INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated July 16, 2002, between BlackRock California
Municipal Income Trust II (the "Trust"), a Delaware business trust, and
BlackRock Advisors, Inc. (the "Advisor"), a Delaware corporation.
WHEREAS, Advisor has agreed to furnish investment advisory
services to BlackRock California Municipal Income Trust II (the "Trust"), a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act");
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 Trust with respect to the investment
of the Trust's assets and to supervise and arrange for the day-to-day operations
of the Trust and the purchase of securities for and the sale of securities held
in the investment portfolio of the Trust.
2. Duties and Obligations of the Advisor with Respect to
Investment of Assets of the Trust. Subject to the succeeding provisions of this
section and subject to the direction and control of the Trust's Board of
Trustees, the Advisor shall (i) act as investment advisor for and supervise and
manage the investment and reinvestment of the Trust's assets and in connection
therewith have complete discretion in purchasing and selling securities and
other assets for the Trust and in voting, exercising consents and exercising
all other rights appertaining to such securities and other assets on behalf of
the Trust; (ii) supervise continuously the investment program of the Trust and
the composition of its investment portfolio; (iii) 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 Trust; and (iv) provide
investment research to the Trust.
3. Duties and Obligations of Advisor with Respect to the
Administration of the Trust. 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 Trust's Custodian, Transfer
Agent and Dividend Disbursing Agent and other service providers) for the Trust.
To the extent requested by the Trust, the Advisor agrees to provide the
following administrative services:
(a) Oversee the determination and publication of the Trust's net asset
value in accordance with the Trust's policy as adopted from time to time by the
Board of Trustees;
(b) Oversee the maintenance the Trust's Custodian and Transfer Agent
and Dividend Disbursing Agent of certain books and records of the Trust as
required under Rule 31a-1(b)(4) of the 1940 Act and maintain (or oversee
maintenance by such other persons as approved by the Board of Trustees) such
other books and records required by law or for the proper operation of the
Trust;
(c) Oversee the preparation and filing of the Trust'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
Trust's expenses;
(e) Prepare for review and approval by officers of the Trust financial
information for the Trust's semi-annual and annual reports, proxy statements and
other communications with shareholders required or otherwise to be sent to Trust
shareholders, and arrange for the printing and dissemination of such reports
and communications to shareholders;
(f) Prepare for review by an officer of the Trust the Trust's periodic
financial reports required to be filed with the Securities and Exchange
Commission ("SEC") on Form N-SAR and such other reports, forms and filings, as
may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the Trust
as may be mutually agreed upon and not otherwise appropriately prepared by the
Trust's custodian, counsel or auditors;
(h) Prepare such information and reports as may be required by any
stock exchange or exchanges on which the Trust's shares are listed;
(i) Make such reports and recommendations to the Board of Trustees
concerning the performance of the independent accountants as the Board of
Trustees may reasonably request or deems appropriate;
(j) Make such reports and recommendations to the Board of Trustees
concerning the performance and fees of the Trust's Custodian and Transfer and
Dividend disbursing agent as the Board of Trustees may reasonably request or
deems appropriate;
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(k) Oversee and review calculations of fees paid to the Trust's
service providers;
(l) Oversee the Trust's portfolio and perform necessary calculations
as required under Section 18 of the 1940 Act;
(m) Consult with the Trust's officers, independent accountants, legal
counsel, custodian, accounting agent and transfer and dividend disbursing agent
in establishing the accounting policies of the Trust and monitor financial and
shareholder accounting services;
(n) Review implementation of any share purchase programs authorized
by the Board of Trustees;
(o) Determine the amounts available for distribution as dividends and
distributions to be paid by the Trust to its shareholders; prepare and arrange
for the printing of dividend notices to shareholders; and provide the Trust'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 Trust's dividend reinvestment plan;
(p) Prepare such information and reports as may be required by any
banks from which the Trust borrows funds;
(q) Provide such assistance to the Custodian and the Trust's counsel
and auditors as generally may be required to properly carry on the business and
operations of the Trust;
(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(f) of the 1940 Act for the officers and trustees of the Trust, such filings
to be based on information provided by those persons;
(s) Respond to or refer to the Trust's officers or transfer agent,
shareholder (including any potential shareholder) inquiries relating to the
Trust.
(t) Supervise any other aspects of the Trust's administration as may
be agreed to by the Trust and the Advisor.
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.
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The Trust 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.
4. Covenants. 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:
(a) (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 (the "SEC"); (ii) any
other applicable provision of law; (iii) the provisions of the Agreement and
Declaration of Trust, as amended and restated, and By-Laws of the Trust, as
such documents are amended from time to time; (iv) the investment objectives and
policies of the Trust as set forth in its Registration Statement on Form N-2;
and (v) any policies and determinations of the Board of Trustees of the Trust;
(b) will 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
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 Trust 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 Trust and
its other clients and that the total commissions paid by the Trust will be
reasonable in relation to the benefits to the Trust over the long-term. In
addition, the Advisor is authorized to take into account the sale of shares of
the Trust in allocating purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are affiliated with the
Advisor), provided that the Advisor believes that the quality of the transaction
and the commission are comparable to what they would be with other qualified
firms. In no instance, however, will the Trust's securities be purchased from
or sold to the Advisor, or any affiliated person thereof, except to the extent
permitted by the SEC or by applicable law;
(c) will 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 Trust, its investment advisory personnel will
not inquire or take into consideration whether the
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issuer of securities proposed for purchase or sale for the Trust's account are
customers of the commercial department of its affiliates; and
(d) will treat confidentially and as proprietary
information of the Trust all records and other information relative to the
Trust, and the Trust'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 Trust, 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
Trust.
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 may be 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. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Advisor hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust'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-1 under the
1940 Act.
7. Agency Cross Transactions. From time to time, the Advisor
or brokers or dealers affiliated with it may find themselves in a position to
buy for certain of their brokerage clients (each an "Account") securities which
the Advisor's investment advisory clients wish to sell, and to sell for certain
of their brokerage clients securities which advisory clients wish to buy. Where
one of the parties is an advisory client, the Advisor or the affiliated broker
or dealer cannot participate in this type of transaction (known as a cross
transaction) on behalf of an advisory client and retain commissions from one or
both parties to the transaction without the advisory client's consent. This is
because in a situation where the Advisor is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Advisor or an affiliate is receiving commissions from both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Advisor's part regarding the advisory client. The
Securities and Exchange Commission has adopted a rule under the Investment
Advisers Act of 1940, as amended, which permits the Advisor or its affiliates to
participate on behalf of an Account in agency cross transactions if the advisory
client has given written
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consent in advance. By execution of this Agreement, the Trust authorizes the
Advisor or its affiliates to participate in agency cross transactions involving
an Account. The Trust may revoke its consent at any time by written notice to
the Advisor.
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
trustees fees of any officers or trustees of the Trust who are affiliated
persons (as defined in the 0000 Xxx) of the Advisor; provided that the Board of
Trustees of the Trust 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 Trust operations (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 Trust operations or the operations of other investment
companies advised by the Advisor.
9. Compensation of the Advisor. (a) The Trust 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 0.55% of the average weekly
value of the Trust's Managed Assets. "Managed Assets" means the total assets of
the Trust minus the sum of the accrued liabilities (other than the aggregate
indebtedness constituting financial leverage). 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 Trust shall be calculated pursuant to the procedures adopted by
resolutions of the Trustees of the Trust for calculating the value of the
Trust's assets or delegating such calculations to third parties.
10. Indemnity. (a) The Trust hereby agrees to 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
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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 Trust and furthermore, in the case of any criminal
proceeding, so long as such Indemnitee 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 Trust 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 Trust 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 Trust 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 Trustees of the Trust.
(b) The Trust shall make advance payments in
connection with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Trust receives a written
affirmation 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 Trust unless it is subsequently determined that such Indemnitee is
entitled to such indemnification and if the trustees of the Trust 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 such Indemnitee-undertaking, (B) the Trust shall be
insured against losses arising by reason of any lawful advance, or (C) a
majority of a quorum consisting of trustees of the Trust who are neither
"interested persons" of the Trust (as defined in Section 2(a)(19) of the 0000
Xxx) nor parties to the proceeding ("Disinterested Non-Party Trustees") 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 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 Trustees of the Trust, 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 shall be made in accordance with the immediately preceding clause (2)
above.
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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 Trust in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty 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.
(b) Notwithstanding anything to the contrary
contained in this Agreement, the parties hereto acknowledge and agree that, as
provided in Section 5.1 of Article V of the Declaration of Trust, as amended and
restated, this Agreement is executed by the Trustees and/or officers of the
Trust, not individually but as such Trustees and/or officers of the Trust, and
the obligations hereunder are not binding upon any of the Trustees or
Shareholders individually but bind only the estate of the Trust.
12. Duration and Termination. This Agreement shall become
effective as of the date hereof and, unless sooner terminated with respect to
the Trust 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 Trust 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 Trust's Board of Trustees or the vote of a majority of the
outstanding voting securities of the Trust at the time outstanding and entitled
to vote, and (b) by the vote of a majority of the Trustees 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 Trust 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 Trust shall be directed or approved by the vote of a majority
of the Trustees of the Trust in office at the time or by the vote of the holders
of a majority of the voting securities of the Trust at the time outstanding and
entitled to vote, or by the Advisor on 60 days' written notice (which notice may
be waived by the Trust). 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.
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14. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
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.
16. Use of the name BlackRock. The Advisor has consented to
the use by the Trust of the name or identifying word "BlackRock" in the name of
the Trust. Such consent is conditioned upon the employment of the Advisor as the
investment advisor to the Trust. 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 Trust to cease
using "BlackRock" in the name of the Trust if the Trust ceases to employ, for
any reason, the Advisor, any successor thereto or any affiliate thereof as
investment advisor of the Trust.
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 CALIFORNIA MUNICIPAL
INCOME TRUST II
By:/s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Secretary
BLACKROCK ADVISORS, INC.
By:/s/ Xxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
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