Exhibit (g)(1)
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INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated July 19, 2001, between BlackRock
California Municipal Income Trust (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 (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 invest ment 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 ex ercising 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 composi tion 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 cleri cal, bookkeeping and administrative
services (other than such services, if any, provided by the Trust's Custodian,
Transfer Agent and Dividend Disbursing Agent and other ser vice 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 re quired 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 xxxxx cial 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 share holders, and arrange for the printing
and dissemination of such reports and communica tions to shareholders;
(f) Prepare for review by an officer of the Trust
the Trust's peri odic 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 Trust ees 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 Trust ees concerning the performance and fees of the Trust's
Custodian and Transfer and Divi dend disbursing agent as the Board of Trustees
may reasonably request or deems appro priate;
(k) Oversee and review calculations of fees paid to
the Trust's service providers;
(l) Oversee the Trust's portfolio and perform
necessary calcula tions 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 autho rized 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 reinvest
ment 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 coun sel and auditors as generally may be required to properly
carry on the business and opera tions of the Trust;
(r) Assist in the preparation and filing of Forms
3, 4, and 5 pursu ant 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 infor mation 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, offi cers or employees of the Advisor or its affiliates as the
Advisor deems appropriate in order to fulfill its obligations hereunder.
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 ser vices 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 im posed 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 favor able 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 cli ents 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 port folio 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 in stance, 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 invest ment 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 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 unreason ably
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 advi sor for any other person, firm or corporation, or
from engaging in any other lawful activ ity, 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 per formance 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 advi sory 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 par ties 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
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 Advi sor; 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 bene fits
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 Advi sor 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 0.60 % of the average
weekly value of the Trust's Managed Assets. "Man aged 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 ac cording 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
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 misfea
sance, (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
settle ment 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 trust ees 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 Trust
ees") 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 rea son 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, inde pendent 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 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 result ing 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 exe cuted 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), pro vided
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 actu ally received or on the fourth day
after the postmark if such notice is mailed first class postage prepaid.
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 termi nation 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 en tirely 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 con venience 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.
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
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: President, Chief Executive Officer
and Chief Financial Officer
BLACKROCK ADVISORS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: President
BlackRock Advisors, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 19, 2001
BlackRock California Municipal Income Trust
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
We are writing to confirm our understanding that BlackRock
California Municipal Income Trust (the "Trust") has a nonexclusive, revocable
license to use the word "BlackRock" in its name and that if BlackRock
Advisors, Inc. (the "Advisor") ceases to be the investment advisor to the
Trust, the Trust will cease using such name as promptly as practicable, making
all reasonable efforts to remove "BlackRock" from its name including calling a
special meeting of stockholders.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the
Trust, has informed us that the provision described above is contained in the
Trust's investment management agreement, and that continued use of the name
"BlackRock" if the Advisor ceases to be the investment advisor would probably
violate those provisions of the 1940 Act, that require that the Trust's name
not be misleading.
Execution of this letter agreement on behalf of the Trust
will signify that the Trust understands that it has a nonexclusive, revocable
license to the use of the name "BlackRock."
BLACKROCK ADVISORS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: President
BLACKROCK CALIFORNIA MUNICIPAL
INCOME TRUST
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: President, Chief Executive Officer and
Chief Financial Officer
