SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT
dated September 29, 2006, between BlackRock Advisors, LLC (the "Advisor"), a
Delaware limited liability company, and BlackRock Financial Management, Inc.
(the "Sub-Advisor"), a Delaware corporation.
WHEREAS,
the Advisor has agreed to furnish investment advisory services to the BlackRock
Capital and Income Strategies Fund, Inc., a Maryland corporation (the "Fund"), a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act");
WHEREAS,
the Advisor wishes to retain the Sub-Advisor to provide it with certain
sub-advisory services as described below in connection with Advisor's advisory
activities on behalf of the Fund;
WHEREAS,
the advisory agreement between the Advisor and the Fund, dated October 2, 2006
(such agreement or the most recent successor agreement between such parties
relating to advisory services to the Fund is referred to herein as the "Advisory
Agreement") contemplates that the Advisor may sub-contract investment advisory
services with respect to the Fund to a sub-advisor pursuant to a sub-advisory
agreement agreeable to the Fund and approved in accordance with the provisions
of the 1940 Act; and
WHEREAS,
this Agreement has been approved in accordance with the provisions of the 1940
Act, and the Sub-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. Appointment. The
Advisor hereby appoints the Sub-Advisor to act as sub-advisor with respect to
the Fund and the Sub-Advisor accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Services of the
Sub-Advisor. Subject to the succeeding provisions of this
section, the oversight and supervision of the Advisor and the direction and
control of the Fund's Board of Directors, the Sub-Advisor will perform certain
of the day-to-day operations of the Fund, which may include one or more of the
following services, at the request of the Advisor: (a) acting as investment
advisor for and managing the investment and reinvestment of those assets of the
Fund as the Advisor may from time to time request and in connection therewith
have complete discretion in purchasing and selling such 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;
(b) arranging, subject to the provisions of paragraph 3 hereof, for the purchase
and sale of securities and other assets of the Fund; (c) providing investment
research and credit analysis concerning the Fund's investments, (d) assist the
Advisor in determining what portion of the Fund's assets will be invested in
cash, cash equivalents and money market instruments, (e) placing orders for all
purchases and sales of such investments made for the Fund,
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and
(f) maintaining the books and records as are required to support Fund investment
operations. At the request of the Advisor, the Sub-Advisor will also, subject to
the oversight and supervision of the Advisor and the direction and control of
the Fund's Board of Directors, provide to the Advisor or the Fund any of the
facilities and equipment and perform any of the services described in Section 3
of the Advisory Agreement. In addition, the Sub-Advisor will keep the
Fund and the Advisor informed of developments materially affecting the Fund and
shall, on its own initiative, furnish to the Fund from time to time whatever
information the Sub-Advisor believes appropriate for this
purpose. The Sub-Advisor will periodically communicate to the
Advisor, at such times as the Advisor may direct, information concerning the
purchase and sale of securities for the Fund, including: (a) the name of the
issuer, (b) the amount of the purchase or sale, (c) the name of the broker or
dealer, if any, through which the purchase or sale is effected, (d) the CUSIP
number of the instrument, if any, and (e) such other information as the Advisor
may reasonably require for purposes of fulfilling its obligations to the Fund
under the Advisory Agreement. The Sub-Advisor will provide the
services rendered by it under this Agreement in accordance with the Fund's
investment objectives, policies and restrictions (as currently in effect and as
they may be amended or supplemented from time to time) as stated in the Fund's
Prospectus and Statement of Additional Information and the resolutions of the
Fund's Board of Directors.
3. Covenants. 1) In
the performance of its duties under this Agreement, the Sub-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 (the "Advisers Act") 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 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 the Directors of the Fund and
(b) In addition, the Sub-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 Sub-Advisor will
attempt to obtain the best price and the most favorable execution of its
orders. In placing orders, the Sub-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
Sub-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 or the
Sub-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
Sub-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 Sub-Advisor determines in good faith
that such commission is reasonable in terms either of the
transaction or the overall responsibility of the Advisor and the Sub-Advisor to
the Fund's and their 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
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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 books and records with respect
to the Fund's securities transactions and will render to the Advisor and the
Fund's Board of Directors such periodic and special reports as they may
request;
(iii) maintain a policy and practice of
conducting its investment
advisory services hereunder independently of the commercial banking operations
of its affiliates. When the Sub-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
(iv) 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 Sub-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.
4. Services Not
Exclusive. Nothing in this Agreement shall prevent the
Sub-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
Sub-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
Sub-Advisor will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations under this Agreement.
5. Books and
Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-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 the Fund's
request. The Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31 a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act (to the extent such books and
records are not maintained by the Advisor).
6. Expenses. During
the term of this Agreement, the Sub-Advisor will bear all costs and expenses of
its employees and any overhead incurred by the Sub-Advisor in connection with
its duties hereunder; provided that the Board of Directors of the Fund may
approve reimbursement to the Sub-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
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personnel
employed by the Sub-Advisor who devote substantial time to the Fund operations
or the operations of other investment companies advised or sub-advised by the
Sub-Advisor.
7. Compensation.
(a) The Advisor agrees to pay to the
Sub-Advisor and the Sub-Advisor agrees to accept as full compensation for all
services rendered by the Sub-Advisor as such, a monthly fee in arrears at an
annual rate equal to the
amount set forth in Schedule A hereto. 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 Fund 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.
8. Indemnity.
(a) The Fund may, in the discretion of the
Board of Directors of the Fund, indemnify the Sub-Advisor, and each of the
Sub-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 Sub-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 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
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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 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 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 a 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 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
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.
9. Limitation on
Liability.
(a) The Sub-Advisor will not be Liable for any error of judgment or mistake of
law or for any loss suffered by the Advisor or by the Fund 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. As used in this Section 9(a), the
term. "Sub-Advisor" shall include any affiliates of the
Sub-Advisor performing services for the Fund contemplated hereby and partners,
directors, officers and employees of the Sub-Advisor and such
affiliates.
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10. 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 a 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 (as such term is defined in the 0000
Xxx) of any such party, 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 or the Advisor at any time, without the payment of any
penalty, upon giving the Sub-Advisor 60 days' notice (which notice may be waived
by the Sub-Advisor), provided that such termination by the Fund or the Advisor
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 Sub-Advisor on 60 days' written notice (which notice may be waived by the
Fund and the Advisor), and will terminate automatically upon any termination of
the Advisory Agreement between the Fund and the Advisor. 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.)
11. 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.
12. 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.
13. 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.
14. 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.
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15. 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 this instrument to be executed
by their duly authorized officers designated below as of the day and year first
above written.
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BLACKROCK
ADVISORS, LLC
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By:
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/s/
Xxxxxx X. Xxxxx
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Name:
Xxxxxx X. Xxxxx
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Title:
Managing Director
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BLACKROCK
FINANCIAL MANAGEMENT, LLC
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By:
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/s/
Xxxxx X. Xxxxxxx
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Name:
Xxxxx X. Xxxxxxx
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Title:
Managing Director
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AGREED
AND ACCEPTED
as
of the date first set forth above
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BLACKROCK
CAPITAL AND INCOME STRATEGIES FUND, INC.
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By:
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/s/
Xxxxxx X. Xxxxx
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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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Schedule
A
Sub-Investment Advisory
Fee
37%
of the monthly advisory fee received by the Advisor from the Fund
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