INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT,
dated September 29, 2006, between BlackRock Capital and Income Strategies Fund,
Inc. (the "Fund"), a Maryland corporation, and BlackRock Advisors, LLC (the
"Advisor"), a Delaware limited liability company.
WHEREAS,
the Advisor has agreed to furnish investment advisory services to the Fund, a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS,
this Agreement has been approved in accordance with the provisions of the 1940
Act, and the Advisor is willing to furnish such services upon the terms and
conditions herein set forth;
NOW,
THEREFORE, in consideration of the mutual premises and covenants 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 Advisor agrees, all as more fully set forth
herein, to act as investment advisor to the Fund with respect to the investment
of the Fund's assets and to supervise and arrange for the day to day operations
of the Fund and the purchase of securities for and the sale of securities held
in the investment portfolio of the Fund.
2. Duties and Obligations of
the Advisor with Respect to Investment of Assets of the
Fund. Subject to the succeeding provisions of this section and
subject to the direction and control of the Fund's Board of Directors, the
Advisor shall (i) act as investment advisor 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; (iii) arrange, subject to the provisions of paragraph
4 hereof, for the purchase and sale of securities and other assets held in the
investment portfolio of the Fund; and (iv) provide investment research to the
Fund.
3. Duties and Obligations of
Advisor with Respect to the Administration of the Fund. The
Advisor also agrees to furnish office facilities and equipment and clerical,
bookkeeping and administrative services (other than such services, if any,
provided by the Fund's Custodian, Transfer Agent and Dividend Disbursing Agent
and other service providers) for the Fund. To the extent requested by
the Fund, the Advisor agrees to provide the following administrative
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 the Fund's Custodian and
Transfer Agent and Dividend Disbursing Agent of certain books and records of the
Fund as required under Rule
31a1(b)(4) of the 1940 Act and maintain
(or oversee maintenance by such other persons as approved by the Board
of Directors) such other
books and records required by law or for the proper operation of the
Fund;
(c) Oversee the preparation and filing of
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 semiannual 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 NSAR, Form NCSR, Form NPX, Form NQ, and such other
reports, forms and filings, as may be mutually agreed upon;
(g) Prepare such reports relating to the
business and affairs of the Fund as may be mutually agreed upon and not otherwise appropriately prepared by
the Fund's 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 of Directors
concerning the performance of the independent accountants as the Board of
Directors may reasonably request or deems appropriate;
(j) Make such reports and recommendations to
the Board of Directors concerning the performance and fees of the Fund's Custodian and Transfer and
Dividend Disbursing Agent as the Board of Directors may reasonably request or
deems appropriate;
(k) Oversee and review calculations of fees
paid to the Fund's service providers;
(l) Oversee the Fund's portfolio and perform
necessary calculations as
required under Section 18 of the 1940 Act;
(m) 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 and monitor
financial and shareholder accounting services;
(n) Review implementation of any share
purchase programs authorized by the Board of Directors;
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(o) Determine the amounts available for
distribution as dividends and distributions to be paid by the Fund to its shareholders; prepare and
arrange for the printing of dividend notices to shareholders; and provide the
Fund's dividend disbursing agent and custodian with such information as is
required for such parties to effect the payment of dividends and distributions and to implement the Fund's
dividend reinvestment plan;
(p) Prepare such information and reports as
may be required by any banks from which the Fund borrows funds;
(q) Provide such assistance to 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;
(r) Assist in the preparation and filing of
Forms 3, 4, and 5 pursuant to Section 16 of the Securities Exchange Act of 1934,
as amended, and Section 30(h) of the 1940 Act for the officers and Directors of the Fund,
such filings to be based on information provided by those
persons;
(s) Respond to or refer to the Fund's
officers or transfer agent, shareholder (including any potential shareholder)
inquiries relating to the Fund;
(t) Supervise any other aspects of the Fund's
administration as may be agreed to by the Fund and the Advisor;
and
All
services are to be furnished through the medium of any directors, officers or
employees of the Advisor or its affiliates as the Advisor deems appropriate in
order to fulfill its obligations hereunder.
The
Fund will reimburse the Advisor or its affiliates for all out of pocket expenses
incurred by them in connection with the performance of the administrative
services described in this paragraph 3. The Fund will reimburse the
Advisor and its affiliates for their costs in providing accounting services to
the Fund.
4. Covenants. (a) In
the performance of its duties under this Agreement, the Advisor shall at all
times conform to, and act in accordance with, any requirements imposed by: (i)
the provisions of the 1940 Act and the Investment Advisers Act of 1940, as
amended, and all applicable Rules and Regulations of the Securities and Exchange
Commission; (ii) any other applicable provision of law; (iii) the provisions of
the Charter and By Laws of the Fund, as such documents are amended from time to
time; (iv) the investment objectives and policies of the Fund as set forth in
its Registration Statement on Form N-2 and/or the resolutions of the Board of
Directors; and (v) any policies and determinations of the Board of Directors of
the Fund and
(b) In addition, the Advisor will:
(i) place orders either directly with the
issuer or with any broker or dealer. Subject to the other provisions
of this paragraph, in
placing orders with brokers and dealers, the Advisor will attempt to obtain the
best price and the most favorable execution of its orders. In placing
orders, the Advisor will consider the experience and skill of the
firm's
3
securities traders as well as
the firm's financial
responsibility and administrative efficiency. Consistent with this
obligation, the Advisor may select brokers on the basis of the research,
statistical and pricing services they provide to the Fund and other clients of
the Advisor. Information and research received from
such brokers will be in addition to, and not in lieu of, the services required
to be performed by the Advisor hereunder. A commission paid to such
brokers may be higher than that which another qualified broker would
have charged for effecting the same
transaction, provided that the Advisor determines in good faith that such
commission is reasonable in terms either of the transaction or the overall
responsibility of the Advisor to the Fund and its other clients and
that the total commissions paid by the Fund
will be reasonable in relation to the benefits to the Fund over the long
term. Subject to the foregoing and the
provisions of the 1940 Act, the Securities Exchange Act of 1934, as amended, and
other applicable provisions
of law, the Advisor may select brokers and dealers with which it or the Fund is
affiliated;
(ii) maintain a policy and practice of
conducting its investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When the Advisor makes investment
recommendations for the Fund, its investment advisory personnel will not inquire
or take into consideration whether the issuer of securities proposed for
purchase or sale for the Fund's account are customers of the commercial department of its affiliates;
and
(iii) treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
and the Fund's prior, current or potential shareholders, and will not use such
records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where the
Advisor may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Fund.
5. Services Not
Exclusive. Nothing in this Agreement shall prevent the Advisor
or any officer, employee or other affiliate thereof from acting as investment
advisor 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 Advisor or any
of its 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 maybe acting; provided, however, that the Advisor will undertake no
activities which, in its judgment, will adversely affect the performance of its
obligations under this Agreement.
6.
Sub-Advisors. The
Advisor may from time to time, in its sole discretion to the extent permitted by
applicable law, appoint one or more sub-advisors, including, without limitation,
affiliates of the Advisor, to perform investment advisory services with respect
to the Fund. The Advisor may terminate any or all sub-advisors in its
sole discretion at any time to the extent permitted by applicable
law.
7. Books and
Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any such records upon
4
the
Fund's request. The Advisor further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-l under the 1940 Act.
8. Expenses. During
the term of this Agreement, the Advisor will bear all costs and expenses of its
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 0000 Xxx) of
the Advisor; provided that the Board of Directors of the Fund may approve
reimbursement to the Advisor 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, (including, without limitation, compliance
matters) (other than the provision of investment advice and administrative
services required to be provided hereunder) of all personnel employed by the
Advisor who devote substantial time to Fund operations or the operations of
other investment companies advised by the Advisor.
9. Compensation of the
Advisor. (a) The Fund agrees to pay to the Advisor
and the Advisor agrees to accept as full compensation for all services rendered
by the Advisor as such, a monthly fee (the "Investment Advisory Fee") in arrears
at an annual rate equal to the amount set forth in Schedule A hereto of an
aggregate of (i) the average daily value of the Fund's Net Assets and (ii) the
proceeds of any outstanding debt securities or borrowings used for
leverage. "Net Assets" means the total assets of the Fund minus the
sum of the accrued liabilities. It is understood that the liquidation
preference of any outstanding preferred stock (other than accumulated dividends)
is not considered a liability in determining the Fund's Net Asset
Value. For any period less than a month during which this Agreement
is in effect, the fee shall be prorated according to the proportion which such
period bears to a full month of 28, 29, 30 or 31 days, as the case may
be.
(b) For purposes of this Agreement, the net
assets of the Funds shall be calculated pursuant to the procedures adopted by resolutions
of the Directors of the Fund for calculating the value of the Fund's assets or
delegating such calculations to third
parties.
10. Indemnity. (a) The
Fund may, in the discretion of the Board of Directors of the Fund, indemnify the
Advisor, and each of the Advisor's directors, officers, employees, agents,
associates and controlling persons and the directors, partners, members,
officers, employees and agents thereof (including any individual who serves at
the Advisor's request as director, officer, partner, member, trustee or the like
of another entity) (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 state 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 such Indemnitee may be or may have been involved as
a party or otherwise or with which such Indemnitee may be or may have been
threatened, while acting in any capacity set forth herein or thereafter by
reason of such Indemnitee having acted in any such capacity, except with respect
to any matter as to which such Indemnitee shall have been adjudicated not to
have acted in good faith in the reasonable belief that such Indemnitee's action
was in the best interest of the Fund and furthermore, in the case of any
criminal proceeding, so long as such Indemnitee had no reasonable cause to
believe that the
5
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 such Indemnitee's 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 such Indemnitee's action was 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 Directors of the
Fund.
(b) The Fund may 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 such
Indemnitee 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 security for
such Indemnitee undertaking, (B) the Fund shall be insured against losses arising by
reason of any unlawful advance, 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 0000 Xxx) 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 the
standards for 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 or 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, even 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
and 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 such Indemnitee may be lawfully entitled.
11. Limitation on
Liability. (a) The Advisor will not be liable for any error of
judgment or mistake of law or for any loss suffered by Advisor or by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty
6
with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement. As used in this Section 11(a), the term "Advisor"
shall include any affiliates of the Advisor performing services for the Fund
contemplated hereby and partners, directors, officers and employees of the
Advisor and of such affiliates.
12. Duration and
Termination. This Agreement shall become effective as of the
date hereof and, unless sooner terminated with respect to the Fund as provided
herein, shall continue in effect for a period of two
years. Thereafter, if not terminated, this Agreement shall continue
in effect with respect to the Fund for successive periods of 12 months, provided
such continuance is specifically approved at least annually by both (a) the vote
of a majority of the Fund's Board of Directors or the vote of a majority of the
outstanding voting securities of the Fund at the time outstanding and entitled
to vote, and (b) by the vote of a majority of the Directors who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Fund at any time, without the payment of any penalty, upon
giving the Advisor 60 days' notice (which notice may be waived by the Advisor),
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 of the voting securities of the Fund at the
time outstanding and entitled to vote, or by the Advisor on 60 days' written
notice (which notice may be waived by the Fund). This Agreement will
also immediately terminate in the event of its assignment. (As used
in this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings of such terms
in the 1940 Act.)
13. 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.
14. Amendment of this
Agreement. This Agreement may be amended by the parties only
if such amendment is specifically approved by the vote of the Board of Directors
of the Fund, including a majority of those Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval and, where required by the
1940 Act, by a vote of a majority of the outstanding voting securities of the
Fund.
15. Governing
Law. This Agreement shall be governed by and 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 1940 Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions, conflict with the applicable provisions of the 1940 Act, the latter
shall control.
16. Use of the Name
BlackRock. The Advisor has consented to the use by the Fund of
the name or identifying word "BlackRock" in the name of the
Fund. Such consent is
7
conditioned
upon the employment of the Advisor as the investment advisor to the
Fund. The name or identifying word "BlackRock" may be used from time
to time in other connections and for other purposes by the Advisor and any of
its affiliates. The Advisor may require the Fund to cease using
"BlackRock" in the name of the Fund if the Fund ceases to employ, for any
reason, the Advisor, any successor thereto or any affiliate thereof as
investment advisor of the Fund.
17. Miscellaneous. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding on, and shall inure to the benefit of the parties
hereto and their respective successors.
18. Counterparts. This
Agreement may be executed in counterparts by the parties hereto, each of which
shall constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
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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.
BLACKROCK
CAPITAL AND INCOME STRATEGIES FUND, INC.
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By:
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Name:
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Xxxxxx
X. Xxxxx
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Title:
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Vice
President
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BLACKROCK
ADVISORS, LLC
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By:
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Name:
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Xxxxxx
X. Xxxxx
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Title:
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Managing
Director
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9
Schedule
A.
Investment Advisory
Fee
0.85%
of an aggregate of (i) the average daily value of the Fund's Net Assets, and
(ii) the proceeds of any outstanding debt securities or borrowings used for
leverage.
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