Exhibit 4(cc)
CO-INVESTMENT ADVISORY AGREEMENT
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AGREEMENT made as of ________, 2001 among BlackRock Funds(SM), a
Massachusetts business trust (the "Fund"), BlackRock Advisors, Inc., a Delaware
corporation, and BlackRock International, Ltd., a corporation registered in
Scotland ("BIL") (collectively, the "Advisers").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Advisers to furnish investment
advisory services to the Fund and each Adviser is willing to so furnish such
services;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
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a. The Fund hereby appoints the Advisers to act as investment
advisers to the Fund's Global Communications Portfolio (the "Portfolio") for the
period and on the terms set forth in this Agreement. Each Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
b. In the event that the Fund establishes one or more
portfolios other than the Portfolio named above with respect to which it desires
to retain the Advisers to act as investment advisers hereunder, the Fund shall
notify each Adviser in writing. If each Adviser is willing to render such
services under this Agreement, it shall notify the Fund in writing whereupon,
subject to such approval as may be required pursuant to Paragraph 10 hereof,
such portfolio shall become a "Portfolio" hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Portfolio named above in
subparagraph (a) except to the extent that said provisions (including those
relating to the compensation payable by the Fund to the Advisers) are modified
with respect to such portfolio in writing by the Fund and the Advisers at the
time.
c. BIL is a member of the Investment Management Regulatory
Organization Limited ("IMRO") and is regulated in its conduct of Investment
Business (as defined in IMRO's rules) by IMRO. Based on information provided to
the Fund by BIL, the Fund will be categorized as a Non-Private Customer (as
defined in IMRO's rules) of BIL.
2. Sub-Contractors. It is understood that the Advisers may from
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time to time employ or associate with such person or persons as each Adviser may
believe to be particularly fitted to assist it in the performance of this
Agreement; provided, however, that the compensation
of such person or persons shall be paid by such Adviser and that Adviser shall
be as fully responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions. Such person or persons
shall be employed pursuant to sub-advisory agreements agreeable to the Fund and
approved in accordance with the provisions of the 1940 Act.
3. Delivery of Documents. The Fund has furnished each Adviser with
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copies, properly certified or authenticated, of each of the following:
a. Resolutions of the Fund's Board of Trustees authorizing the
appointment of each Adviser as the Portfolio's adviser and approving this
Agreement;
b. The Fund's Declaration of Trust as filed with the State
Secretary of the Commonwealth of Massachusetts and the Boston City Clerk on
December 22, 1988;
c. The Fund's Amended and Restated Code of Regulations;
d. The Fund's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission ("SEC") on
December 23, 1988;
e. The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933 and the 1940 Act, as filed with the SEC on December 23,
1988, and all amendments thereto (the "Registration Statement"); and
f. The Fund's most recent prospectuses for the Portfolio (such
prospectuses together with the related statements of additional information, as
currently in effect and all amendments and supplements thereto, are herein
called "Prospectuses").
The Fund will furnish each Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
4. Services. Subject to the supervision of the Fund's Board of
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Trustees, each Adviser will (either directly or through the sub-advisers and
other sub-contractors employed by it in accordance with Section 2 hereof)
provide a continuous investment program for the Portfolio, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Portfolio. Each Adviser will (either directly or through
the sub-advisers and other sub-contractors employed by it in accordance with
Paragraph 2 hereof) determine from time to time what securities and other
investments will be purchased, retained or sold by the Portfolio and will place
the daily orders for the purchase or sale of securities. Each Adviser will
provide the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in such
Portfolio's Prospectus (as currently in effect and as it may be amended or
supplemented from time to time) and the resolutions of the Fund's Board of
Trustees. Each Adviser further agrees that it:
a. will comply with all applicable rules and regulations of the
SEC and will in addition conduct its activities under this Agreement in
accordance with other applicable law;
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 Adviser will attempt to obtain the
best price and the most favorable execution of its orders. In placing orders,
the Adviser 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 Adviser may, subject to the
approval of the Fund's Board of Trustees, select brokers on the basis of the
research, statistical and pricing services they provide to the Portfolio and
other clients of the Adviser or a sub-adviser. 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 Adviser 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 Adviser determines
in good faith that such commission is reasonable in terms of either the
transaction or the overall responsibility of the Adviser and sub-advisers to the
Portfolio and their other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long-term. In addition, the Adviser is authorized to take into account the
sale of shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, the sub-advisers or the Fund's distributor) in
compliance with applicable law. In no instance, however, will the Portfolio's
securities be purchased from or sold to the Adviser, the sub-advisers, the
Fund's distributor or any affiliated person thereof, except to the extent
permitted by the SEC or by applicable law;
c. will maintain books and records with respect to the
Portfolio's securities transactions and will furnish the Fund's Board of
Trustees such periodic and special reports as the Board may request;
d. will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Adviser makes investment recommendations
for the Portfolio, its investment advisory personnel will not inquire or take
into consideration whether the issuer of securities proposed for purchase or
sale for the Portfolio's account are customers of the commercial departments of
its affiliates. In dealing with commercial customers of its affiliates, the
Adviser and the sub-advisers will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
e. will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund, any of the
Portfolio's 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 Adviser 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.
5. Services Not Exclusive. Each Adviser's services hereunder are
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not deemed to be exclusive, and each Adviser shall be free to render similar
services to others so long as its services under this Agreement are not impaired
thereby.
Neither Adviser has the right, without prior notice to the Fund's
Board of Trustees as may be required by applicable law, to effect transactions
with or for the Portfolio in respect of which the Adviser has directly or
indirectly a material interest (except for an interest arising solely from the
mere participation of the Adviser as agent for the Portfolio) or a relationship
of any description with another party which may involve a conflict with the
Adviser's duty to the Fund.
6. Books and Records. In compliance with the requirements of Rule
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31a-3 under the 1940 Act, each Adviser hereby agrees that all records which it
maintains for the Portfolio are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. Each
Adviser 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. Expenses. During the term of this Agreement, each Adviser will
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pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Portfolio.
8. Compensation.
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a. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay the Advisers and the Advisers will accept
as full compensation therefor a fee, computed daily and payable monthly, at the
following annual rates: .80% of the first $1 billion of the Portfolio's average
daily net assets, .75% of the next $1 billion of the Portfolio's average daily
net assets, .725% of the next $1 billion of the Portfolio's average daily net
assets and .70% of the average daily net assets of the Portfolio in excess of $3
billion, to be divided between the Advisers as they shall agree. Such fee as is
attributable to the Portfolio shall be a separate charge to the Portfolio and
shall be the several (and neither joint nor joint and several) obligation of the
Portfolio.
b. If in any fiscal year the aggregate expenses of the
Portfolio (as defined under the securities regulations of any state having
jurisdiction over the Fund) exceed the expense limitations of any such state,
the Advisers will bear their share of the amount of such excess in proportion to
the aggregate fees otherwise payable to them hereunder and to the Fund's co-
administrators under their administration agreements with the Fund. The
obligation of the Advisers to reimburse the Fund under this Paragraph 8(b) is
limited in any fiscal year to the amount of its fees otherwise payable hereunder
attributable to the Portfolio for such fiscal year, provided, however, that
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notwithstanding the foregoing, the Advisers shall reimburse the Fund for the
full amount of their share of any such excess expenses regardless of the amount
of fees otherwise payable to them during such fiscal year to the extent that the
securities regulations of any state having jurisdiction over the Fund so
require. Such expense reimbursement, if any, will be estimated, reconciled and
paid on a monthly basis.
9. Limitation of Liability. Neither Adviser shall be liable for
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any error of judgment or mistake of law or for any loss suffered 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 obligations or duties under this Agreement.
10. Duration and Termination. This Agreement will become effective
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as of the date hereof with respect to the Portfolio and, with respect to any
additional Portfolio, on the date of receipt by the Fund of notice from each
Adviser in accordance with Section 1(b) hereof that the Adviser is willing to
serve as investment adviser with respect to such Portfolio, provided that this
Agreement (as supplemented by the terms specified in any notice and agreement
pursuant to Section 1(b) hereof) shall have been approved in accordance with the
requirements of the 1940 Act, and, unless sooner terminated as provided herein,
shall continue in effect with respect to each such Portfolio until March 31,
2002. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the particular Portfolio for successive annual periods ending on
March 31, provided such continuance is specifically approved at least annually
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(a) by vote of a majority of those members of the Fund's Board of Trustees who
are not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the Fund's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Portfolio. Notwithstanding the foregoing, this Agreement may be
terminated with respect to any Portfolio at any time, without the payment of any
penalty, by the Fund (by vote of the Fund's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio), or by the
Advisers on sixty days' written notice. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meanings as such terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may
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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.
12. Release. "BlackRock Funds" and "Trustees of BlackRock Funds"
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refer respectively to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated December 22, 1988, which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Fund. The obligations of
"BlackRock Funds" entered into in the name or on behalf thereof by any of the
Trustees, officers, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders,
officers, representatives or agents of the Fund personally, but bind only the
Trust Property (as defined in the Declaration of Trust), and all persons dealing
with any class of shares of the Fund must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Fund.
13. Complaints. All complaints regarding BIL's performance of its
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duties under this Agreement should in the first instance be made in writing to
Adviser's Compliance Officer at: 0 Xxxxxx Xxxxxx, Xxxxxxxxx XX0 0XX Xxxxxxxx,
Fax No. 000-00-000-000-0000. In addition, the Fund has a right to complain
directly to the IMRO appointed Investment Ombudsman.
14. Miscellaneous. The captions in this Agreement are included for
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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 and shall be
governed by Delaware law.
15. Counterparts. This Agreement may be executed in counterparts by
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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 officers designated below as of the day and year first
above written.
BLACKROCK FUNDS
By: ________________________
Name:
Title:
BLACKROCK INTERNATIONAL, LTD.
By: ________________________
Name:
Title:
BLACKROCK ADVISORS, INC.
By: ________________________
Name:
Title:
