EX-99.2(g)(2)
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated as of October 19, 2001, between BlackRock
California Municipal 2018 Term Trust, a Delaware business trust (the "Trust"),
BlackRock Advisors, Inc. a Delaware corporation (the "Advisor"), and BlackRock
Financial Management, Inc., a Delaware corporation (the "Sub-Advisor").
WHEREAS, the Advisor has agreed to furnish investment advisory
services to the Trust, 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 Trust;
WHEREAS, the advisory agreement between the Advisor and the
Trust dated October 19, 2001 (such Agreement or the most recent successor
agreement between such parties relating to advisory services to the Trust is
referred to herein as the "Advisory Agreement") contemplates that the Advisor
may sub-contract investment advisory services with respect to the Trust to a
sub-advisor pursuant to a sub-advisory agreement agreeable to the Trust 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 Trust 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 Trust's Board of Trustees, the Sub-Advisor will perform certain
of the day-to-day operations of the Trust 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
Trust 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 Trust and in voting, exercising consents and exercising all other
rights appertaining to such securities and other assets on behalf of the Trust;
(b) arranging, 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
Trust; (c) providing investment research and credit analysis concerning the
Trust's investments, (d) assist the Advisor in determining what portion of the
Trust'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 Trust, and (f) maintaining the books and records as are required to
support Trust 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 Trust's Board of Trustees, provide to the
Advisor or the Trust 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 Trust and the Advisor informed of developments
materially affecting the Trust and shall, on its own initiative, furnish to the
Trust 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 Trust, 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 Trust
under the Advisory Agreement. The Sub-Advisor will provide the services rendered
by it under this Agreement in accordance with the Trust'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 Trust's Prospectus and
Statement of Additional Information and the resolutions of the Trust's Board of
Trustees.
3. COVENANTS. 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:
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(1) (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 Agreement and Declaration of
Trust, as amended and restated, and By-Laws of the Trust, as such documents are
amended from time to time; (iv) the investment objectives and policies of the
Trust as set forth in its Registration Statement on Form N-2; and (v) any
policies and determinations of the Board of Trustees of the Trust;
(2) 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 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 Trust 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 Trust's and their other clients and that the total
commissions paid by the Trust will be reasonable in relation to the benefits to
the Trust over the long-term. In addition, the Sub-Advisor is authorized to take
into account the sale of shares of the Trust in allocating purchase and sale
orders for portfolio securities to brokers or dealers (including brokers and
dealers that are affiliated with the Advisor or the Sub-Advisor), provided that
the Sub-Advisor believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no instance,
however, will the Trust's securities be purchased from or sold to the Advisor,
the Sub-Advisor or any affiliated person thereof, except to the extent permitted
by the SEC or by applicable law;
(3) will maintain books and records with respect to the Trust's securities
transactions and will render to the Advisor and the Trust's Board of Trustees
such periodic and special reports as they may request;
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(4) will 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
Trust, its investment advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale for
the Trust's account are customers of the commercial department of its
affiliates; and
(5) will treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust, and the Trust'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
Trust, 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 Trust.
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 Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Sub-Advisor 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 (to the extent such books and records are not maintained by the
Advisor).
6. AGENCY CROSS TRANSACTIONS. From time to time, the Sub-Advisor or brokers
or dealers affiliated with it may find themselves in a position to buy for
certain of their brokerage clients (each an "Account") securities which the
Sub-Advisor's investment advisory clients wish to sell, and to sell for certain
of their brokerage clients securities which advisory clients wish to buy. Where
one of the
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parties is an advisory client, the Advisor or the affiliated broker or dealer
cannot participate in this type of transaction (known as a cross transaction) on
behalf of an advisory client and retain commissions from both parties to the
transaction without the advisory client's consent. This is because in a
situation where the Sub-Advisor is making the investment decision (as opposed to
a brokerage client who makes his own investment decisions), and the Sub-Advisor
or an affiliate is receiving commissions from one or both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Sub-Advisor's part regarding the advisory client. The
Securities and Exchange Commission has adopted a rule under the Advisers Act
which permits the Sub-Advisor or its affiliates to participate on behalf of an
Account in agency cross transactions if the advisory client has given written
consent in advance. By execution of this Agreement, the Trust authorizes the
Sub-Advisor or its affiliates to participate in agency cross transactions
involving an Account. The Trust may revoke its consent at any time by written
notice to the Sub-Advisor.
7. 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
Trustees of the Trust 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 Trust operations (other
than the provision of investment advice and administrative services required to
be provided hereunder) of all personnel employed by the Sub-Advisor who devote
substantial time to the Trust operations or the operations of other investment
companies advised or sub-advised by the Sub-Advisor.
8. COMPENSATION.
(1) 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: (i) prior to October 31,
2002, to 38% of the monthly advisory fees received by the Advisor, (ii) from
November 1, 2002 to October 31, 2003, to 19% of the monthly advisory fee
received by the Advisor; and (iii) after October 31, 2003, 0% of the advisory
fees received by the Advisor; provided that thereafter the Sub-Advisor may be
compensated at cost for any services rendered to the Trust at the request of the
Advisor and approved of by the Board of Trustees. For any period less than a
month during which this Agreement is in effect, the fee shall be prorated
according to the propor-
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tion which such period bears to a full month of 28, 29, 30 or 31 days, as the
case may be.
(2) For purposes of this Agreement, the Managed Assets of the Trust shall
be calculated pursuant to the procedures adopted by resolutions of the Trustees
of the Trust for calculating the value of the Trust's assets or delegating such
calculations to third parties.
9. INDEMNITY.
(1) The Trust hereby agrees to 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
Trust 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 Trust 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
Trust and that such Indemnitee appears to have acted in good faith in the
reasonable belief that such Indemnitee's action was in the best interest of the
Trust 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
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Indemnitee was authorized by a majority of the full Board of Trustees of the
Trust.
(2) The Trust shall make advance payments in connection with the expenses
of defending any action with respect to which indemnification might be sought
hereunder if the Trust 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 Trust unless it is subsequently
determined that such Indemnitee is entitled to such indemnification and if the
trustees of the Trust 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 Trust shall be insured against losses arising by
reason of any lawful advance, or (C) a majority of a quorum consisting of
trustees of the Trust who are neither "interested persons" of the Trust (as
defined in Section 2(a)(19) of the 0000 Xxx) nor parties to the proceeding
("Disinterested Non-Party Trustees") 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.
(3) 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 Trustees of the Trust, 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.
10. LIMITATION ON LIABILITY.
(1) 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 Trust in
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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.
(2) Notwithstanding anything to the contrary contained in this Agreement,
the parties hereto acknowledge and agree that, as provided in Section 5.1 of
Article V of the Declaration of Trust, as amended and restated, this Agreement
is executed by the Trustees and/or officers of the Trust, not individually but
as such Trustees and/or officers of the Trust, and the obligations hereunder are
not binding upon any of the Trustees or Shareholders individually but bind only
the estate of the Trust.
11. DURATION AND TERMINATION. This Agreement shall become effective as of
the date hereof and, unless sooner terminated with respect to the Trust 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
Trust 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 Trust's Board of Trustees or a vote of a majority of the outstanding voting
securities of the Trust at the time outstanding and entitled to vote and (b) by
the vote of a majority of the Trustees, 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 Trust 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 Trust or the Advisor shall be directed or
approved by the vote of a majority of the Trustees of the Trust in office at the
time or by the vote of the holders of a majority of the voting securities of the
Trust 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 Trust and the Advisor),
and will terminate automatically upon any termination of the Advisory Agreement
between the Trust 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.)
12. 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
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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.
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may 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.
14. 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.
15. 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.
16. 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.
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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.
BLACKROCK ADVISORS, INC.
By: /s/ XXXX X. XXXXXXXX
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Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: /s/ XXXX X. XXXXXXXX
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Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BLACKROCK CALIFORNIA MUNICIPAL
2018 TERM TRUST
By: /s/ XXXX X. XXXXXXXX
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Name: Xxxx X. Xxxxxxxx
Title: Secretary
