SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 28th day of February, 1995 by and between Xxxx
Xxxxxx InterCapital Inc., a Delaware corporation (herein referred to as the
"Investment Manager"), and BlackRock Financial Management, Inc., a Delaware
corporation (herein referred to as the "Sub-Advisor").
WHEREAS, Xxxx Xxxxxx Premier Income Trust (herein referred to as the "Fund")
is engaged in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Investment Manager has entered into an Investment
Management Agreement with the Fund (the "Investment Management
Agreement") wherein the Investment Manager has agreed to provide investment
management services to the Fund; and
WHEREAS, the Sub-Advisor is registered as an investment adviser as under the
Investment Advisers Act of 1940 and engages in the business of acting as an
investment advisor; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Advisor to render investment advisory services for the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Advisor desires to be retained by the Investment Manager to
perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and
Trustees, and the Investment Manager, and in accordance with the investment
objective, policies and restrictions set forth in the then-current
Registration Statement relating to the Fund, and such investment
objective, policies and restrictions from time to time prescribed by the
Trustees of the Fund and communicated by the Investment Manager to the
Sub-Advisor, the Sub-Advisor agrees to provide the Fund with investment
advisory services with respect to investments in the Fund's portfolio
securities, as follows: to obtain and evaluate such information and advice
relating to the economy, securities markets and securities as it deems
necessary or useful to discharge its duties hereunder; to continuously
manage the assets of the Fund in a manner consistent with the investment
objective and policies of the Fund; to determine the securities to be
purchased, sold or otherwise disposed of by the Fund and the timing of
such purchases, sales and dispositions; to take such further action,
including the placing of purchase and sale orders on behalf of the Fund, as
it shall deem necessary or appropriate; and to furnish to or place at the
disposal of the Fund and the Investment Manager such of the information,
evaluations, analyses and opinions formulated or obtained by it in the
discharge of its duties as the Fund and the Investment Manager may, from
time to time, reasonably request. The Investment Manager and the Sub-Advisor
shall each make its officers and employees available to the other from
time to time at reasonable times to review investment policies of the Fund
and to consult with each other.
2. The Sub-Advisor shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting
the generality of the foregoing, the staff and personnel of the Sub-Advisor
shall be deemed to include persons employed or otherwise retained by the
Sub-Advisor to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice
and assistance as the Investment Manager may reasonably request,
PROVIDED, that nothing contained herein shall require the Sub-Advisor to
transfer proprietary technology to the Investment Manager. The Sub-Advisor
shall maintain whatever records as may be required to be maintained by it
under the Act. All such records so maintained shall be retained for the
period of time required under the Act and shall remain the property of the
Fund and be made available to the Fund, upon the request of the Investment
Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available to
the Sub-Advisor such financial reports, proxy statements and other information
relating to the business and affairs of the Fund as
the Sub-Advisor may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and regulations and
the investment objectives, policies and restrictions from time to time
prescribed by the Trustees of the Fund.
4. The Sub-Advisor shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and shall,
at its own expense, pay the compensation of the officers and employees, if
any, of the Fund, employed by the Sub-Advisor, and such clerical help
and bookkeeping services as the Sub-Advisor shall reasonably require in
performing its duties hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: any fees paid to the
Investment Manager; fees pursuant to any plan of distribution that the Fund
may adopt; the charges and expenses of any registrar, any custodian,
sub-custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to federal, state
or other governmental agencies or pursuant to any foreign laws; the cost
and expense of engraving or printing certificates representing shares
of the Fund; all costs and expenses in connection with the registration and
maintenance of registration of the Fund and its shares with the Securities
and Exchange Commission and various states and other jurisdictions or
pursuant to any foreign laws (including filing fees and legal fees
and disbursements of counsel); the cost and expense of printing
(including typesetting) and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and
mailing proxy statements and reports to shareholders; fees and travel
expenses of Trustees or members of any advisory board or committee who
are not employees of the Investment Manager or Sub-Advisor; all expenses
incident to the payment of any dividend, distribution, withdrawal or
redemption whether in shares or in cash; charges and expenses of any outside
service used for pricing of the Fund's shares; charges and expenses of
legal counsel, including counsel to the Trustees of the Fund who are not
"interested persons" (as defined in the Act) of the Fund, the Investment
Manager or the Sub-Advisor, and of independent accountants, in connection
with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the
Fund which inure to its benefit; extraordinary expenses (including
but not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs
of the Fund's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and
the expenses assumed by the Sub-Advisor, the Investment Manager shall
pay to the Sub-Advisor monthly compensation equal to 40% of its monthly
compensation receivable pursuant to the Investment Management Agreement.
Any subsequent change in the Investment Management Agreement which has the
effect of raising or lowering the compensation of the Investment Manager
will have the concomitant effect of raising or lowering the fee payable
to the Sub-Advisor under this Agreement. In addition, if the Investment
Manager has undertaken in the Fund's Registration Statement as filed under
the Act or elsewhere to waive all or part of its fee under the Investment
Management Agreement, the Sub-Advisor's fee payable under this Agreement
will be proportionately waived in whole or in part. The calculation of the
fee payable to the Sub-Advisor pursuant to this Agreement will be made, each
month, at the time designated for the monthly calculation of the fee payable
to the Investment Manager pursuant to the Investment Management Agreement.
If this Agreement becomes effective subsequent to the first day of a month or
shall terminate before the last day of a month, compensation for the part
of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fee as set forth above. Subject to
the provisions of paragraph 7 hereof, payment of the Sub-Advisor's
compensation for the preceding month shall be made as promptly as possible
after completion of the computations contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the Fund, including
amounts payable to the Investment Manager pursuant to the Investment
Management Agreement, for any fiscal year ending on a date on which this
Agreement is in effect, exceed the expense limitations applicable to the
Fund imposed by state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Sub-
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Advisor shall reduce its advisory fee (but not lower than zero) to the extent of
40% of such excess, it being understood that the Investment Manager has agreed
to effect a reduction and reimbursement of 60% of such excess in accordance with
the terms of the Investment Management Agreement; provided, however, there shall
be excluded from such expenses the amount of any interest, taxes, brokerage
commissions, distribution fees and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such reduction, if
any, shall be computed and accrued daily, shall be settled on a monthly basis,
and shall be based upon the expense limitation applicable to the Fund as at the
end of the last business day of the month. Should two or more such expense
limitations be applicable as at the end of the last business day of the month,
that expense limitation which results in the largest reduction in the Investment
Manager's fee or the largest expense reimbursement shall be applicable.
For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities, if any, in the Fund's portfolio, the record dates for
which fall on or prior to the last day of such fiscal year, but shall not
include gains from the sale of securities.
8. The Sub-Advisor will use its best efforts in the performance
of investment activities on behalf of the Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations hereunder, the Sub-Advisor shall not be liable to the
Investment Manager or the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by the Sub-Advisor or
for any losses sustained by the Fund or its investors.
9. It is understood that any of the shareholders, Trustees, officers
and employees of the Fund may be a shareholder, director, officer or employee
of, or be otherwise interested in, the Sub-Advisor, and in any person
controlled by or under common control with the Sub-Advisor, and that the
Sub-Advisor and any person controlled by or under common control with the
Sub-Advisor may have an interest in the Fund. It is also understood that
the Sub-Advisor and any affiliated persons thereof or any persons controlled
by or under common control with the Sub-Advisor have and may have
advisory, management service or other contracts with other organizations and
persons, and may have other interests and businesses, and further may
purchase, sell or trade any securities or commodities for their own
accounts or for the account of others for whom they may be acting;
PROVIDED, HOWEVER, that, unless expressly consented to in writing by the
Investment Manager or the Sub-Advisor, as the case may be, for so long as the
Sub-Advisor shall serve as sub-advisor to the Fund, neither (i) the
Sub-Advisor nor any of its affiliates which contains the name "Blackstone"
or (ii) the Investment Manager nor any of its affiliates which contains the
name "Xxxx Xxxxxx" shall undertake to act as investment advisor or
sub-advisor for any other U.S. registered open-end investment company, sold
primarily to retail investors, which utilizes the same investment
techniques utilized by the Sub-Advisor in connection with its sub-advisory
services to the Fund and whose investment objective and policies and
general asset allocation are the same as those of the Fund and which is
sponsored, distributed or managed by a U.S. registered broker-dealer or
one of its affiliates.
10. (a) The Fund, to the full extent permitted by applicable law,
shall indemnify the Sub-Advisor and each of the Sub-Advisor's
partners, officers, employees and agents who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Fund) by
reason of the fact that he is or was a Trustee, partner, officer,
employee, or agent of the Fund or the Sub-Advisor acting in its capacity
as Sub-Advisor (each such person hereinafter referred to as an Indemnified
Person). The indemnification shall be against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement,
actually and reasonably incurred by him in connection with the action, suit,
or proceeding, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Fund, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did
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not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Fund, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) The Fund shall indemnify any Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or on behalf of the Fund to obtain a judgment or decree in its favor
by reason of the fact that he is or was a Trustee, officer, employee, or agent
of the Fund or the Sub-Advisor acting in its capacity as Sub-Advisor. The
indemnification shall be against expenses, including attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement of
the action or suit, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Fund; except that
no indemnification shall be made in respect of any claim, issue, or matter as to
which the person has been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Fund, except to the extent that the court in
which the action or suit was brought, or a court of equity in the county in
which the Fund has its principal office, determines upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for those
expenses which the court shall deem proper, provided such Indemnified Person is
not adjudged to be liable by reason of his willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
(c) To the extent that an Indemnified Person has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
subsection (a) or (b) or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection therewith.
(d) (1) Unless a court orders otherwise, any indemnification under
subsections (a) or (b) of this section may be made by the Fund only as
authorized in the specific case after a determination that indemnification of
the Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) or (b).
(2) The determination shall be made:
(i) By the Trustees, by a majority vote of a quorum which consists of
Trustees who were not parties to the action, suit or proceeding; or
(ii) If the required quorum is not obtainable, or if a quorum of
Trustees who are not "interested persons" of the Fund (as defined in the
Act) so directs, by independent legal counsel in a written opinion; or
(iii) By the Fund's shareholders.
(3) Notwithstanding any provision of this paragraph 10, no person shall
be entitled to indemnification for any liability, whether or not there is an
adjudication of liability, arising by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of duties as described in
Section 17(h) and (i) of the Act ("disabling conduct"). A person shall be
deemed not liable by reason of disabling conduct if, either:
(i) a final decision on the merits is made by a court or other body
before whom the proceeding was brought that the Indemnified Person was
not liable by reason of disabling conduct; or
(ii) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the Indemnified Person was not
liable by reason of disabling conduct, is made by either--
(A) a majority of a quorum of Trustees who are neither
"interested persons" of the Fund, (as defined in the Act), nor
parties to the action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
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(e) Expenses, including attorneys' fees, incurred by an Indemnified Person
in defending a civil or criminal action, suit or proceeding may be paid by the
Fund in advance of the final disposition thereof if:
(1) authorized in the specific case by the Trustees; and
(2) the Fund receives an undertaking by or on behalf of the Indemnified
Person to repay the advance if it is not ultimately determined that such
person is entitled to be indemnified by the Fund; and
(3) either, (i) such person provides a security for his undertaking, or
(ii) the Fund is insured against losses by reason of any lawful
advances, or
(iii) a determination, based on a review of readily available facts,
that there is reason to believe that such person ultimately will be found
entitled to indemnification, is made by either--
(A) a majority of a quorum which consists of Trustees who are
neither "interested persons" of the Fund (as defined in the Act), nor
parties to the action, suit or proceeding, or
(B) an independent legal counsel in a written opinion.
(f) The indemnification provided by this paragraph 10 shall not be deemed
exclusive of any other rights to which an Indemnified Person may be entitled
under any by-law, agreement, vote of Fund shareholders or Trustees who are not
"interested persons" of the Fund or otherwise, both as to action in his official
capacity and as to action in another capacity while a partner, officer, employee
or agent of the Sub-Advisor, and shall continue as to a person who has ceased to
be an Indemnified Person and inure to the benefit of the heirs, executors and
administrators of such person; provided that no person may satisfy any right of
indemnity or reimbursement granted herein or to which he may be otherwise
entitled except out of the property of the Fund, and no shareholder shall be
personally liable with respect to any claim for indemnity or reimbursement or
otherwise.
(g) The Fund may purchase and maintain insurance on behalf of any
Indemnified Person, against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such. However, in no
event will the Fund purchase insurance to indemnify any Indemnified Person
against liability for any act for which the Fund itself is not permitted to
indemnify him.
(h) Nothing contained in this Section shall be construed to protect any
Indemnified Person of the Fund against any liability to the Fund or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(i) The provisions of this paragraph 10 shall survive the termination of
this Agreement.
11. This Agreement shall remain in effect until April 30, 1995 and from year
to year thereafter provided such continuance is approved at least
annually by the vote of holders of a majority, as defined in the Act, of the
outstanding voting securities of the Fund or by the Trustees of the Fund;
provided, that in either event such continuance is also approved annually by the
vote of a majority of the Trustees of the Fund who are not parties to this
Agreement or "interested persons" (as defined in the Act) of any such party,
which vote must be cast in person at a meeting called for the purpose of voting
on such approval; provided, however, that (a) the Fund may, at any time and
without the payment of any penalty, terminate this Agreement upon thirty days'
written notice to the Investment Manager and the Sub-Advisor, either by majority
vote of the Trustees of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund; (b) this Agreement shall immediately terminate in
the event of its assignment (within the meaning of the Act) unless such
automatic termination shall be prevented by an exemptive order of the Securities
and Exchange Commission; (c) this Agreement shall immediately terminate in the
event of the termination of the Investment Management Agreement; (d) the
Investment Manager may terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund and the Sub-Advisor and; (e) the Sub-
Advisor may terminate this Agreement without the payment of penalty on thirty
days' written notice to the Fund and the Investment Manager. Any notice under
this Agreement shall be given in writing, addressed and delivered, or mailed
post-paid, to the other party at the principal office of such party.
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12. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct
or supplement any ambiguous, defective or inconsistent provision hereof, or if
they deem it necessary to conform this Agreement to the requirements of
applicable federal laws or regulations, but neither the Fund, the Investment
Manager nor the Sub-Advisor shall be liable for failing to do so.
13. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
14. The Declaration of Trust establishing Xxxx Xxxxxx Premier Income Trust,
dated March 26, 1991, a copy of which is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Xxxx
Xxxxxx Premier Income Trust refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no Trustee,
Shareholder, officer, employee or agent of Xxxx Xxxxxx Premier Income Trust
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of said Xxxx Xxxxxx Premier Income Trust, but the
Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.
XXXX XXXXXX INTERCAPITAL INC.
By ___________________________________
Attest: ______________________________
BLACKROCK FINANCIAL
MANAGEMENT, INC.
By ___________________________________
Attest: ______________________________
Accepted and agreed to as of
the day and year first above written:
XXXX XXXXXX PREMIER INCOME
TRUST
By ___________________________________
Attest: ______________________________
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