INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated August __, 1997, between BLK
Subsidiary Inc. (the "Fund"), a Maryland corporation, and
BlackRock Financial Management, Inc. (the "Adviser"), a
Delaware corporation.
In consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties
hereto as follows:
1. In General
The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Fund with
respect to the investment of the Fund's assets and to
supervise and arrange the purchase of securities for and
the sale of securities held in the investment portfolio
of the Fund.
2. Duties and obligations of the Adviser with
respect to investments of assets of the Fund
(a) Subject to the succeeding provisions
of this section and subject to the direction and control
of the Fund's Board of Directors, the Adviser shall (i)
act as investment adviser for and supervise and manage
the investment and reinvestment of the Fund's assets and
in connection therewith have complete discretion in
purchasing and selling securities and other assets for
the Fund and in voting, exercising consents and
exercising all other rights appertaining to such
securities and other assets on behalf of the Fund; (ii)
supervise continuously the investment program of the Fund
and the composition of its investment portfolio; and
(iii) arrange, subject to the provisions of paragraph 3
hereof, for the purchase and sale of securities and other
assets held in the investment portfolio of the Fund.
(b) In the performance of its duties
under this Agreement, the Adviser shall at all times
conform to, and act in accordance with, any requirements
imposed by (i) the provisions of the Investment Company
Act of 1940 (the "Act"), and of any rules or regulations
in force thereunder; (ii) any other applicable provision
of law; (iii) the provisions of the Articles of
Incorporation and By-Laws of the Fund, as such documents
are amended from time to time; (iv) the investment
objective and policies of the Fund as set forth in its
Registration Statement on Form N-2; and (v) any policies
and determinations of the Board of Directors of the Fund.
(c) The Adviser will bear all costs and
expenses of its partners and employees and any overhead
incurred in connection with its duties hereunder and
shall bear the costs of any salaries or directors fees of
any officers or directors of the Fund who are affiliated
persons (as defined in the Act) of the Adviser except
that the Board of Directors of the Fund may approve
reimbursement to the Adviser of the pro rata portion of
the salaries, bonuses, health insurance, retirement
benefits and all similar employment costs for the time
spent on Fund operations (other than the provision of
investment advice) of all personnel employed by the
Adviser who devote substantial time to Fund operations or
the operations of other investment companies advised by
the Adviser.
(d) The Adviser shall give the Fund the
benefit of its best judgment and effort in rendering
services hereunder, but the Adviser shall not be liable
for any act or omission or for any loss sustained by the
Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this
Agreement.
(e) Nothing in this Agreement shall
prevent the Adviser or any partner, officer, employee or
other affiliate thereof from acting as investment adviser
for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in
any way limit or restrict the Adviser or any of its
partners, officers, employees or agents from buying,
selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or
they may be acting, provided, however that the Adviser
will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations under
this Agreement.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase and
sale of the Fund's portfolio securities, to employ such
securities dealers as may, in the judgment of the
Adviser, implement the policy of the Fund to obtain the
best net results taking into account such factors as
price, including dealer spread, the size, type and
difficulty of the transaction involved, the firm's
general execution and operational facilities and the
firm's risk in positioning the securities involved.
Consistent with this policy, the Adviser is authorized to
direct the execution of the Fund's portfolio transactions
to dealers and brokers furnishing statistical information
or research deemed by the Adviser to be useful or
valuable to the performance of its investment advisory
functions for the Fund.
4. Compensation of The Adviser
The Parties to this Agreement agree that the
Adviser will receive compensation for the services it
renders under this Agreement from The BlackRock 2001 Term
Trust Inc.
5. Indemnity
(a) The Fund hereby agrees to indemnify
the Adviser and each of the Adviser's partners, officers,
employees, agents, associates and controlling persons and
the partners, officers, employees and agents thereof
(including any individual who serves at the Adviser's
request as director, officer, partner, trustee or the
like of another corporation) (each such person being an
"indemnitee") against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
(all as provided in accordance with applicable corporate
law) reasonably incurred by such indemnitee in connection
with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any
court or administrative or investigative body in which he
may be or may have been involved as a party or otherwise
or with which he may be or may have been threatened,
while acting in any capacity set forth above in this
Section 5 or thereafter by reason of his having acted in
any such capacity, except with respect to any matter as
to which he shall have been adjudicated not to have acted
in good faith in the reasonable belief that his action
was in the best interest of the Fund and furthermore, in
the case of any criminal proceeding, so long as he had no
reasonable cause to believe that the conduct was
unlawful, provided, however, that (1) no indemnitee shall
be indemnified hereunder against any liability to the
Fund or its shareholders or any expense of such
indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless
disregard of the duties involved in the conduct of his
position (the conduct referred to in such clauses (i)
through (iv) being sometimes referred to herein as
"disabling conduct"), (2) as to any matter disposed of by
settlement or a compromise payment by such indemnitee,
pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other
expenses shall be provided unless there has been a
determination that such settlement or compromise is in
the best interests of the Fund and that such indemnitee
appears to have acted in good faith in the reasonable
belief that his action as in the best interest of the
Fund and did not involve disabling conduct by such
indemnitee and (3) with respect to any action, suit or
other proceeding voluntarily prosecuted by any indemnitee
as plaintiff, indemnification shall be mandatory only if
the prosecution of such action, suit or other proceeding
by such indemnitee was authorized by a majority of the
full Board of the Fund.
(b) The Fund shall make advance payments
in connection with the expenses of defending any action
with respect to which indemnification might be sought
hereunder if the Fund receives a written affirmation of
the indemnitee's good faith belief that the standard of
conduct necessary for indemnification has been met and a
written undertaking to reimburse the Fund unless it is
subsequently determined that he is entitled to such
indemnification and if the directors of the Fund
determine that the facts then known to them would not
preclude indemnification. In addition, at least one of
the following conditions must be met: (A) the indemnitee
shall provide a security for his undertaking, (B) the
Fund shall be insured against losses arising by reason of
any lawful advances, or (C) a majority of a quorum
consisting of directors of the Fund who are neither
"interested persons" of the Fund (as defined in Section
2(a)(19) of the Act) nor parties to the proceeding
("Disinterested Non-Party Directors") or an independent
legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to
indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before
whom the proceeding was brought that such indemnitee is
not liable by reason of disabling conduct or, (2) in the
absence of such a decision, by (i) a majority vote of a
quorum of the Disinterested Non-Party Directors of the
Fund, or (ii) if such a quorum is not obtainable or
event, if obtainable, if a majority vote of such quorum
so directs, independent legal counsel in a written
opinion. All determinations that advance payments in
connection with the expense of defending any proceeding
shall be authorized shall be made in accordance with the
immediately preceding clause (2) above.
The rights accruing to any indemnitee under
these provisions shall not exclude any other right to
which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective on the
date it is approved by the stockholder of the Fund and
shall continue in effect for a period of two years and
thereafter from year to year, but only so long as such
continuation is specifically approved at least annually
in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser
at any time without penalty upon giving the Fund sixty
days written notice (which notice may be waived by the
Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty days notice
(which notice may be waived by the Adviser), provided
that such termination by the Fund shall be directed or
approved by the vote of a majority of the Directors of
the Fund in office at the time or by the vote of the
holders of a "majority" (as defined in the Act) of the
voting securities of the Fund at the time outstanding and
entitled to vote. This Agreement shall terminate
automatically in the event of its assignment (as
"assignment" is defined in the Act).
7. Notices
Any notice under this Agreement shall be in
writing to the other party at such address as the other
party may designate from time to time for the receipt of
such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth
day after the postmark if such notice is mailed first
class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance
with the laws of the State of New York for contracts to
be performed entirely therein without reference to choice
of law principles thereof and in accordance with the
applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have
caused the foregoing instrument to be executed by their
duly authorized officers, all as of the day and the year
first above written.
BLK SUBSIDIARY INC.
[SEAL] By: _________________________________
Name:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: _________________________________
Name:
Title: