ADMINISTRATION AGREEMENT

        AGREEMENT (this "Agreement") made as of August 4, 2005 by and between
BlackRock Kelso Capital Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), and BlackRock Financial Management, Inc., a
Delaware corporation (hereinafter referred to as the "Administrator").


                             W I T N E S S E T H:

        WHEREAS, the Corporation is a newly organized closed-end management
investment company that has elected to be treated as a business development
company under the Investment Company Act of 1940, as amended (hereinafter
referred to as the "Investment Company Act");

        WHEREAS, the Corporation desires to retain the Administrator to
provide administrative services to the Corporation in the manner and on the
terms hereinafter set forth; and

        WHEREAS, the Administrator is willing to provide administrative
services to the Corporation on the terms and conditions hereafter set forth.

        NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Corporation and the
Administrator hereby agree as follows:

     1. Duties of the Administrator.

         (a) Employment of Administrator. The Corporation hereby employs the
     Administrator to act as administrator of the Corporation, and to furnish,
     or arrange for others to furnish, the administrative services, personnel
     and facilities described below, subject to review by and the overall
     control of the Board of Directors of the Corporation, for the period and
     on the terms and conditions set forth in this Agreement. The
     Administrator hereby accepts such employment and agrees during such
     period to render, or arrange for the rendering of, such services and to
     assume the obligations herein set forth subject to the reimbursement of
     costs and expenses as provided for below. The Administrator and any such
     other persons providing services arranged for by the Administrator shall
     for all purposes herein be deemed to be independent contractors and
     shall, unless otherwise expressly provided or authorized herein, have no
     authority to act for or represent the Corporation in any way or otherwise
     be deemed agents of the Corporation.

         (b) Services. The Administrator shall perform (or oversee, or arrange
     for, the performance of) the administrative services necessary for the
     operation of the Corporation. Without limiting the generality of the
     foregoing, the Administrator shall provide the Corporation with office
     facilities, equipment, clerical, bookkeeping and record keeping services
     at such office facilities and such other services as the Administrator,
     subject to review by the Board of Directors of the Corporation, shall
     from time to time determine to be necessary or useful to perform its
     obligations under this Agreement. The Administrator shall also, on behalf
     of the Corporation, arrange for the services of, and oversee, custodians,
     depositories, transfer agents, dividend disbursing agents, other
     stockholder servicing agents, accountants, attorneys, underwriters,
     brokers and dealers, corporate fiduciaries, insurers, banks and such
     other persons in any such other capacity deemed to be necessary or
     desirable. The Administrator shall make reports to the Corporation's
     Board of Directors of its performance of obligations hereunder and
     furnish advice and recommendations with respect to such other aspects of
     the business and affairs of the Corporation as it shall determine to be
     desirable; provided that nothing herein shall be construed to require the
     Administrator to, and the Administrator shall not, provide any advice or
     recommendation relating to the securities and other assets that the
     Corporation should purchase, retain or sell or any other investment
     advisory services to the Corporation. The Administrator shall be
     responsible for the financial and other records that the Corporation is
     required to maintain and shall prepare all reports and other materials
     required to be filed with the Securities and Exchange Commission (the
     "SEC") or any other regulatory authority, including reports to
     stockholders. At the Corporation's request, the Administrator will
     provide on the Corporation's behalf significant managerial assistance to
     those portfolio companies to which the Corporation is required to provide
     such assistance. In addition, the Administrator will assist the
     Corporation in determining and publishing the Corporation's net asset
     value, overseeing the preparation and filing of the Corporation's tax
     returns, and the printing and dissemination of reports to stockholders of
     the Corporation, and generally overseeing the payment of the
     Corporation's expenses and the performance of administrative and
     professional services rendered to the Corporation by others.

