and similar instruments;
(7) purchase or sell commodities or commodity
contracts except for hedging purposes; or
(8) make any short sale of securities except in
conformity with applicable laws, rules and regulations and
unless, giving effect to such sale, the market value of all
securities sold short does not exceed 25% of the value of
the Fund's total assets and the Fund's aggregate short sales
of a particular class of securities does not exceed 25% of
then outstanding securities of that class.
8.3 Risk Factors. Zero Coupon Securities. The market prices of
Zero Coupon Securities are generally more volatile than the
market prices of securities that pay interest periodically and
are likely to respond to changes in interest rates to a greater
degree than do securities having similar maturities and credit
quality which do pay periodic interest.
Yield Considerations. The yield characteristics of Mortgage-
Backed Securities and Asset-Backed Securities differ from
Corporate Debt Securities and other traditional debt securities.
The major differences typically include more frequent interest
and principal payments, usually monthly, and the possibility that
prepayments of principal may be made at any time. Prepayment
rates are influenced by changes in current interest rates and a
variety of other economic, geographic, social and other factors.
In general, changes in the rate of prepayments on a security will
change the yield to maturity of the security.
The Fund expects that it will invest a portion of its assets in
securities such as CMO Residuals and stripped Mortgage-Backed
Securities that are highly sensitive to changes in prepayment and
interest rates. Under certain interest rate or prepayment rate
scenarios, the Fund may fail to recoup fully its investment in
such securities notwithstanding that such securities may be rated
AAA or Aaa. Under current market conditions, the Fund expects to
invest approximately 15% of its assets in CMO Residuals and under
no circumstances will the Fund invest more than 40% of its assets
in CMO Residuals. Under current market conditions, the Fund
expects to invest approximately 10% of its assets in stripped
Mortgage-Backed Securities.
As the result of usual prepayment patterns, amounts available for
reinvestment by the Fund are likely to be greater during a period
of declining interest rates and, as a result, likely to be
reinvested at lower interest rates than during a period of rising
interest rates. Mortgage-Backed Securities and Asset-Backed
Securities may decrease in value as a result of increases in
interest rates and may benefit less than other fixed income
securities from declining interest rates because of the risk of
prepayment. The Fund's income and dividends are expected to
decline over the term of the Fund due to the anticipated
shortening of the dollar-weighted average maturity of the Fund's
assets over the term of the Fund.
Disposition of Assets. The Fund must distribute to stockholders
each year substantially all of its net investment income in order
to continue to qualify as a pass-through entity for federal
income tax purposes. The Fund intends to make such dividend
payments in cash. Because the Fund must accrue income on its
Zero Coupon Securities each year even though it receives no cash
interest payments thereon until maturity, however, the Fund will
be required in certain instances to apply principal returned on
investments to dividend payments in lieu of reinvesting such
amounts and may be required to liquidate a portion of its assets
from time to time for the purpose of paying such dividends.
Illiquid Securities. The Fund may invest in securities that lack
an established secondary trading market or are otherwise
considered illiquid. Liquidity of a security relates to the
ability to easily dispose of securities and the price to be
obtained, and does not generally relate to the credit risk or
likelihood of receipt of cash at maturity. Illiquid securities
may trade at a discount from comparable, more liquid investments.
Illiquid securities in which the Fund may invest include, under
current guidelines of the staff of the Securities and Exchange
Commission (the "Commission"), stripped mortgage-backed,
privately stripped U.S. Government, agency and municipal
securities, CMO Residuals, interest rate swaps, certain hedging
instruments and restricted securities of corporate and other
issuers, including certain Corporate Debt Securities. The Fund
expects that approximately 15% of its assets will be invested in
CMO Residuals and approximately 20% of its assets will be
invested in the remaining categories of illiquid securities,
representing an anticipated total of 35% of the Fund's assets.
In no event will the Fund invest more than 40% of its assets in
CMO Residuals and the total of all such illiquid investments will
not exceed 60% of the Fund's assets. Although the staff of the
Commission currently categorizes these securities as illiquid,
some of them trade in established secondary markets.
Borrowings. The Fund is authorized to borrow funds (including
through reverse repurchase agreements) in amounts not exceeding
33 1/3% of its total assets (including the amount borrowed) and
under current market conditions intends to borrow an amount equal
to approximately 30% of its total assets. Borrowing by the Fund
creates an opportunity for increased net income, but, at the same
time, creates special risks. The Fund will only borrow when the
Adviser believes that such borrowings will benefit the Fund. To
the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund will have to pay,
the Fund's net income will be greater than if borrowings had not
been used. Conversely, if the income from the securities
purchased with borrowed funds is not sufficient to cover the cost
of borrowing, the net income of the Fund will be less than if
borrowing had not been used, and therefore the amount available
for distribution to stockholders as dividends will be reduced.
The Fund may also borrow up to an additional 5% of its total
assets for temporary purposes without regard to the foregoing
limitation.
Non-U.S. Securities. The Fund may invest up to 10% of its total
assets in debt securities, including Corporate Debt Securities,
of non-U.S. issuers although under current market conditions the
Fund does not expect to purchase any non-U.S. securities.
Investing in non-U.S. securities involves certain special risks.
The rating of a corporate debt security may change over time, as
S&P and Moody's monitor and evaluate the ratings assigned to
corporate debt securities on an ongoing basis. As a result,
corporate debt securities held by the Fund could receive a higher
rating (which would tend to increase their value) or a lower
rating (which would tend to decrease their value) during the time
that they are owned by the Fund. If a security owned by such
Fund is downgraded below either BBB- by S&P or Baa3 by Moody's,
the Adviser will monitor such security and determine whether to
sell it based on the factors it considers relevant such as
remaining terms of such Fund, size of the investment, whether a
loss or gain will result, relative risk to such Fund, depth of
the trading market or any other relevant factors.
Other Investment Techniques. The Fund may use various other
investment techniques that also involve special considerations
including engaging in hedging transactions and short sales,
selling covered call options, making forward commitments,
entering into repurchase agreements, reverse repurchase
agreements, and dollar rolls, investing in Eurodollar
instruments, purchasing or selling interest rate swaps, caps,
floors or collars, and lending its portfolio securities.
Market Price of Shares. The shares of closed-end investment
companies such as the Fund frequently trade at a discount from
their net asset values but may trade at a premium. The Fund
cannot predict whether its shares will trade at, above or below
net asset value. This market price risk may be greater for
investors who intend to sell their shares in a relatively short
period after completion of the public offering. The Fund is
permitted to engage in share repurchases or make tender offers
for a portion of the shares in an effort to reduce any market
value discount that may exist. There are special risks
associated with such activities.
The market value of the Fund's assets will fluctuate with changes
in prevailing interest rates. To the extent the various hedging
techniques and active portfolio management employed by the Fund
do not offset these changes, the net asset value of the Fund's
shares will also fluctuate in relation to interest rate changes.
It is anticipated that a substantial portion of the Fund's
portfolio will consist of debt securities, the value of which
varies inversely with changes in prevailing interest rates. The
various hedging techniques employed by the Fund, the term of the
Fund and the different characteristics of particular securities
in which the Fund may invest make it very difficult to predict
the impact of interest rate changes on either the net asset value
or the market price of the shares.
Shares Unsecured. Although certain portfolio securities
purchased by the Fund are collateralized by, or represent
ownership interests in, specific assets, the shares themselves
are not so secured.
Antitakeover Provisions. Certain antitakeover provisions will
make a change in the Fund's business or management more difficult
without the approval of the Fund's board of directors and may
have the effect of depriving stockholders of an opportunity to
sell their shares at a premium above the prevailing market price.
ITEM 9. MANAGEMENT
1. General.
(a) Board of Directors. The Directors set broad policies
for the Fund and choose its officers. The Adviser manages the
day-to-day operations of the Fund and supplies officers to the
Fund for this purpose. The Directors shall consist at all times
of no less than two (2) Directors, unless the Fund has three (3)
or more stockholders during which time the number of Directors
shall never be less than three (3). No more than 60% of the
Directors are "interested persons" of the Fund, as defined in the
1940 Act.
(b) Investment Adviser. The Adviser, BlackRock Financial
Management, Inc., is located at 345 Park Avenue, New York, New
York 10154. The Adviser currently serves as the investment
advisor to institutional and individual fixed income investors in
the U.S. and overseas through a number of funds and separately
managed accounts with combined total assets in excess of $50
billion.
Pursuant to an Investment Advisory Agreement (the "Advisory
Agreement"), the Fund has retained the Adviser to manage the
investment of its assets, to provide such investment research,
advice and supervision, in conformity with its investment
objective and policies, as may be necessary for the operations of
the Fund. The Advisory Agreement was approved by the Directors
on August 14, 1997 and by the Fund's sole shareholder on August
14, 1997.
As compensation for its services rendered to the Fund, the
Adviser will receive a Management Fee directly from the Fund.
(c) Portfolio Management. The Fund's portfolio manager
will be BlackRock Financial Management, Inc.
(d) Administration Agreement. Under the Administration
Agreement with the Fund, Prudential Mutual Fund Management, Inc.,
One Seaport Plaza, New York, New York 10292, administers the
Fund's corporate affairs subject to the supervision of the
Directors and furnishes the Fund with office facilities and
ordinary clerical and bookkeeping services.
(e) Custodian, Transfer Agent, Dividend Disbursing Agent
and Registrar. State Street Bank & Trust Company, One Heritage
Drive, North, Quincy, MA will serve as custodian for the Fund's
portfolio securities and cash and as Transfer Agent, Dividend
Disbursing Agent and Registrar for the shares, and in those
capacities, maintains certain financial and accounting books and
records pursuant to agreements with the Fund. The Fund may also
periodically enter into arrangements with other qualified
custodians with respect to certain types of securities or other
transactions. Transfer, dividend disbursing and registrar
functions have been delegated to and are being performed by
Boston EquiServe, L.P., an affiliate of State Street.
(f) Expenses. The Advisory Agreement provides, among other
things, that the Adviser will bear all expenses of its employees
and overhead incurred in connection with its duties under the
Advisory Agreement, and the expense of services rendered by any
employee of the Adviser in such employee's capacity as a Director
or officer of the Fund.
ITEM 10. CAPITAL STOCK, LONG-TERM DEBT, AND OTHER SECURITIES
1. Capital Stock. The Fund is authorized to issue up to
500 million shares of capital stock of all classes, all of which
have a per value of one cent ($.01) per share. The shares have
no preemptive, conversion, exchange or redemption rights. Each
share has equal voting, dividend, distribution and liquidation
rights. Shareholders of the Fund have cumulative voting rights
on the election of Directors and are entitled to one vote per
share on all other matters subject to shareholder approval. When
issued against payment therefor, the shares will be fully paid
and non-assessable. No person has any liability for liabilities
of the Fund by reason of owning shares.
2. Long Term Debt. None.
3. General. None.
4. Taxes. The Fund and the Adviser intend to qualify the
Fund as a Regulated Investment Company ("RIC") under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code").
In order to qualify as a RIC, the Fund must satisfy certain tests
regarding the nature and distribution of its income and assets.
If the Fund so qualifies, the Fund will not be subject to federal
income tax on its net investment income and net capital gain, if
any, realized during any fiscal year to the extent that the Fund
distributes such income and capital gain to shareholders.
However, the Fund will be subject to federal and possibly state
corporate income tax on any undistributed income and capital
gain. Under the Code, amounts not distributed by a RIC on a
timely basis in accordance with a calendar year distribution
requirement are subject to a 4% excise tax. To the extent that
the Fund realizes net capital gains, the Fund intends to
distribute such gains at least annually and designate them as
capital gain dividends. See Item 22 for additional information
regarding Taxes.
5. Outstanding Securities.
Amount
Outstanding
Exclusive of
Amount Shown
Amount Held by Under
Amount Registrant or Previous
Title of Class Authorized for its Account Column
---------------------------------------------------------------
Voting Shares 500 million None ______ shares
shares
6. Securities Ratings.
None.
ITEM 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES
1. None.
2. None.
ITEM 12. LEGAL PROCEEDINGS
None.
ITEM 13. TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION
Not Applicable.
PART B
ITEM 14. COVER PAGE
Not Applicable.
ITEM 15. TABLE OF CONTENTS
Not Applicable.
ITEM 16. GENERAL INFORMATION AND HISTORY
The Fund has no history. See Item 8 - General Description
of the Registrant, for general information.
ITEM 17. INVESTMENT OBJECTIVES AND POLICIES
Additional detail on the 2001 Term Trust's investment objectives
and policies is provided in its Registration Statement filed with
the SEC on June 24, 1992 (as amended by pre-effective amendments
on July 20, 1992 and August 20, 1992), in its Annual Reports
filed with the SEC for its fiscal years ended June 30, 1995 and
June 30, 1996, and in its Proxy Statements filed with the SEC for
the Annual Meetings of Stockholders held in 1995 and 1996.
ITEM 18. MANAGEMENT
The following individuals are the officers and Directors of the
Fund. A brief statement of their present positions and principal
occupations during the past five years is also provided.
Name and Business Position(s) Held Principal Occupation(s)
Address with Registrant During Past Five Years
----------------- ---------------- ----------------------
Andrew F. Brimmer Director President of Brimmer &
4400 MacArthur Company, Inc. a Washington,
Blvd., D.C.-based economic and
N.W. Suite 302 financial consulting firm.
Washington, D.C. Formerly member of the Board
20007 of Governors of the Federal
reserve System. Director,
Airborne Express, Bank-
America Corporation (Bank of
America), Carr Realty
Corporation, College
Retirement Equities Fund
(Trustee), E.I. du Pont de
Nemours & Company, Gannett
Company (publishing),
Navistar International
Corporation (truck
manufacturing) and PHH
Corporation (car leasing).
Richard E. Cavanagh Director President and Chief Executive
845 Third Avenue Officer of The Conference
New York, NY 10022 Board, Inc., a leading global
business membership
organization. Former
Executive Dean of the John F.
Kennedy School of Government
at Harvard University from
1988-1995. Acting Director,
Harvard Center for Business
and Government (1991-1993).
Formerly Partner (principal)
of McKinsey & Company, Inc.
(1980-1988). Former
Executive Director of Federal
Cash Management, White House
Office of Management and
Budget (1977-1979). Trustee,
Wesleyan University.
Director, Olin Corp.
(chemicals and metals) and
Fremont Group (investments).
Kent Dixon Director Consultant/Investor. Former
9495 Blind Pass Road President and Chief Executive
Unit #602 Officer of Empire Federal
St. Petersburg, FL Savings Bank of America and
33706 Banc PLUS Savings
Association, former Chairman
of the Board, President and
Chief Executive Officer of
Northeast Savings. Former
Director of ISFA (the owner
of INVEST, a national
securities brokerage service
designed for banks and thrift
institutions).
Frank J. Fabozzi Director Consultant. Editor of The
858 Tower View Journal of Portfolio
Circle Management and Adjunct
New Hope, PA 18938 Professor of Finance at the
School of Organization and
Management at Yale
University. Director,
Guardian Mutual Funds Group.
Author and editor of several
books on fixed income
portfolio management.
Visiting Professor of Finance
and Accounting at the Sloan
School of Management,
Massachusetts Institute of
Technology from 1986 to
August 1992.
Laurence D. Fink* ** Director and Chairman and Chief Executive
Chairman of the Officer of the Adviser.
Board Formerly Managing Director of
The First Boston Corporation,
member of its management
Committee, co-head of its
Taxable Fixed Income
Department, and head of its
Mortgage and Real Estate
Products Group. Chairman of
the Board of each of the
Trusts. Trustee, New York
University Medical Center.
Dwight Englewood School,
VIMRx Pharmaceuticals,
National Outdoor Leadership
School, Innouir Laboratories,
Inc.
James Grosfeld Director Consultant/Investor.
20500 Civic Center Formerly Chairman of the
Drive Board and Chief Executive
Suite 3000 Officer of Pulte Corporation
Southfield, MI (homebuilding and mortgage
48076 banking and finance) (May
1974-April 1990).
James Clayburn Director Dean Emeritus of The John E.
LaForce, Jr. Anderson Graduate School of
P.O. Box 1595 Management, University of
Pauma Valley, CA California since July 1,
92061 1993. Director, Eli Lilly
and Company (pharmaceuticals),
Imperial Credit Industries
(mortgage banking), Jacobs
Engineering Group, Inc., Rockwell
International Corporation,
Payden & Krygel Investment
Trust (mutual fund),
Provident Investment Counsel
Funds (investment companies),
Timken Company (roller
bearing and steel). Acting
Dean of the School of
Business, Hong Kong
University of Science and
Technology 1990-1993. From
1978 to September 1993, Dean
of The John E. Anderson
Graduate School of
Management, University of
California.
Walter F. Mondale Director Partner, Dorsey & Witney, a
220 South Sixth law firm (December 1996-,
Street September 1987-August 1993).
Minneapolis, MN Formerly, U.S. Ambassador to
55402 Japan (1993-1996). Formerly
Vice President of the United
States, U.S. Senator and
Attorney General of the State
of Minnesota. 1984
Democratic Nominee for
President of the United
States.
Ralph L. Director and President of the Adviser.
Schlosstein* ** President Formerly Managing Director of
Lehman Brothers and co-head
of its Mortgage and Savings
Institutions Group.
President of each of the
Trusts. Trustee Denison
University, Director of the
Fund for New York City Public
Education, Member Visiting
Board of Overseers of the
John F. Kennedy School of
Government at Harvard
University. Member Board of
Children's Television
Workshop, Member Board of
Pulte Home Corporation.
Scott Amero Vice President Managing Director of the
Adviser. From 1985 to 1990
Vice President at The First
Boston Corporation in the
Fixed Income Research
Department.
Keith T. Anderson Vice President Managing Director of the
Adviser. From February 1987
to April 1988 Vice President
at The First Boston
Corporation in the Fixed
Income Research Department.
Previously Vice President and
Senior Portfolio Manager at
Criterion Investment
Management Company.
Michael C. Huebsch Vice President Managing Director of the
Adviser. From July 1985 to
January 1989 Vice President
at The First Boston
Corporation in the Fixed
Income Research Department.
Robert S. Kapito Vice President Managing Director and Vice
Chairman of the Adviser.
Formerly Vice President at
The First Boston Corporation
in the Mortgage Products
Group.
Henry Gabbay Treasurer Managing Director and Chief
Operating Officer of the
Adviser. From September 1984
to February 1989 Vice
President at The First Boston
Corporation.
James Kong Assistant Managing Director of the
Treasurer Adviser. From April 1987 to
April 1989 Assistant Vice
President at The First Boston
Corporation in the CMO/ABO
Administration Department.
Previously affiliated with
Deloitte, Haskins & Sells
(now Deloitte & Touche LLP).
Karen H. Sabath Secretary Managing Director of the
Adviser. From June 1986 to
July 1988 Associate at The
First Boston Corporation in
the Mortgage Finance
Department. From August 1988
to December 1992 Associate,
Vice President of the
Adviser.
Richard Shea, Esq. Vice Principal of the Adviser.
President/Tax From December 1988 to
February 1993 Tax Counsel at
Prudential Securities, Inc.
From August 1984 to December
1988 Senior Tax Specialist at
Laventhol & Horwath.
Frank Smith Assistant Associate of the Adviser.
Treasurer From December 1994 to June
1996 Manager at Coopers &
Lybrand LLP. From June 1987
to December 1994 affiliated
with McGladney & Pullen LLP.
* Directors who are directors, officers or employees of the
Adviser.
** Directors who may be deemed to be "interested persons" of the
Fund.
Each Director (other than any Director who is a partner,
director, officer or employee of the Adviser or any affiliate
thereof or successor thereto) will receive no compensation for
serving as Director of the Fund. Inasmuch as each Director is
also a Director of BBT Subsidiary Inc., BNN Subsidiary Inc., the
Trusts and most of the other investment companies in the
BlackRock fund complex, it is anticipated that the aggregate
annual compensation to each Director for service to investment
companies in the BlackRock fund complex will be approximately
$160,000, with the exception of Mr. Grosfeld who will receive
approximately $200,000 for his combined service as a director of
BBT Subsidiary Inc., BNN Subsidiary Inc., the Trusts and each of
the other investment companies in the BlackRock complex. Each
Director is entitled to one vote on each matter requiring the
Directors to take any action or consent to the taking of any
action. In all cases in which a Director vote is required, only
the vote of the Directors present (whether in person or by
telephone) and eligible to vote with respect to such matter will
be taken into consideration in determining whether consent has
been given or withheld. On each matter on which Directors vote,
each Director may give or withhold his or her vote as he or she
deems appropriate in his or her sole discretion.
Messrs. Fink, Schlosstein, Gabbay and Grosfeld also serve in the
same capacity as a director and/or officer, as the case may be,
of each of the other closed end investment companies in the
BlackRock fund complex except that Mr. Schlosstein is not a
director of BlackRock Asset Investors, BlackRock Fund Investors
I, BlackRock Fund Investors II, BlackRock Fund Investors III, and
BlackRock MQE Investors. In addition, the Adviser serves as
investment sub-advisor to The BlackRock Government Income Trust
and the Smith Barney Shearson Adjustable Rate Government Income
Fund, each of which are open-end management investment companies.
The Adviser also acts as an advisor to BlackRock Institutional
Trust, an open end investment company consisting of sixteen
investment portfolios. Mr. Grosfeld additionally serves as a
director and officer of such Trust.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
1. The 2001 Term Trust, which has offices at 345 Park
Avenue, New York, New York 10154, owns 100% of the
voting shares of the Registrant.
2. See Item 19.1.
3. None.
ITEM 20. INVESTMENT ADVISORY AND OTHER SERVICES
1-6. See Item 9 - Management.
7. Deloitte & Touche LLP, 2 World Financial Center, New
York, New York 10281-1431.
8. None.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
1. Not Applicable.
2. None.
3. Not Applicable.
4. None.
5. None.
ITEM 22. TAX STATUS
The following discussion is based on the advice of Skadden, Arps,
Slate, Meagher & Flom LLP and, except as otherwise indicated,
reflects provisions of the Code, Treasury regulations, judicial
decisions and administrative pronouncements as of the date of
this registration statement, all of which are subject to change,
possibly with retroactive effect. The following discussion is a
general summary of certain of the current federal income tax laws
regarding the Fund and investors in the shares and does not
purport to deal with all of the federal income tax consequences
or any of the state or other tax considerations applicable to the
Fund or to all categories of investors, some of which may be
subject to special rules. Prospective investors should consult
their own tax advisors regarding the federal, state, local,
foreign and other tax consequences to them of investments in the
Fund, including the effects of any changes, including proposed
changes, in the tax laws.
Taxation of the Fund. The Fund and the Adviser intend to qualify
the Fund as a RIC under Subchapter M of the Code. If the Fund so
qualifies, the Fund will not be subject to federal income tax on
its net investment income and net capital gain, if any, realized
during any fiscal year to the extent that the Fund distributes
such income and capital gain to shareholders.
In order to qualify as a RIC, the Fund must, among other things,
(a) derive at least 90% of its gross income from dividends,
interest, payments with respect to loans of securities and gains
from the sale or other disposition of securities or certain other
related income; (b) diversify its holdings so that at the end of
each fiscal quarter (i) at least 50% of the value of the Fund's
assets is represented by cash, U.S. government securities,
securities of other RICs, and other securities which, with
respect to any one issuer, do not represent more than 5% of the
value of the Fund's assets nor more than 10% of the voting
securities of such issuer, and (ii) not more than 25% of the
value of the Fund's assets is invested in securities of any one
issuer other than U.S. government securities or the securities of
other RICs; and (c) distribute to its shareholders at least 90%
of its net investment income (including tax-exempt interest and
net short-term capital gain but not net capital gain, which is
the excess of net long-term capital gain over net short-term
capital loss). If for any other reason the Fund does not qualify
as a RIC, the Fund will be taxable as an ordinary corporation
which would have a material adverse effect on the Fund.
So long as the Fund qualifies as a RIC, the Fund will not be
subject to federal tax on the income and capital gain so
distributed. However, the Fund will be subject to federal and
possibly state corporate income tax (currently at a maximum
federal tax rate of 35%) on any undistributed income and capital
gain other than tax-exempt income from municipal securities.
Under the Code, amounts not distributed by a RIC on a timely
basis in accordance with a calendar year distribution requirement
are subject to a 4% excise tax. To avoid the imposition of such
tax, the Fund must distribute, in each calendar year, an amount
at least equal to the sum of (a) 98% of the ordinary income for
such calendar year; (b) 98% of the net capital gains for the one-
year period ending on October 31 of such calendar year (unless
the Fund has a fiscal year ending in November or December and
irrevocably elects to use that fiscal year as the one-year
period); and (c) 100% of all ordinary income and net capital
gains from prior years that were not previously distributed. For
purposes of the excise tax, any income or capital gains retained
by, and taxed in the hands of, the Fund are treated as having
been distributed.
Taxation of Shareholders. Distributions paid by the Fund from
its net investment income ("ordinary dividends") will be taxable
to shareholders as ordinary income. Distributions made from net
capital gains and properly designated by the Fund ("capital gain
dividends") will be taxable to shareholders as long-term capital
gains, regardless of the time the shareholder has owned Fund
shares. Under recent legislation, long-term capital gains may be
broken down into additional categories of gain, taxable at
different rates for shareholders that are individuals. These
categories include mid-term gain as well as certain other
categories of gain that the Fund does not expect to realize.
Properly designated capital gain dividends comprising gains with
respect to assets held by the Fund for more than one year but
less than eighteen months will be taxable at a maximum rate of
28% in the hands of an individual shareholder ("28% rate gain
distributions"), while properly designated capital gain dividends
comprising gains with respect to assets held by the Fund for more
than eighteen months will be taxable at a maximum rate of 20% in
the hands of an individuals shareholder ("20% rate gain
distributions"). Distributions in excess of the Fund's earnings
and profits, for federal income tax purposes, will first reduce
the adjusted tax basis of a holder's shares and, after such basis
is reduced to zero, will constitute capital gain, provided the
shares are held as a capital asset.
Liquidating distributions which in the aggregate exceed a
shareholder's basis in shares will be treated as gain from the
sale of shares. If a shareholder receives in the aggregate
liquidating distributions which are less than such basis, such
shareholder will recognize a loss to that extent.
Dividends and other distributions by the Fund are generally
taxable to the shareholders at the time the dividend or
distribution is made. Any dividends declared by the Fund in
October, November or December and made payable to shareholders of
record in such a month will be taxable to shareholders as of
December 31, provided that the dividend is paid in the following
January.
If a shareholder purchases shares at a cost that reflects an
anticipated dividend, such dividend will be taxable even though
it represents economically in whole or in part a return of the
purchase price. Investors should consider the tax implications
of buying shares shortly prior to a dividend distribution.
The Fund will, within 60 days after the close of its taxable
year, send written notices to shareholders regarding the tax
status of all distributions made during the year.
In general, if a share of the Fund is sold, the seller will
recognize gain or loss equal to the difference between the amount
realized on the sale and the seller's adjusted basis in the
share. Any gain or loss realized upon a sale of shares by a
shareholder who is not a dealer in securities will be treated as
capital gain or loss and will be long-term capital gain or loss
if the shares were held for more than one year. However, any
loss recognized by a shareholder within six months of purchasing
the shares will be treated as a long-term capital loss to the
extent of any long-term capital gain dividends received by the
shareholder and the shareholder's share of undistributed long-
term capital gains. Under recent legislation, long-term cazpital
gains are broken down into additional categories of gain, taxable
at different rates for shareholders that are individuals.
Capital gains with respect to shares held for more than one year
are subject to a 28% maximum tax rate, while capital gains with
respect to shares held for more than eighteen months are subject
to a 20% maximum tax rate. Any loss realized on a sale of shares
will be disallowed to the extent the shares disposed of are
replaced within a period of 61 days beginning 30 days before the
disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
The Fund may be required to withhold federal income tax at the
rate of 31% of any payments made to a shareholder of the Fund if
the shareholder has not provided a correct taxpayer
identification number and certain required certifications to the
Fund or if the Secretary of the Treasury notifies the Fund that
the number provided by a shareholder is incorrect or that the
shareholder has not reported all interest and dividend income
required to be shown on the shareholder's federal income tax
return.
Under current law, the Fund is required to withhold U.S.
withholding tax from any distributions of net investment income
paid to most non-U.S. investors, and the ownership of an interest
in a Fund by a non-U.S. individual at death may subject such
individual to U.S. estate tax. Consequently, the Fund may not be
appropriate as an investment for non-U.S. persons, and such
prospective investors are urged to consult their own tax advisors
with respect to the potential effective tax liability that may
arise with respect to an investment in the Fund.
ITEM 23. FINANCIAL STATEMENTS
Not Applicable.
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Not Applicable.
(2) (a) Articles of Incorporation.
(b) By-Laws.
(c) None.
(d) Not Applicable.
(e) None.
(f) Form of Notes.
(g) Form of Investment Advisory Agreement.
(h) Not Applicable.
(i) None.
(j) Form of Custodian Agreement.
(k) Form of Administration Agreement;
Form of Transfer Agent Agreement.
(l) Not Applicable.
(m) None.
(n) Not Applicable.
(o) Not Applicable.
(p) None.
(q) None.
(r) None.
ITEM 25. MARKETING ARRANGEMENTS
None.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable.
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
The Fund does not control any person.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES OF THE FUND
Title of Class Number of Record Holders
Voting Shares 1
ITEM 29. INDEMNIFICATION
Under the Fund's By-laws, the Fund agrees to indemnify the
Directors or officers of the Fund (each such person being an
"indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and reasonable counsel fees reasonably
incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or
investigative body in which he may be or may have been involved
as a party or otherwise or with which he may be or may have been
threatened, while acting in any capacity set forth above by
reason of his having acted in any such capacity, except with
respect to any matter as to which he shall not have acted in good
faith in the reasonable belief that his action was in the best
interest of the Fund or, in the case of any criminal proceeding,
as to which he shall have had reasonable cause to believe that
the conduct was unlawful, provided, however, that no indemnitee
shall be indemnified hereunder against any liability to any
person or any expense of such indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence
(negligence in the case of those Directors or officers who are
directors, officers or employees of the Adviser ("Affiliated
Indemnitees")), or (iv) reckless disregard of the duties involved
in the conduct of his position (the conduct referred to in such
clauses (i) through (iv) being sometimes referred to herein as
"disabling conduct"). Notwithstanding the foregoing, with
respect to any action, suit or other proceeding voluntarily
prosecuted by any indemnitee as plaintiff, indemnification shall
be mandatory only if the prosecution of such action, suit or
other proceeding by such indemnitee was authorized by a majority
of the Directors.
Further, pursuant to the Advisory Agreement, the Fund agrees to
indemnify the Adviser and each of the Adviser's directors,
officers, employees and controlling persons and the partners,
directors, officers and employees thereof (each such person being
an "indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and reasonable counsel fees reasonably
incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or
investigative body in which he may be or may have been involved
as a party or otherwise or with which he may be or may have been
threatened, while acting in any capacity set forth above with
respect to the services provided hereunder or thereafter by
reason of his having acted in any such capacity, except with
respect to any matter as to which he shall not have acted in good
faith in the reasonable belief that his action was in the best
interest of the Fund or, in the case of any criminal proceeding,
as to which he shall have had reasonable cause to believe that
the conduct was unlawful, provided, however, that no indemnitee
shall be indemnified hereunder against any liability to any
person or any expense of such indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) negligence or (iv)
reckless disregard of the duties involved in the conduct of his
position. Notwithstanding the foregoing, with respect to any
action, suit or other proceeding voluntarily prosecuted by any
indemnitee as plaintiff, indemnification shall be mandatory only
if the prosecution of such action, suit or other proceeding by
such indemnitee was authorized by a majority of the Directors.
Insofar as indemnification for liabilities under the Securities
Act of 1933, as amended (the "1933 Act") may be permitted to the
Directors and officers, the Fund has been advised that in the
opinion of the SEC such indemnification is against public policy
as expressed in such Act and is therefore unenforceable. If a
claim for indemnification against such liabilities under the 1933
Act (other than for expenses incurred in a successful defense) is
asserted against the Fund by the Directors or officers in
connection with the shares, the Fund will, unless in the opinion
of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final
adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of the Adviser, reference is made to the Adviser's
current Form ADV filed under the Investment Advisors Act of 1940,
as amended, incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Fund are maintained in part at
the office of the Adviser at 345 Park Avenue, New York, New York
10154, in part at the offices of the Custodian and the
Administrator, State Street Bank & Trust Company, with offices at
One Heritage Drive, North Quincy, MA 02171 and Prudential Mutual
Fund Management, Inc., with offices at One Seaport Plaza, New
York, New York 10292, respectively, and in part at the offices of
Boston EquiServe, L.P., BFDS Building, 4th Floor, 2 Heritage
Drive, Quincy, MA 02171.
ITEM 32. MANAGEMENT SERVICES
Except as described above in Item 9 - Management, the Fund is not
a party to any management service related contract.
ITEM 33. UNDERTAKINGS
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company
Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New
York, on the 5th day of December, 1997.
BLK Subsidiary Inc.
(Registrant)
By: /s/ Ralph Schlosstein
Name: Ralph Schlosstein
Title: President
SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit Page
Number Exhibit Number
Exhibit A Articles of Incorporation . . . . . .
Exhibit B By-Laws . . . . . . . . . . . . . . .
Exhibit C None . . . . . . . . . . . . . . . . .
Exhibit D Not Applicable . . . . . . . . . . . .
Exhibit E None . . . . . . . . . . . . . . . . .
Exhibit F Form of Notes . . . . . . . . . . . .
Exhibit G Form of Investment Advisory Agreement
Exhibit H Not Applicable . . . . . . . . . . . .
Exhibit I None . . . . . . . . . . . . . . . . .
Exhibit J Form of Custodian Agreement . . . . .
Exhibit K (a) Form of Administration Agreement .
(b) Form of Transfer Agent Agreement .
Exhibit L Not Applicable . . . . . . . . . . . .
Exhibit M None . . . . . . . . . . . . . . . . .
Exhibit N Not Applicable . . . . . . . . . . . .
Exhibit O Not Applicable . . . . . . . . . . . .
Exhibit P None . . . . . . . . . . . . . . . . .
Exhibit Q None . . . . . . . . . . . . . . . . .
Exhibit R None . . . . . . . . . . . . . . . . .
ARTICLES OF INCORPORATION
OF
BLK SUBSIDIARY INC.
* * * * *
ARTICLE I
THE UNDERSIGNED, John B. Frisch, whose post
office address is 10 Light Street, Baltimore, Maryland
21202, being at least eighteen (18) years of age, hereby
forms a corporation under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is BLK Subsidiary
Inc. (the "Corporation").
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is
formed are to act as an investment company under the
federal Investment Company Act of 1940, as amended (the
"1940 Act"), and to exercise and enjoy all of the general
powers, rights and privileges granted to, or conferred
upon, corporations by the Maryland General Corporation
Law now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office
of the Corporation in the State of Maryland is c/o The
Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent
of the Corporation in the State of Maryland is The
Corporation Trust Incorporated, a corporation of the
State of Maryland, and the post office address of the
resident agent is 32 South Street, Baltimore, Maryland
21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital
stock of all classes which the Corporation shall have
authority to issue is Two Hundred Million (200,000,000)
shares, all of which shall have a par value of one cent
($.01) per share and of the aggregate par value of Two
Million Dollars ($2,000,000).
(2) (a) The Board of Directors of the
Corporation is authorized to classify or to reclassify,
from time to time, any unissued shares of stock of the
Corporation, whether now or hereafter authorized, by
setting, changing or eliminating the preferences,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms and
conditions of or rights to require redemption of the
stock.
(b) Without limiting the generality of
the foregoing, the dividends and distributions or other
payments with respect to the stock of the Corporation,
and with respect to each class that hereafter may be
created, shall be in such amount as may be declared from
time to time by the Board of Directors, and such
dividends and distributions may vary from class to class
to such extent and for such purposes as the Board of
Directors may deem appropriate, including, but not
limited to, the purpose of complying with requirements of
regulatory or legislative authorities.
(c) Until such time as the Board of
Directors shall provide otherwise pursuant to the
authority granted in this section (2) all the authorized
shares of the Corporation are designated as Common Stock.
Shares of the Common Stock and the holders thereof, and
shares of any class and the holders thereof, shall be
subject to the following provisions, provided, however,
that if no shares of any class other than Common Stock
are outstanding, the shares of the Common Stock and the
holders thereof shall nevertheless be subject to the
following provisions except to the extent that such
provisions are by their terms applicable only when shares
of two or more classes are outstanding.
(i) The net asset value of each
share of the Corporation's capital stock issued, sold or
purchased at net asset value shall be the current net
asset value per share as determined in accordance with
procedures adopted from time to time by the Board of
Directors which comply with the 1940 Act.
(ii) Shares of each class of stock
shall be entitled to such dividends or distributions, in
stock or in cash or both, as may be declared from time to
time by the Board of Directors, acting in its sole
discretion, with respect to such class.
(iii) In the event of the
liquidation or dissolution of the Corporation, the
holders of the Common Stock of the Corporation's stock
shall be entitled to receive all the assets of the
Corporation not attributable to other classes of stock
through any preference. The assets so distributable to
the stockholders shall be distributed among such
stockholders in proportion to the number of shares of
that class held by them and recorded on the books of the
Corporation.
(iv) Unless otherwise expressly
provided in these Articles of Incorporation, including
any Articles Supplementary creating any class of capital
stock, on each matter submitted to a vote of
stockholders, each holder of a share of capital stock of
the Corporation shall be entitled to one vote for each
share standing in such holder's name on the books of the
Corporation, irrespective of the class thereof, and all
shares of all classes of capital stock shall vote
together as a single class; provided, however, that as to
any matter with respect to which a separate vote of any
class is required by the 1940 Act or any rules,
regulations or orders issued thereunder, or the Maryland
General Corporation Law, such requirement as to a
separate vote by that class shall apply in lieu of a vote
of all classes voting together as a single class as
described above.
(v) The Corporation shall be
entitled to purchase shares of its capital stock, to the
extent that the Corporation may lawfully effect such
purpose under the laws of the State of Maryland, upon
such terms and conditions and for such consideration as
the Board of Directors shall deem advisable.
(vi) All shares purchased by the
corporation shall constitute authorized but unissued
shares and the number of the authorized shares of stock
of the Corporation shall not be reduced by the number of
any shares purchased by it. Unless and until their
classification is changed in accordance with section (2)
of this Article V, all shares of capital stock so
purchased shall continue to belong to the same class to
which they belonged at the time of their purchase.
(vii) The Corporation may issue
shares of stock in fractional denominations to the same
extent as its whole shares, and shares in fractional
denominations shall be shares of capital stock having
proportionately to the respective fractions represented
thereby all the rights of whole shares, including without
limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate
upon liquidation of the Corporation, but excluding the
right to receive a stock certificate representing
fractional shares.
(viii) Any purchase or transfer or
purported purchase or transfer of capital stock to (i)
the United States, any State or political subdivision
thereof, any foreign government, any international
organization, or any agency or instrumentality of any of
the foregoing; (ii) any organization (other than a
farmer's cooperative described in SECTION521 of the Internal
Revenue Code of 1986, as amended (the "Code" that is
exempt from the tax imposed by 26 U.S.C. SECTION1-1399 and not
subject to the tax imposed by 26 U.S.C. SECTION511 or (iii) any
rural electric or telephone cooperative described in
SECTION1381(1)(2)(C) of the Code shall be void. Any capital
stock purportedly transferred to or retained by such an
entity may, at the option of the Corporation, be
repurchased by the Corporation at the lesser of market
value or net asset value at the time of repurchase.
(ix) All persons who shall acquire
capital stock or other securities of the Corporation
shall acquire the same subject to the provisions of these
Articles of Incorporation and the By-Laws of the
Corporation, as each may be amended from time to time.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE CORPORATION
AND OF THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation
shall initially be nine, which number may be increased by
or pursuant to the By-Laws of the Corporation but shall
never be less than two (2), unless the Corporation has
three (3) or more stockholders during which time the
number of directors shall never be less than three (3).
In addition, and notwithstanding the preceding sentence,
the number of the Corporation's directors shall be
increased by or pursuant to the Corporation's By-Laws to
a number greater than or equal to three prior to or at
the Corporation's first annual meeting of stockholders
(the "initial annual meeting"). The names of the persons
who shall act as directors until the initial annual
meeting and until their successors are duly elected and
qualify are:
Dr. Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
Laurence D. Fink
James Grosfeld
James Clayburn LaForce, Jr.
Walter F. Mondale
Ralph L. Schlosstein
Beginning with the initial annual meeting, the
directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of
the total number of directors constituting the entire
Board of Directors. At the initial annual meeting of
stockholders, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and
Class III directors for a three-year term. At each annual
meeting of stockholders beginning with the annual meeting
of stockholders next succeeding the initial annual
meeting, successors to the class of directors whose term
expires at that annual meeting shall be elected for a
three-year term. A director elected at an annual meeting
shall hold office until the annual meeting for the year
in which his term expires and until his successor shall
be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or
removal from office. If the number of directors is
changed, any increase or decrease shall be apportioned
among the classes, as of the annual meeting of
stockholders next succeeding any such change, so as to
maintain a number of directors in each class as nearly
equal as possible. In no case shall a decrease in the
number of directors shorten the term of any incumbent
director. Any vacancy on the Board of Directors that
results from an increase in the number of directors may
be filled by a majority of the entire Board of Directors,
provided that a quorum is present, and any other vacancy
occurring in the Board of Directors may be filled by a
majority of the directors then in office, whether or not
sufficient to constitute a quorum, or by a sole remaining
director; provided, however, that if the stockholders of
any class of the Corporation's capital stock are entitled
separately to elect one or more directors, a majority of
the remaining directors elected by that class or the sole
remaining director elected by that class may fill any
vacancy among the number of directors elected by that
class. A director elected by the Board of Directors to
fill any vacancy in the Board of Directors shall serve
until the next annual meeting of stockholders and until
his successor shall be elected and shall qualify,
subject, however, to prior death, resignation,
retirement, disqualification or removal from office. At
any annual meeting of stockholders, any director elected
to fill any vacancy in the Board of Directors that has
arisen since the preceding annual meeting of stockholders
(whether or not any such vacancy has been filled by
election of a new director by the Board of Directors)
shall hold office for a term which coincides with the
remaining term of the class to which such directorship
was previously assigned, if such vacancy arose other than
by an increase in the number of directors, and until his
successor shall be elected and shall qualify. In the
event such vacancy arose due to an increase in the number
of directors, any director so elected to fill such
vacancy at an annual meeting shall hold office for a term
which coincides with that of the class to which such
directorship has been apportioned as heretofore provided,
and until his successor shall be elected and shall
qualify. A director may be removed for cause only, and
not without cause, and only by action taken by the
holders of at least seventy-five percent (75%) of the
shares of capital stock then entitled to vote in an
election of such director.
(2) The Board of Directors of the Corporation
is hereby empowered to authorize the issuance from time
to time of shares of capital stock, whether now or
hereafter authorized, for such consideration as the Board
of Directors may deem advisable, subject to such
limitations as may be set forth in these Articles of
Incorporation or in the By-Laws of the Corporation or in
the Maryland General Corporation Law or the 1940 Act.
(3) Each person who at any time is or was a
director or officer of the Corporation shall be
indemnified by the Corporation to the fullest extent
permitted by the Maryland General Corporation Law as it
may be amended or interpreted from time to time,
including the advancing of expenses, subject to any
limitations imposed by the 1940 Act and the Rules and
Regulations promulgated thereunder. Furthermore, to the
fullest extent permitted by Maryland law, as it may be
amended or interpreted from time to time, subject to the
limitations imposed by the 1940 Act and the Rules and
Regulations promulgated thereunder, no director or
officer of the Corporation shall be personally liable to
the Corporation or its stockholders. No amendment of the
Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate any of the benefits
provided to any person who at any time is or was a
director or officer of the Corporation under this Section
in respect of any act or omission that occurred prior to
such amendment or repeal.
(4) The Board of Directors of the Corporation
shall have the exclusive authority to make, alter or
repeal from time to time any of the By-Laws of the
Corporation except any particular By-Law which is
specified as not subject to alteration or repeal by the
Board of Directors, subject to the requirements of the
1940 Act and the Rules and Regulations promulgated
thereunder.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No stockholder of the Corporation shall by
reason of his holding shares of capital stock have any
preemptive or preferential right to purchase or subscribe
to any shares of capital stock of the Corporation, now or
hereafter authorized, or any notes, debentures, bonds or
other securities convertible into shares of capital
stock, now or hereafter to be authorized, whether or not
the issuance of any such shares of capital stock, or
notes, debentures, bonds or other securities would
adversely affect the dividend or voting rights of such
stockholder; and the Board of Directors may issue shares
of any class of capital stock of the Corporation, or any
notes debentures, bonds, or other securities convertible
into shares of any class of capital stock of the
Corporation, either, whole or in part, to the existing
stockholders.
ARTICLE VIII
CERTAIN VOTES OF STOCKHOLDERS
(1) Except as otherwise provided in these
Articles of Incorporation and notwithstanding any
provision of the Maryland General Corporation Law (other
than Sections 3-601 through 3-603 of the Maryland General
Corporation Law or any successors thereto) requiring
approval by the stockholders (or any class of
stockholders) of any action by the affirmative vote of a
greater proportion than a majority of the votes entitled
to be cast on the matter, any such action may be taken or
authorized upon the concurrence of a majority of the
number of votes entitled to be cast thereon (or a
majority of the votes entitled to be cast thereon as a
separate class).
(2) Notwithstanding the terms of Section
3603(e)(1)(iv) of the Maryland General Corporation Law
(o; any successor thereto) and the provisions of Section
(1) of this Article VIII, the Corporation hereby
expressly elects to be subject to the requirements of
Section 3-60; of the Maryland General Corporation Law.
The amendment, alteration, modification, or repeal of
this Section (2) of Article VIII of these Articles of
Incorporation shall require the vote specified in Section
3-602 of the Maryland General Corporation Law.
ARTICLE IX
DETERMINATION BINDING
Any determination made in good faith, so far as
accounting matters are involved, in accordance with
accepted accounting practice by or pursuant to the
authority of the direction of the Board of Directors, as
to the amount of assets, obligations or liabilities of
the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or
amounts at any time legally available for the payment of
dividends, as to the amount of any reserves or charges
set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use,
alteration or cancellation of any reserves or charges
(whether or not any obligation or liability for which
such reserves or charges shall have been created, shall
have been paid or discharged or shall be then or
thereafter required to be paid or discharged), as to the
price of any security owned by the Corporation or as to
any other matters relating to the issuance, sale,
redemption or other acquisition or disposition of
securities or shares of capital stock of the Corporation,
and any reasonable determination made in good faith by
the Board of Directors shall be final and conclusive, and
shall be binding upon the Corporation and all holders of
its capital stock, past, present and future, and shares
of the capital stock of the Corporation are issued and
sold on the condition and understanding, evidenced by the
purchase of shares of capital stock or acceptance of
share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of these
Articles of Incorporation shall be effective to (a)
require a waiver of compliance with any provision of the
Securities Act of 1933, as amended, or the 1940 Act, or
of any valid rule, regulation or order of the Securities
and Exchange Commission thereunder or (b) protect or
purport to protect any director or officer of the
Corporation against any liability to the Corporation or
its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ARTICLE X
PRIVATE PROPERTY OF STOCKHOLDERS
The private property of stockholders shall not be
subject to the payment of corporate debts to any extent
whatsoever.
ARTICLE XI
LIMITED TERM OF EXISTENCE
The Corporation shall have a limited period of
existence and shall cease to exist at the close of
business on June 30, 2001, except that the Corporation
shall continue to exist for the purpose of paying,
satisfying, and discharging any existing debts or
obligations, collecting and distributing its assets, and
doing all other acts required to liquidate and wind up
its business and affairs. After the close of business on
June 30, 2001, if the Corporation has not liquidated and
wound up its business and affairs, the directors shall
become trustees of the Corporation's assets for purposes
of liquidation with the full powers granted to directors
of a corporation which has voluntarily dissolved under
Subtitle 4 of Title 3 of the Maryland General Corporation
Law or any successor statute as are necessary to
liquidate the Corporation and wind up its affairs, but in
no event with lesser powers than the powers granted by
such subtitle granted under the Maryland General
Corporation Law as of the date of incorporation of the
Corporation.
The Board of Directors may, to the extent it
deems it appropriate, adopt a plan of termination at any
time during the twelve months immediately preceding June
30, 2001, which plan of termination may set forth the
terms and conditions for implementing the termination of
the Corporation's existence under this Article XI.
Stockholders of the Corporation shall not be entitled to
vote on the adoption of any such plan or the termination
of the Corporation's existence under this Article XI.
ARTICLE XII
CONVERSION TO OPEN-END COMPANY
Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the
Corporation, a favorable vote of a majority of the total
number of directors fixed in accordance with the By-Laws
of the Corporation and the favorable vote of the holders
of at least seventy-five percent (75%) of the shares of
capital stock of the Corporation entitled to be voted on
the matter shall be required to approve, adopt or
authorize an amendment to these Articles of Incorporation
that makes the Common Stock or any other class of capital
stock a "redeemable security" as that term is defined in
the 1940 Act.
The Corporation shall notify the holders of all
shares of capital stock of the approval, in accordance
with the preceding paragraph of this Article XII, of any
amendment to these Articles of Incorporation that makes
the Common Stock a "redeemable security" (as that term is
defined in the 1940 Act) no later than thirty (30) days
prior to the date of filing of such amendment with the
Department of Assessments and Taxation (or any successor
agency) of the State of Maryland; such amendment may not
be so filed, however, until the later of (a) ninety (90)
days following the date of approval of such amendment by
the holders of shares of capital stock in accordance with
the preceding paragraph of this Article XII and (b) the
next January l or July l, whichever is sooner, following
the date of such approval by holders of shares of capital
stock.
ARTICLE XIII
AMENDMENT
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in these
Articles of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this
reservation. Notwithstanding any other provisions of
these Articles of Incorporation or the By-Laws of the
Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, these Articles of
Incorporation or the By-Laws of the Corporation), the
amendment or repeal of Section (1), Section (3), or
Section (4) of Article VI, Section (l) of Article VIII,
Article X, Article XI, Article XII or this Article XIII
of these Articles of Incorporation shall require the
affirmative vote of the holders of at least seventy-five
percent (75%) of the shares then entitled to be voted on
the matter.
IN WITNESS WHEREOF, the undersigned incorporator of
BLK Subsidiary Inc. hereby executes the foregoing
Articles of Incorporation and acknowledges the same to be
his act and further acknowledges that, to the best of his
knowledge, the matters and facts set forth therein are
true in all material respects under the penalties of
perjury.
Dated the __rd day of August, 1997.
John B. Frisch
BY-LAWS
OF
BLK SUBSIDIARY INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal
office of BLK Subsidiary Inc. (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.
BLK SUBSIDIARY INC.
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof of
the Corporation, and the qualifications, limitations, or restrictions of such
preferences and/or rights. The Corporation will also furnish without charge to
each stockholder who so requests a description of the authority of the
Corporation's board of directors to set the relative rights and preferences of
unissued series of the Corporation's capital stock. Such requests may be made
to the Corporation or the transfer agent.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireness (Cust) (Minor)
JT TEN as joint tenants with right of under Uniform Gifts to
survivorship and not as tenants Minors Act
in common
----------------------
(State)
Additional abbreviations may also be used through not in the above list.
For value received, ________________________________________ hereby
sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------------------
| |
----------------------------------------------------------------------------
----------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE
----------------------------------------------------------------------------
----------------------------------------------------------------------------
------------------------------------------------------------------- Shares
of the Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
----------------------------------------------------------------------------
Attorney to transfer the said Stock on the books of the within- named
Corporation with full power of substitution in the premises.
Dated: ________________________
------------------------------------------
Signature
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
COMMON STOCK
PAR VALUE $.01 Shares
INCORPORATED UNDER THE LAWS
OF THE STATE OF MARYLAND THIS CERTIFICATE
IS TRANSFERABLE IN
BOSTON, MA OR IN
NEW YORK, NY
CUSIP ____________
SEE REVERSE FOR CERTAIN DEFINITIONS
BLK SUBSIDIARY INC.
THIS CERTIFIES THAT
IS THE OWNER OF
FULL PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF BLK Subsidiary
Inc., transferable on the books of the Corporation by the holder hereof in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate and the shares represented hereby are
issued and shall be subject to all of the provisions of the Articles of
Incorporation and By-Laws of the Corporation, such as from time to time
amended, to all of which the holder by acceptance hereof assents. This
Certificate is not valid until countersigned and registered by the Transfer
Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED
STATE STREET BANK and
TRUST COMPANY
BOSTON
TRANSFER AGENT
AND REGISTRAR
AUTHORIZED SIGNATURE
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated August __, 1997, between BLK
Subsidiary Inc. (the "Fund"), a Maryland corporation, and
BlackRock Financial Management, Inc. (the "Adviser"), a
Delaware corporation.
In consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties
hereto as follows:
1. In General
The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Fund with
respect to the investment of the Fund's assets and to
supervise and arrange the purchase of securities for and
the sale of securities held in the investment portfolio
of the Fund.
2. Duties and obligations of the Adviser with
respect to investments of assets of the Fund
(a) Subject to the succeeding provisions
of this section and subject to the direction and control
of the Fund's Board of Directors, the Adviser shall (i)
act as investment adviser for and supervise and manage
the investment and reinvestment of the Fund's assets and
in connection therewith have complete discretion in
purchasing and selling securities and other assets for
the Fund and in voting, exercising consents and
exercising all other rights appertaining to such
securities and other assets on behalf of the Fund; (ii)
supervise continuously the investment program of the Fund
and the composition of its investment portfolio; and
(iii) arrange, subject to the provisions of paragraph 3
hereof, for the purchase and sale of securities and other
assets held in the investment portfolio of the Fund.
(b) In the performance of its duties
under this Agreement, the Adviser shall at all times
conform to, and act in accordance with, any requirements
imposed by (i) the provisions of the Investment Company
Act of 1940 (the "Act"), and of any rules or regulations
in force thereunder; (ii) any other applicable provision
of law; (iii) the provisions of the Articles of
Incorporation and By-Laws of the Fund, as such documents
are amended from time to time; (iv) the investment
objective and policies of the Fund as set forth in its
Registration Statement on Form N-2; and (v) any policies
and determinations of the Board of Directors of the Fund.
(c) The Adviser will bear all costs and
expenses of its partners and employees and any overhead
incurred in connection with its duties hereunder and
shall bear the costs of any salaries or directors fees of
any officers or directors of the Fund who are affiliated
persons (as defined in the Act) of the Adviser except
that the Board of Directors of the Fund may approve
reimbursement to the Adviser of the pro rata portion of
the salaries, bonuses, health insurance, retirement
benefits and all similar employment costs for the time
spent on Fund operations (other than the provision of
investment advice) of all personnel employed by the
Adviser who devote substantial time to Fund operations or
the operations of other investment companies advised by
the Adviser.
(d) The Adviser shall give the Fund the
benefit of its best judgment and effort in rendering
services hereunder, but the Adviser shall not be liable
for any act or omission or for any loss sustained by the
Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall
prevent the Adviser or any partner, officer, employee or
other affiliate thereof from acting as investment adviser
for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in
any way limit or restrict the Adviser or any of its
partners, officers, employees or agents from buying,
selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or
they may be acting, provided, however that the Adviser
will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations under
this Agreement.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase and
sale of the Fund's portfolio securities, to employ such
securities dealers as may, in the judgment of the
Adviser, implement the policy of the Fund to obtain the
best net results taking into account such factors as
price, including dealer spread, the size, type and
difficulty of the transaction involved, the firm's
general execution and operational facilities and the
firm's risk in positioning the securities involved.
Consistent with this policy, the Adviser is authorized to
direct the execution of the Fund's portfolio transactions
to dealers and brokers furnishing statistical information
or research deemed by the Adviser to be useful or
valuable to the performance of its investment advisory
functions for the Fund.
4. Compensation of The Adviser
The Parties to this Agreement agree that the
Adviser will receive compensation for the services it
renders under this Agreement from The BlackRock 2001 Term
Trust Inc.
5. Indemnity
(a) The Fund hereby agrees to indemnify
the Adviser and each of the Adviser's partners, officers,
employees, agents, associates and controlling persons and
the partners, officers, employees and agents thereof
(including any individual who serves at the Adviser's
request as director, officer, partner, trustee or the
like of another corporation) (each such person being an
"indemnitee") against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
(all as provided in accordance with applicable corporate
law) reasonably incurred by such indemnitee in connection
with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any
court or administrative or investigative body in which he
may be or may have been involved as a party or otherwise
or with which he may be or may have been threatened,
while acting in any capacity set forth above in this
Section 5 or thereafter by reason of his having acted in
any such capacity, except with respect to any matter as
to which he shall have been adjudicated not to have acted
in good faith in the reasonable belief that his action
was in the best interest of the Fund and furthermore, in
the case of any criminal proceeding, so long as he had no
reasonable cause to believe that the conduct was
unlawful, provided, however, that (1) no indemnitee shall
be indemnified hereunder against any liability to the
Fund or its shareholders or any expense of such
indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless
disregard of the duties involved in the conduct of his
position (the conduct referred to in such clauses (i)
through (iv) being sometimes referred to herein as
"disabling conduct"), (2) as to any matter disposed of by
settlement or a compromise payment by such indemnitee,
pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other
expenses shall be provided unless there has been a
determination that such settlement or compromise is in
the best interests of the Fund and that such indemnitee
appears to have acted in good faith in the reasonable
belief that his action as in the best interest of the
Fund and did not involve disabling conduct by such
indemnitee and (3) 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
full Board of the Fund.
(b) The Fund shall make advance payments
in connection with the expenses of defending any action
with respect to which indemnification might be sought
hereunder if the Fund receives a written affirmation of
the indemnitee's good faith belief that the standard of
conduct necessary for indemnification has been met and a
written undertaking to reimburse the Fund unless it is
subsequently determined that he is entitled to such
indemnification and if the directors of the Fund
determine that the facts then known to them would not
preclude indemnification. In addition, at least one of
the following conditions must be met: (A) the indemnitee
shall provide a security for his undertaking, (B) the
Fund shall be insured against losses arising by reason of
any lawful advances, or (C) a majority of a quorum
consisting of directors of the Fund who are neither
"interested persons" of the Fund (as defined in Section
2(a)(19) of the Act) nor parties to the proceeding
("Disinterested Non-Party Directors") or an independent
legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to
indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before
whom the proceeding was brought that such indemnitee is
not liable by reason of disabling conduct or, (2) in the
absence of such a decision, by (i) a majority vote of a
quorum of the Disinterested Non-Party Directors of the
Fund, or (ii) if such a quorum is not obtainable or
event, if obtainable, if a majority vote of such quorum
so directs, independent legal counsel in a written
opinion. All determinations that advance payments in
connection with the expense of defending any proceeding
shall be authorized shall be made in accordance with the
immediately preceding clause (2) above.
The rights accruing to any indemnitee under
these provisions shall not exclude any other right to
which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective on the
date it is approved by the stockholder of the Fund and
shall continue in effect for a period of two years and
thereafter from year to year, but only so long as such
continuation is specifically approved at least annually
in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser
at any time without penalty upon giving the Fund sixty
days written notice (which notice may be waived by the
Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty days notice
(which notice may be waived by the Adviser), provided
that such termination by the Fund shall be directed or
approved by the vote of a majority of the Directors of
the Fund in office at the time or by the vote of the
holders of a "majority" (as defined in the Act) of the
voting securities of the Fund at the time outstanding and
entitled to vote. This Agreement shall terminate
automatically in the event of its assignment (as
"assignment" is defined in the Act).
7. Notices
Any notice under this Agreement shall be in
writing to the other party at such address as the other
party may designate from time to time for the receipt of
such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth
day after the postmark if such notice is mailed first
class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance
with the laws of the State of New York for contracts to
be performed entirely therein without reference to choice
of law principles thereof and in accordance with the
applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have
caused the foregoing instrument to be executed by their
duly authorized officers, all as of the day and the year
first above written.
BLK SUBSIDIARY INC.
[SEAL] By: _________________________________
Name:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: _________________________________
Name:
Title:
CUSTODIAN CONTRACT
This Contract between , a corporation
organized and existing under the laws of , having its
principal place of business at hereinafter called the
"Fund", and State Street Bank and Trust 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. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
its assets pursuant to the provisions of the Declaration of
Trust. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it
with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or
treasury shares of capital stock, $ par value, ("Shares")
of the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund
held or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 3), the Custodian shall from time to time employ one or
more sub-custodians, but only in accordance with an applicable
vote by the Board of Trustees of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability
to the Fund on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the
Custodian.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property,
including all securities owned by the Fund, other than (a)
securities which are maintained pursuant to Section 2.10 in
a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of
the Treasury, collectively referred to herein as "Securities
System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian
pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by the Fund held by the Custodian
or in a Securities System account of the Custodian or in the
Custodian's Direct Paper book entry system account ("Direct
Paper System Account") only upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Fund;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.10 hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities
are called, redeemed, or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent. for transfer into
the name of the Fund or into the name of any nominee or
nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian
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
Fund, 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 or
willful misconduct;
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 Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Fund, which may be in the form of
cash or 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
Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by
the Fund, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-
dealer registered under the 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 Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or
organizations, regarding account deposits in connection
with transactions by the Fund;
14) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees
or of the Executive Committee signed by an officer and
certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund 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 Fund or in the name of any nominee of the
Fund or of any nominee of the Custodian which nominee shall
be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be
used in common with other registered investment companies
having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-
custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Fund under the
terms of this Contract shall be in "street name" or other
good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely
collect income due the Fund on such securities and to notify
the Fund 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 Fund,
subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in
such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian
for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940
and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be
approved by vote of a majority of the Board of Trustees of
the Fund. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the
Custodian only in, that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions, make federal funds
available to the Fund as of specified times agreed upon from
time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 Collection of Income. Subject to provisions of Section 2.3,
the Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by
the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to
the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items
requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder.
Income due the Fund on securities loaned pursuant to the
provisions of Section 2.2(10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the Custodian
of the income to which the Fund is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay
out monies of the Fund in the following cases only:
1) Upon the purchase of securities, options, futures
contracts or options on futures contracts for the
account of the Fund but only (a) against the delivery
of such securities or evidence of title to such
options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States or
abroad which is qualified under the Investment Company
Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between the
Fund and the Custodian, or another bank, or a broker-
dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through
an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by
the Fund of securities owned by the Custodian along
with written evidence of the agreement by the Custodian
to repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund in any
bank; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions as defined in Section 3;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section
2.2 hereof;
3) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes,
management, accounting, transfer agent and legal fees,
and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or
treated as deferred expenses;
4) For the payment of any dividends declared pursuant to
the governing documents of the Fund;
5) For payment of the amount of dividends received in
respect of securities sold short;
6) For any other proper purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of
a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of
the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such 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 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase
of securities for the account of the Fund is made by the
Custodian in advance of receipt of the securities purchased
in the absence of specific written instructions from the
Fund to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as
if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time remove)
any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act
as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time
to time direct; provided however, that the appointment of
any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The Custodian
may deposit and/or maintain securities owned by the Fund in
a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
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 Fund in a
Securities System provided that such securities are
represented in an account ("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 Fund which are maintained in a Securities System
shall identify by book-entry those securities belonging
to the Fund;
3) The Custodian shall pay the securities purchased for
the account of the Fund upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the
account of the Fund upon (i) 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 Fund.
Copies of all advices from the Securities System of
transfers of securities for the account of the Fund
shall identify the Fund, be maintained for the Fund by
the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the
Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions
in the Securities System for the account of the Fund;
4) The Custodian shall provide the Fund 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
certificate required by Article 12 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for any loss or damage to the Fund resulting from
use of the Securities System by reason of any
negligence, misfeasance or 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
Fund, 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 Fund has
not been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities owned
by the Fund in the Direct Paper System of the Custodian
subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
represented in an account ("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 records of the Custodian with respect to securities
of the Fund which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the Fund;
4) The Custodian shall pay for securities purchased for
the account of the Fund 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 Fund.
The Custodian shall transfer securities sold for the
account of the Fund upon the making of an entry on the
records of the Custodian to reflect such transfer and
receipt of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund, in
the form of a written advice or notice, of Direct Paper
on the next business day following such transfer and
shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the
Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on
its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for the
purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment 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 Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be
proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The 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 Fund held by it and in
connection with transfers of such securities.
2.14 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities
are registered otherwise than in the name of the Fund or a
nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall
promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.15 Communications Relating to Fund Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit
promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by
the Fund and the maturity of futures contracts purchased or
sold by the Fund) received by the Custodian from issuers of
the securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit
promptly to the Fund all written information received by the
Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents) making
the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or
any other similar transaction, the Fund shall notify the
Custodian at least three business days prior to the date on
which the Custodian is to take such action.
2.16 Reports to Fund by Independent Public Accounts. The
Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with respect by independent public
accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient
scope and in sufficient detail, as may reasonably be
required by the Fund, to provide reasonable assurance that
any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the
reports shall so state.
3. Proper Instructions
Proper Instructions as used herein means a writing signed or
initialled by one or more person or persons as the Board of
Trustees shall have from time to time authorized. Each such
writing shall set forth the specified transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by
the Board of Trustees of the Fund accompanied by a detailed
description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that
the Board of Trustees and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets. For
purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-
party agreement which requires a segregated asset account in
accordance with Section 2.12.
4. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to
its duties under this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable 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 Fund except as otherwise
directed by the Board of Trustees of the Fund.
5. Evidence of Authority
The Custodian shall be protected in action upon any
instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority
of any person to act in accordance with such vote or (b) of any
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.
6. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Trustees of the Fund to keep the books of account of the Fund
and/or compute the net asset value per share of the outstanding
shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such
net asset value per share. If so directed, the Custodian shall
also calculate weekly the net income of the Fund as described in
the Fund's currently effective prospectus and shall advise the
Fund and the Transfer Agent weekly of the total amounts of such
net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components.
The calculations of the net asset value per share and the weekly
income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.
7. Records
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All
such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents
of the Fund and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by the Fund
and held by the Custodian and shall, when requested to do so by
the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers
in such tabulations.
8. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the
preparation of the Fund's Form N-2, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
9. 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 Fund and the Custodian.
10. Responsibility of Custodian
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Contract and shall be held harmless in acting upon any notice,
request, 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
reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitle to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
If the Fund requires that Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund being liable
for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates,
subsidiaries or agents, to advance cash or securities for any
purpose (including but not limited to securities settlements and
assumed settlement) or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the
performance of this Contract, except such as may arise from its
or its nominee's own negligent action, negligent failure to act
or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund's
assets to the extent necessary to obtain reimbursement.
11. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such delivery or
mailing; provided, however that the Custodian shall not act under
Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Trustees of the Fund has approved the initial use of a
particular Securities System, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian
shall not act under Section 2.11 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has approved the initial use
of the Direct Paper System; provided, further, however, that the
Fund 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 Fund
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 by the Comptroller of
the Currency 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 Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
12. Successor Custodian
If a successor custodian shall be appointed by the Board of
Trustees of the Fund, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Trustees of the Fund, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees
shall have been delivered to the 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, of its own selection,
having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000,
all securities, funds and other properties held by the Custodian
and all instruments held by the Custodian relative thereto and
all other property held by it under this Contract and to transfer
to an account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair 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.
13. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund, may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in writing signed by both parties
and shall be annexed hereto, provided that no such interpretive
or additional provisions shall contravene any applicable federal
or state regulations or any provision of the Declaration of Trust
of the Fund. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
14. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The
Commonwealth of Massachusetts.
15. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the Custodian
relating to the custody of the Fund's assets.
16. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 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, the Custodian needs the Fund to indicate whether it
authorizes the Custodian to provide the Fund's name, address, and
share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will
not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or
"no" below, the Custodian is required by the rule to treat the
Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established
by the Fund. For the Fund's protection, the Rule prohibits the
requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate
below whether the Fund consents or objects by checking one of the
alternatives below.
YES [ ] The Custodian is authorized to release the
Fund's name, address, and share positions.
NO [ ] The Custodian is not authorized to release
the Fund's name, address and share positions.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199.
ATTEST NAME OF FUND
By
ATTEST STATE STREET BANK AND TRUST COMPANY
By
Executive Vice President
CUSTODIAN CONTRACT
BETWEEN
(NAME OF TRUST, COMPANY, FUND)
AND
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It . 1
2. Duties of the Custodian with Respect to Property of the
Fund Held By the Custodian . . . . . . . . . . . . . . . 1
2.1 Holding Securities . . . . . . . . . . . . . . . . 1
2.2 Delivery of Securities . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . 4
2.5 Availability of Federal Funds . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . . . . . 5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in Securities Systems . . . 7
2.11 Fund Assets Held in the Custodian's Direct Paper
System . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Segregated Account . . . . . . . . . . . . . . . . 9
2.13 Ownership Certificates for Tax Purposes . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Communications Relating to Fund Securities . . . . 10
2.16 Reports to Fund by Independent Public Accounts . . 10
3. Proper Instructions . . . . . . . . . . . . . . . . . . 11
4. Actions Permitted without Express Authority . . . . . . 11
5. Evidence of Authority . . . . . . . . . . . . . . . . . 12
6. Duties of Custodian with Respect to the Books of
Account and Calculation of Net Asset Value and Net
Income . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Records . . . . . . . . . . . . . . . . . . . . . . . . 12
8. Opinion of Fund's Independent Accountant . . . . . . . . 13
9. Compensation of Custodian . . . . . . . . . . . . . . . 13
10. Responsibility of Custodian . . . . . . . . . . . . . . 13
11. Effective Period, Termination and Amendment . . . . . . 14
12. Successor Custodian . . . . . . . . . . . . . . . . . . 14
13. Interpretive and Additional Provisions . . . . . . . . . 15
14. Massachusetts Law to Apply . . . . . . . . . . . . . . . 16
15. Prior Contracts . . . . . . . . . . . . . . . . . . . . 16
16. Shareholder Communications Election . . . . . . . . . . 16
BLK SUBSIDIARY INC.
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made as of the ____
day of August, 1997 between BLK SUBSIDIARY INC., a
Maryland corporation (the "Fund"), and Prudential Mutual
Fund Management Inc., a Delaware corporation (the
"Administrator").
W I T N E S S E T H:
WHEREAS, the Fund is a diversified closed-end
management investment company registered under the
Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Fund has retained an investment
adviser for the purpose of investing its assets in
securities and desires to retain the Administrator for
certain administrative services, and the Administrator is
willing to furnish such administrative services on the
terms and conditions hereinafter set forth,
NOW, THEREFORE, the parties hereto agree as
follows:
1. The Fund hereby appoints the Administrator
to provide the services set forth below, subject to the
overall supervision of the Board of Directors of the Fund
for the period and on the terms set forth in this
Agreement. The Administrator hereby accepts such
appointment and agrees during such period to render the
services herein described and to assume the obligations
herein set forth, for the compensation herein provided.
2. Subject to the supervision of the Board of
Directors and officers of the Fund, the Administrator
shall provide facilities for meetings of the Board of
Directors and shareholders of the Fund and office
facilities and personnel to assist the officers of the
Fund in the performance of the following services:
(a) Oversee the determination and
publication of the Fund's net asset value in accordance
with the Fund's policy as adopted from time to time by
the Board of Directors;
(b) Oversee the maintenance by State
Street Bank and Trust Company of certain books and
records of the Fund as required under the Investment
Company Act of 1940 and maintain (or oversee maintenance
by such other persons as approved by the Board of
Directors) such other books and records (other than those
maintained by the investment adviser) required by law or
for the proper operation of the Fund;
(c) Prepare and file the Fund's federal,
state and local income tax returns and any other required
tax returns;
(d) Review the appropriateness of and
arrange for payment of the Fund's expenses;
(e) Prepare for review and approval by
officers of the Fund financial information for the Fund's
semi-annual and annual reports, proxy statements and
other communications with shareholders required or
otherwise to be sent to Fund shareholders, and arrange
for the printing and dissemination of such reports and
communications to shareholders;
(f) Prepare for review by an officer of
the Fund the Fund's periodic financial reports required
to be filed with the Securities and Exchange Commission
("SEC") on Form N-SAR and Form N-2 and such other
reports, forms or filings, as may be mutually agreed
upon;
(g) Prepare reports relating to the
business and affairs of the Fund (not otherwise
appropriately prepared by the Fund's investment adviser,
custodian, counsel or auditors);
(h) Prepare such information and reports
as may be required by any stock exchange or exchanges on
which the Fund's shares are listed;
(i) Make such reports and recommendations
to the Board concerning the performance of the
independent accountants as the Board may reasonably
request or deems appropriate;
(j) Make such reports and recommendations
to the Board concerning the performance and fees of the
Fund's custodian, transfer and dividend disbursing agent
as the Board may reasonably request or deems appropriate;
(k) Oversee and review calculations of
fees paid to the Administrator, the investment adviser
and the custodian;
(l) Consult with the Fund's officers,
independent accountants, legal counsel, custodian,
accounting agent and transfer and dividend disbursing
agent in establishing the accounting policies of the
Fund;
(m) Review implementation of any stock
purchase or dividend reinvestment programs authorized by
the Board of Directors;
(n) Facilitate bank or other borrowings
by the Fund;
(o) Prepare such information and reports
as may be required by any banks from which the Fund
borrows funds;
(p) Provide such assistance to the
investment adviser, the custodian and the Fund's counsel
and auditors as generally may be required to properly
carry on the business and operations of the Fund; and
(q) Respond to or refer to the Fund's
officers or transfer agent, shareholder inquiries
relating to the Fund.
(r) Provide to Standard & Poor's
Corporation ("S&P"), upon its request, corporate or
financial information reasonably available to the
Administrator to assist S&P in the rating of the Fund's
shares.
All services are to be furnished
through the medium of any directors, officers or
employees of the Administrator as the Administrator deems
appropriate in order to fulfill its obligations
hereunder.
Each party shall bear all its own expenses
incurred in connection with this Agreement.
3. The Fund shall not pay the Administrator
any fee for services rendered under this Agreement.
4. The Administrator assumes no
responsibility under this Agreement other than to render
the services called for hereunder, and specifically
assumes no responsibilities for investment advice or the
investment or reinvestment of the Fund's assets.
5. The Administrator shall not be liable for
any error of judgment or for any loss suffered by the
Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in
the performance of, or from reckless disregard by it of
it obligations and duties under, this Agreement.
6. This Agreement shall become effective as
of the date on which the Fund's Registration Statement on
Form N-2 is filed with the SEC and shall thereafter
continue in effect unless terminated as herein provided.
This Agreement may be terminated by either party hereto
(without penalty) at any time upon not less than 60 days'
prior written notice to the other party hereto.
7. The services of the Administrator to the
Fund hereunder are not exclusive and nothing in this
Agreement shall limit or restrict the right of the
Administrator to engage in any other business or to
render services of any kind to any other corporation,
firm, individual or association. The Administrator shall
be deemed to be an independent contractor, unless
otherwise expressly provided or authorized by this
Agreement.
8. During the term of this Agreement, the
Fund agrees to furnish the Administrator at the principal
office of the Administrator prior to use thereof all
prospectuses, proxy statements, reports to shareholders,
sales literature, or other material prepared for
distribution to shareholders of the Fund or the public
that refer in any way to the Administrator. If the
Administrator reasonably objects in writing to such
references within five business days (or such other time
as may be mutually agreed) after receipt thereof, the
Fund will modify such references in a manner reasonably
satisfactory to the Administrator. In the event of
termination of this Agreement, the Fund will continue to
furnish to the Administrator copies of any of the above-
mentioned materials that refer in any way to the
Administrator. The Fund shall furnish or otherwise make
available to the Administrator such other information
relating to the business affairs of the Fund as the
Administrator at any time, or from time to time,
reasonably requests in order to discharge its obligations
hereunder.
9. This Agreement may be amended by mutual
written consent.
10. Any notice of other communication required
to be given pursuant to this Agreement shall be deemed
duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Administrator at One Seaport
Plaza, New York, New York 10292, Attention: Chairman or
(2) to the Fund at 345 Park Avenue, New York, New York
10154, Attention: President.
11. This Agreement sets forth the agreement
and understanding of the parties hereto solely with
respect to the matters covered hereby and the
relationship between the Fund and Prudential Mutual Fund
Management, Inc. as Administrator. Nothing in this
Agreement shall govern, restrict or limit in any respect
any other business dealings between the parties hereto
unless otherwise expressly provided herein.
12. This Agreement shall be governed by and
construed in accordance with the laws of t he State of
New York without reference to choice of law principles
thereof and in accordance with the Investment Company
Act. In the case of any conflict the Investment Company
Act shall control.
IN WITNESS WHEREOF, the parties hereto have
caused this instrument to be executed by their officers
designated below as of the day and year first above
written.
BLK SUBSIDIARY INC.
By
Name:
Title:
PRUDENTIAL MUTUAL FUND
MANAGEMENT INC.
By
Name:
Title:
REGISTRAR,
TRANSFER AGENCY AND SERVICE AGREEMENT
between
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment; Duties of the Bank . . . . 1
Article 2 Fees and Expenses . . . . . . . . . . . . . . . 5
Article 3 Representations and Warranties of the Bank . . . 6
Article 4 Representations and Warranties of the Fund . . . 6
Article 5 Indemnification . . . . . . . . . . . . . . . . 7
Article 6 Covenants of the Fund and the Bank . . . . . . 11
Article 7 Termination of Agreement . . . . . . . . . . . . 13
Article 8 Assignment . . . . . . . . . . . . . . . . . . . 13
Article 9 Amendment . . . . . . . . . . . . . . . . . . . 14
Article 10 Massachusetts Law to Apply . . . . . . . . . . . 14
Article 11 Merger of Agreement . . . . . . . . . . . . . . 15
REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of ,
19 , by and between
corporation, having its principal office and place of
business at 345 Park Avenue, New York, New York, 10154,
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office
and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank
as its registrar, transfer agent, dividend disbursing
agent, custodian of certain retirement plans and agent in
connection with certain other activities and the Bank
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
Article 1 Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set
forth in this Agreement, the Fund hereby employs and
appoints the Bank to act as, and the Bank agrees to act
as registrar, transfer agent for the Fund's authorized
and issued shares of its common stock ("Shares"),
dividend disbursing agent, custodian of certain
retirement plans and agent in connection with any
dividend reinvestment plan as set out in the prospectus
of the Fund, corresponding to the date of this Agreement.
1.2 The Bank agrees that it will perform the
following services:
(a) In accordance with procedures established
from time to time by agreement between the Fund and the
Bank, the Bank shall:
(i) Issue and record the appropriate
number of Shares as authorized and
hold such Shares in the
appropriate Shareholder account;
(ii) Effect transfers of Shares by the
registered owners thereof upon
receipt of appropriate
documentation;
(iii) Execute transactions directly with
broker-dealers authorized by the
Fund who shall thereby be deemed
to be acting on behalf of the
Fund;
(iv) Prepare and transmit payments for
dividends and distributions
declared by the Fund;
(v) Act as agent for Shareholders
pursuant to the dividend
reinvestment and cash purchase
plan as amended from time to time
in accordance with the terms of
the agreement to be entered into
between the Shareholders and the
Bank in substantially the form
attached as Exhibit A hereto;
(vi) Issue replacement certificates for
those certificates alleged to have
been lost, stolen or destroyed
upon receipt by the Bank of
indemnification satisfactory to
the Bank and protecting the Bank
and the Fund, and the Bank as its
option, may issue replacement
certificates in place of mutilated
stock certificates upon
presentation thereof and without
such indemnity; and
(vii) Report abandoned property to the
various states as authorized by
the Fund per policies and
principals agreed upon by the Fund
and the Bank.
(b) In addition to and neither in lieu nor in
contravention of the services set forth in the above
paragraph (a), the Bank shall: (i) perform all of the
customary services of a registrar, transfer agent,
dividend disbursing agent, custodian of certain
retirement plans and agent of the dividend reinvestment
and cash purchase plan as described in Article 1
consistent with those requirements in effect as at the
date of this Agreement. The detailed definition,
frequency, limitations and associated costs (if any) set
out in the attached fee schedule, include but not limited
to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies and mailing Shareholder reports to
current Shareholders, withholding taxes on U.S. resident
and non-resident alien accounts where applicable,
preparing and filing U.S. Treasury Department Forms 1099
and other appropriate forms required with respect to
dividends and distributions by federal authorities for
all registered Shareholders.
Article 2 Fees and Expenses
2.1 For the performance by the Bank pursuant
to this Agreement, the Fund agrees to pay the Bank an
annual maintenance fee as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below
may be changed from time to time subject to mutual
written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section
2.1 above, the Fund agrees to reimburse the Bank for out-
of-pocket expenses or advances incurred by the Bank for
the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Bank at
the request or with the consent of the Fund, will be
reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and
reimbursable expenses within five days following the
receipt of the respective billing notice. Postage and
the cost of materials for mailing of dividends, proxies,
Fund reports and other mailings to all Shareholder
accounts shall be advanced to the Bank by the Fund at
least seven (7) days prior to the mailing date of such
materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund
that:
3.1 It is a trust company duly organized and
existing and in good standing under the laws of the
Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its
business in the Commonwealth of Massachusetts.
3.3 It is empowered under applicable laws and
by its Charter and By-Laws to enter into and perform this
Agreement.
3.4 All requisite corporate proceedings have
been taken to authorize it to enter into and perform this
Agreement.
3.5 It has and will continue to have access to
the necessary facilities, equipment and personnel to
perform its duties and obligations under this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank
that:
4.1 It is a corporation duly organized and
existing and in good standing under the laws of .
4.2 It is empowered under applicable laws and
by its Articles of Incorporation and By-Laws to enter
into and perform this Agreement.
4.3 All corporate proceedings required by said
Articles of Incorporation and By-Laws have been taken to
authorize it to enter into and perform this Agreement.
4.4 It is a closed-end, diversified investment
company registered under the Investment Company Act of
1940, as amended.
4.5 To the extent required by federal
securities laws a registration statement under the
Securities Act of 1933, as amended is currently effective
and appropriate state securities law filings have been
made with respect to all Shares of the Fund being offered
for sale; information to the contrary will result in
immediate notification to the Bank.
4.6 It shall make all required filings under
federal and state securities laws.
Article 5 Indemnification
5.1 The Bank shall not be responsible for, and
the Fund shall indemnify and hold the Bank harmless from
and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence
or willful misconduct which arise out of the breach of
any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its
agents or subcontractors of information, records and
documents which (i) are received or relied upon by the
Bank or its agents or subcontractors and/or furnished to
it or performed by or on behalf of the Fund, and (ii)
have been prepared, maintained and/or performed by the
Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by
the Bank or its agents or subcontractors of any
instructions or requests of the Fund.
(e) The offer or sale of Shares in violation
of any requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.
5.2 The Bank shall indemnify and hold the Fund
harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or
failure or omission to act by the Bank as a result of the
Bank's lack of good faith, negligence or willful
misconduct.
5.3 At any time the Bank may apply to any
officer of the Fund for instructions, and may consult
with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank
under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be
indemnified by the Fund for any action taken or omitted
by it in reliance upon such instructions or upon the
opinion of such counsel. The Bank, its agents and
subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on
behalf of the Fund, reasonably believed to be genuine and
to have been signed by the proper person or persons, or
upon any instruction, information, data, records or
documents provided the Bank or its agents or
subcontractors by telephone, in person, machine readable
input, telex, CRT data entry or other similar means
authorized by the Fund, and shall not be held to have
notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. The
Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former
transfer agent or former registrar, or of a co-transfer
agent or co-registrar.
5.4 In the event either party is unable to
perform its obligations under the terms of this Agreement
because of acts of God, strikes, equipment or
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.
5.5 Neither party to this Agreement shall be
liable to the other party for consequential damages under
any provision of this Agreement or for any consequential
damages arising out of any act or failure to act
hereunder.
5.6 In order that the indemnification
provisions contained in this Article 5 shall apply, upon
the assertion of a claim for which either party may be
required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised
with respect to all developments concerning such claim.
The party who may be required to indemnify shall have the
option to participate with the party seeking
indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any
claim or make any compromise in any case in which the
other party may be required to indemnify it except with
the other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.1 The Fund shall promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the
Board of Directors of the Fund authorizing the
appointment of the Bank and the execution and delivery of
this Agreement.
(b) A copy of the Articles of Incorporation
and By-Laws of the Fund and all amendments thereto.
6.2 The Bank hereby agrees to establish and
maintain facilities and procedures reasonably acceptable
to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account
of, such certificates, forms and devices.
6.3 The Bank shall keep records relating to
the services to be performed hereunder, in the form and
manner as it may deem advisable. To the extent required
by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Bank agrees that
all such records prepared or maintained by the Bank
relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered
promptly to the Fund on and in accordance with its
request.
6.4 The Bank and the Fund agree that all
books, records, information and data pertaining to the
business of the other party which are exchanged or
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 by law.
6.5 In cases of any requests or demands for
the inspection of the Shareholder records of the Fund,
the Bank will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to
such inspection. The Bank reserves the right, however,
to exhibit the Shareholder records to any person whenever
it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to
such person.
Article 7 Termination of Agreement
7.1 This Agreement may be terminated by either
party upon one hundred twenty (120) days written notice
to the other.
7.2 Should the Fund exercise its right to
terminate, all out-of-pocket expenses associated with the
movement of records and material will be borne by the
Fund. Additionally, the Bank reserves the right to
charge for any other reasonable expenses associated with
such termination and/or a charge equivalent to the
average of three (3) month's fees.
Article 8 Assignment
8.1 Except as provided in Section 8.3 below,
neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the
written consent of the other party.
8.2 This Agreement shall inure to the benefit
of and be binding upon the parties and their respective
permitted successors and assigns.
8.3 The Bank may, without further consent on
the part of the Fund, subcontract for the performance
hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section
17A(c)(1) of the Securities Exchange Act of 1934, as
amended ("Section 17A(c)(l)"), (ii) a BFDS subsidiary
duly registered as a transfer agent pursuant to Section
17A(c)(1) or (iii) a BFDS affiliate; provided, however,
that the Bank shall be as fully responsible to the Fund
for the acts and omissions of any subcontractor as it is
for its own acts and omissions.
Article 9 Amendment
9.1 This Agreement may be amended or modified
by a written agreement executed by both parties and
authorized or approved by a resolution of the Board of
Directors of the Fund.
Article 10 Massachusetts Law to Apply
10.1 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance
with the laws of the Commonwealth of Massachusetts.
Article 11 Merger of Agreement
11.1 This Agreement constitutes the entire
agreement between the parties hereto and supersedes any
prior agreement with respect to the subject hereof
whether oral or written.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed in their names and
on their behalf by and through their duly authorized
officers, as of the day and year first above written.
BY:
ATTEST:
STATE STREET BANK AND TRUST COMPANY
BY:
Vice President
ATTEST:
Assistant Secretary