     2. Records. The Administrator agrees to maintain and keep all books,
accounts and other records of the Corporation that relate to activities
performed by the Administrator hereunder and, if required by the Investment
Company Act, will maintain and keep such books, accounts and records in
accordance with that act. In compliance with the requirements of Rule 31a-3
under the Investment Company Act, the Administrator agrees that all records
that it maintains for the Corporation shall at all times remain the property
of the Corporation, shall be readily accessible during normal business hours,
and shall be promptly surrendered upon the termination of this Agreement or
otherwise on written request. The Administrator further agrees that all
records which it maintains for the Corporation pursuant to Rule 31a-1 under
the Investment Company Act will be preserved for the periods prescribed by
Rule 31a-2 under the Investment Company Act unless any such records are
earlier surrendered as provided above. Records shall be surrendered in usable
machine-readable form. The Administrator shall have the right to retain copies
of such records subject to observance of its confidentiality obligations under
this Agreement.

     3. Confidentiality. The parties hereto agree that each shall treat
confidentially all information provided by each party to the other regarding
its business and operations. All confidential information provided by a party
hereto, including nonpublic personal information pursuant to Regulation S-P of
the SEC, shall be used by any other party hereto solely for the purpose of
rendering services pursuant to this Agreement and, except as may be required
in carrying out this Agreement, shall not be disclosed to any third party,
without the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided or
thereafter becomes publicly available other than through a breach of this
Agreement, or that is required to be disclosed by any regulatory authority,
any authority or legal counsel of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation.

     4. Compensation; Allocation of Costs and Expenses.

         (a) In full consideration of the provision of the services of the
     Administrator, the Corporation shall reimburse the Administrator for the
     costs and expenses incurred by the Administrator in performing its
     obligations and providing personnel and facilities hereunder.

         (b) The Corporation will bear all costs and expenses that are
     incurred in its operation and transactions and not specifically assumed
     by the Corporation's investment adviser (the "Adviser"), pursuant to that
     certain Investment Management Agreement, dated as of July 25, 2005 by and
     between the Corporation and the Adviser. Costs and expenses to be borne
     by the Corporation include, but are not limited to, those relating to:
     organization and offering; calculating the Corporation's net asset value
     (including the cost and expenses of any independent valuation firm);
     expenses incurred by the Adviser payable to third parties, including
     agents, consultants or other advisors, in monitoring financial and legal
     affairs for the Corporation and in monitoring the Corporation's
     investments and performing due diligence on its prospective portfolio
     companies; interest payable on debt, if any, incurred to finance the
     Corporation's investments; offerings of the Corporation's common stock
     and other securities; investment advisory and management fees;
     administration fees, if any, payable under this Agreement; fees payable
     to third parties, including agents, consultants or other advisors,
     relating to, or associated with, evaluating and making investments;
     transfer agent and custodial fees; federal and state registration fees;
     all costs of registration and listing the Corporation's shares on any
     securities exchange; federal, state and local taxes; independent
     directors' fees and expenses; costs of preparing and filing reports or
     other documents required by the SEC; costs of any reports, proxy
     statements or other notices to stockholders, including printing costs;
     the Corporation's allocable portion of the fidelity bond, directors and
     officers/errors and omissions liability insurance, and any other
     insurance premiums; direct costs and expenses of administration,
     including printing, mailing, long distance telephone, copying,
     secretarial and other staff, independent auditors and outside legal
     costs; and all other expenses incurred by the Corporation or the
     Administrator in connection with administering the Corporation's
     business, including payments under this Agreement based upon the
     Corporation's allocable portion of the Administrator's overhead in
     performing its obligations under this Agreement, including rent and the
     allocable portion of the cost of the Corporation's officers and their
     respective staffs.

     5. Limitation of Liability of the Administrator; Indemnification. The
Administrator, its affiliates and their respective officers, managers,
partners, agents, employees, controlling persons, members, and any other
person or entity affiliated with any of them (collectively, the "Indemnified
Parties"), shall not be liable to the Corporation for any action taken or
omitted to be taken by the Administrator in connection with the performance of
any of its duties or obligations under this Agreement or otherwise as
administrator for the Corporation, and the Corporation shall indemnify, defend
and protect the Administrator (and its officers, managers, partners, agents,
employees, controlling persons, members, and any other person or entity
affiliated with the Administrator, including without limitation the
Indemnified Parties (each of whom shall be deemed a third party beneficiary
hereof) and hold them harmless from and against all damages, liabilities,
costs and expenses (including reasonable attorneys' fees and amounts
reasonably paid in settlement) incurred by the Indemnified Parties in or by
reason of any pending, threatened or completed action, suit, investigation or
other proceeding (including an action or suit by or in the right of the
Corporation or its security holders) arising out of or otherwise based upon
the performance of any of the Administrator's duties or obligations under this
Agreement or otherwise as administrator for the Corporation. Notwithstanding
the preceding sentence of this Paragraph 5 to the contrary, nothing contained
herein shall protect or be deemed to protect the Indemnified Parties against
or entitle or be deemed to entitle the Indemnified Parties to indemnification
in respect of, any liability to the Corporation or its security holders to
which the Indemnified Parties would otherwise be subject by reason of criminal
conduct, willful misfeasance, bad faith or negligence in the performance of
the Administrator's duties or by reason of the reckless disregard of the
Administrator's duties and obligations under this Agreement (to the extent
applicable, as the same shall be determined in accordance with the Investment
Company Act and any interpretations or guidance by the SEC or its staff
thereunder).

     6. Activities of the Administrator. The services of the Administrator to
the Corporation are not to be deemed to be exclusive, and the Administrator
and each other person providing services as arranged by the Administrator is
free to render services to others. It is understood that directors, officers,
employees and stockholders of the Corporation are or may become interested in
the Administrator and its affiliates, as directors, officers, members,
managers, employees, partners, stockholders or otherwise, and that the
Administrator and directors, officers, members, managers, employees, partners
and stockholders of the Administrator and its affiliates are or may become
similarly interested in the Corporation as stockholders or otherwise.

     7. Duration and Termination of this Agreement.

         (a) This Agreement shall become effective as of the date hereof, and
     shall remain in force with respect to the Corporation for two years
     thereafter, and thereafter continue from year to year, but only so long
     as such continuance is specifically approved at least annually by (i) the
     Board of Directors of the Corporation and (ii) a majority of those
     members of the Corporation's Board of Directors who are not parties to
     this Agreement or "interested persons" (as defined in the Investment
     Company Act) of any such party.

         (b) This Agreement may be terminated at any time, without the payment
     of any penalty, by vote of the Corporation's Board of Directors, or by
     the Administrator, upon 60 days' written notice to the other party. This
     Agreement may not be assigned by a party without the consent of the other
     party.

     8. Amendments of this Agreement. This Agreement may not be amended or
modified except by an instrument in writing signed by all parties hereto.

     9. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither party may assign, delegate or otherwise transfer this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party. No assignment by either party permitted
hereunder shall relieve the applicable party of its obligations under this
Agreement. Any assignment by either party in accordance with the terms of this
Agreement shall be pursuant to a written assignment agreement in which the
assignee expressly assumes the assigning party's rights and obligations
hereunder.

     10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, including without
limitation Sections 5-1401 and 5-1402 of the New York General Obligations Law
and New York Civil Practice Laws and Rules 327(b), and the applicable
provisions of the Investment Company Act, if any. To the extent that the
applicable laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, if any,
the latter shall control. The parties unconditionally and irrevocably consent
to the exclusive jurisdiction of the courts located in the State of New York
and waive any objection with respect thereto, for the purpose of any action,
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

     11. No Waiver. The failure of either party to enforce at any time for any
period the provisions of or any rights deriving from this Agreement shall not
be construed to be a waiver of such provisions or rights or the right of such
party thereafter to enforce such provisions, and no waiver shall be binding
unless executed in writing by all parties hereto.

     12. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.

     13. Headings. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.

     14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original
instrument and all of which taken together shall constitute one and the same
agreement.

     15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service (with signature required), by facsimile,
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at their respective principal executive office
addresses.

     16. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, between the parties with
respect to such subject matter.


                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.


                                            BLACKROCK KELSO CAPITAL CORPORATION


                                            -------------------------
                                            By:
                                            Title:



                                            BLACKROCK FINANCIAL MANAGEMENT, INC.


                                            -------------------------
                                            By:
                                            Title: