AGREEMENT dated December 31, 2008, between BlackRock Advisors, LLC, a Delaware limited
liability company (the “Advisor”), and BlackRock International Limited, a corporation organized
under the laws of Scotland (the “Sub-Advisor”).
WHEREAS, the Advisor has agreed to furnish investment advisory services to BlackRock Master
International Portfolio (the “Fund”), a series of BlackRock Master LLC, a Delaware statutory trust
(the “Trust”), an open-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 Fund;
WHEREAS, the advisory agreement between the Advisor and the Trust, dated September 29, 2006
(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
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 Fund and the Sub-Advisor accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided. For the purposes of the rules of
the Financial Services Authority of the United Kingdom and based on information obtained in respect
of the Advisor, the Advisor will be treated by the Sub-Advisor as a professional client.
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 Fund, 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 Fund 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 Fund
and in voting, exercising consents and exercising all other rights appertaining to such securities
and other assets on behalf of the Fund; (b) arranging, subject to the provisions of paragraph 3
hereof, for the purchase and sale of securities and other assets of the Fund; (c) providing
investment research and credit analysis concerning the Fund’s investments, (d) assist the Advisor
in determining what portion of the Fund’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 Fund, and (f) maintaining the books and records as are required to support Fund 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 Fund 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 Fund
and the Advisor informed of developments materially affecting the Fund and shall, on its own
initiative, furnish to the Fund 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 Fund, 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 Fund under the Advisory
Agreement. The Sub-Advisor will provide the services rendered by it under this Agreement in
accordance with the Fund’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 Fund’s Prospectus
and Statement of Additional Information and the resolutions of the Trust’s Board of Trustees.
3. Covenants. (a) 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:
(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 Declaration of
Trust and By-Laws of the Trust, as such documents are amended from time to time; (iv) the
investment objectives and policies of the Fund as set forth in its Registration Statement on Form
N-1A and/or the resolutions of the Board of Trustees; and (v) any policies and determinations of
the Board of the Trustees of the Trust and
(b) In addition, the Sub-Advisor will:
(i) 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. A summary of the Sub-Advisor’s Order Execution Policy accompanies
this Agreement. The Advisor hereby confirms that it has read and understood this. In
particular, the Advisor agrees that the Sub-Advisor may trade outside of the regulated
market or multilateral trading facility. 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 Fund 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 Fund’s and their other clients and
that the total commissions paid by the Fund will be reasonable in relation to the benefits
to the Fund over the long-term. Subject to the foregoing and the provisions of the 1940
Act, the Securities Exchange Act of 1934, as amended, and other applicable provisions of
law, the Advisor may select brokers and dealers with which it or the Trust is affiliated;
(ii) 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;
(iii) 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 Fund, its investment advisory
personnel will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Fund’s account are customers of the commercial
department of its affiliates; and
(iv) treat confidentially and as proprietary information of the Fund all records and
other information relative to the Fund, 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
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 Fund.
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
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. 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 Fund operations (including, without
limitation, compliance matters) (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 Fund operations or the operations of other investment companies advised or
sub-advised by the Sub-Advisor.
(a) 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 to the amount set forth in Schedule A hereto. For any period less than a month
during which this Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31 days, as the case may be.
(b) For purposes of this Agreement, the net assets of the Fund shall be calculated pursuant to
the procedures adopted by resolutions of the Trustees of the Trust for calculating the value of the
Fund’s assets or delegating such calculations to third parties.
(a) The Fund 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 Fund 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 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 Trustees of the Trust.
(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 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 Fund 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 unlawful 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 1940 Act) 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.
(c) All determinations with respect to the standards for 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.
9. Limitation on Liability. 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 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 duties under this Agreement.
10. Duration and Termination. This Agreement shall become effective as of the date
hereof and, unless sooner terminated with respect to the Fund 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 Fund 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 Fund 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 1940 Act) 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 Fund 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, on behalf of the Fund, 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.)
11. 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.
12. Amendment of this Agreement. This Agreement may be amended by the parties only if
such amendment is specifically approved by the vote of the Board of Trustees of the Trust,
including a majority of those Trustees who are not parties to this Agreement or interested persons
of any such party cast in person at a meeting called for the purpose of voting on such approval
and, where required by the 1940 Act, by a vote of a majority of the outstanding voting securities
of the Fund.
13. 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.
14. 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. To the extent that the applicable laws of the State of New York, or any of the
provisions, conflict with the applicable provisions of the 1940 Act, the latter shall control.
15. 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.
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, LLC
/s/ Donald C. Burke
Donald C. Burke
BLACKROCK INTERNATIONAL LIMITED
/s/ Nicholas Hall
AGREED AND ACCEPTED
as of the date first set forth above
By: /s/ Donald C. Burke
Name: Donald C. Burke
Title: Chief Executive Officer and President of the Fund
Sub-Investment Advisory Fee
74.00% of the monthly advisory fee received by the Advisor from the Fund.
INFORMATION ON BLACKROCK’S ORDER EXECUTION POLICY
The EU Markets in Financial Instruments Directive (MiFID) came into force on 1st
November 2007. One aspect of the legislation is that BlackRock is required to take all reasonable
steps to obtain the best possible result when dealing for its clients, taking into account the
execution factors referred to below. This is often referred to as “best execution”. Importantly,
BlackRock is required to establish and implement an order execution policy that demonstrates how it
seeks to obtain the best possible result in accordance with that obligation.
The purpose of this document is to provide Customers with a summary of BlackRock’s order execution policy.
This document covers all BlackRock entities resident within the European Economic Area (EEA) that
execute orders, place orders with, or transmit orders to, other entities for execution. These are
set out in more detail in the Glossary.
Generally all orders and executions of equity instruments and foreign exchange are managed by
centralized, specialized dealing desks. Fixed income trades are executed by portfolio managers or,
in some cases, through specialized dealing desks. The dealers are recognized as a significant part
of the investment process and BlackRock seeks to harness their dealing expertise to optimize
Subject to any specific instructions that BlackRock receives, BlackRock takes into account a range
of factors in deciding where to execute deals in order to obtain the best possible result for
Customers. BlackRock dealers and portfolio managers who place deals (referred to for this purpose
collectively as dealers) will determine the relative importance of a range of sometimes conflicting
factors by using their experience in the particular financial instruments and markets being traded.
Generally the most important factor that the dealers take into account is the price of the
financial instrument being traded, along with any associated execution costs — the total
consideration for the trade.
The diversity of the markets, the types of instruments BlackRock trades and the kind of orders
BlackRock places means that BlackRock often takes into account a variety of factors in addition to
the total consideration of the trade. These other factors may include speed, likelihood of
execution and settlement, the size and nature of the order and market impact.
In some markets, price volatility may mean that the timeliness of execution is a key factor,
whereas in other markets or instruments that have low liquidity, it
may be the mere ability to execute the trade that is a key factor. In other cases, BlackRock’s
choice of venue may be limited (even to the fact that there may only be one platform/ market upon
which BlackRock can execute Customers orders) because of the nature of the trade.
For some types of financial instruments such as over-the-counter transactions there is no
formalized market or settlement infrastructure, which is particularly relevant for certain fixed
income and derivative trades.
When executing a deal, BlackRock will take into account a number of criteria for determining the
relative importance of the execution factors noted above. These include a Customer’s status, either
as a Retail client or as a Professional client, the nature of the order, the characteristics of the
financial instruments that are the subject of that order and the characteristics of the execution
venues to which that order can be directed.
Choice of Venue
BlackRock will take all reasonable steps to select venues that it believes are most likely to
provide the best result in the execution of orders. These venues are generally accessed via
brokers and include Regulated Markets such as the London Stock Exchange, Multilateral Trading
Facilities (MTFs) and electronic communication networks (ECNs). Please see the Glossary for more
information. Where permitted, BlackRock may match buy and sell orders of stock between Customers
either through internal crossing arrangements or via ECNs in order to minimize broker commission
and market impact. BlackRock may also undertake programmed trades where there is an appropriate
basket of stocks to trade in order to reduce overall transaction costs. In certain circumstances
BlackRock may execute trades outside of a Regulated Market or MTF.
To enable the dealers to assess the appropriate venue, they have access to several sources of price
information and news including Reuters and Bloomberg, and receive indications of interest, quotes
and information on market flow and liquidity from brokers. This access to information is designed
to allow dealers to obtain the best possible result for BlackRock’s Customers. BlackRock also take
steps to ensure that it does not structure or charge commissions in such a way as to discriminate
unfairly between execution venues.
More detailed information about the execution venues that BlackRock uses for specific financial
instruments is available on request.
BlackRock are not required to take the steps mentioned above when placing an
order with, or transmitting an order to, another entity for execution to the extent that BlackRock
is following specific instructions from a Customer. Customers should be aware that any specific
instruction given regarding the execution of orders may prevent BlackRock from taking the steps
that it has designed and implemented in its execution policy to obtain the best possible result in
respect of the elements covered by those instructions.
Where a Customer’s instructions relate only to part of an order, BlackRock will continue to apply
its execution policy to those aspects not covered by the instruction.
BlackRock will review its order execution policy and order execution arrangements on an annual
basis, as well as whenever a material change occurs that affects its ability to continue to obtain
the best possible result for its Customers. BlackRock will notify Customers of any material change
to its order execution policy and order execution arrangements.
Consent to the Order Execution Policy
For a financial instrument admitted to trading on a Regulated Market or MTF, BlackRock are required
to obtain a Customer’s prior express consent before it executes an order in such instrument outside
of a Regulated Market or MTF. This allows BlackRock greater choice in the venues that it can use
to execute orders, and therefore restricting the execution of orders to Regulated Markets and MTFs
may have a detrimental effect on the quality of the execution that is provided. Executing orders
off-exchange though may provide less regulatory protection than dealing on a Regulated Market or
BlackRock — any BlackRock legal entity resident in the EEA (or branch thereof) or branch of a
non-EEA BlackRock legal entity resident in the EEA, from which investment services are provided to
clients including, but not restricted to, BlackRock Investment Management (UK) Limited, BlackRock
Asset Management UK Limited, BlackRock Investment Management International Limited, BlackRock
International Limited and BlackRock (Netherlands) B.V.
Bid/ ask spreads — the difference between the market price quotations, for buying and selling
Electronic Communication Networks (“ECN”) — an electronic execution venue for fund managers that
enables them to match buying and selling orders in securities directly with other fund managers.
Commissions are typically lower, while market impact and bid/ ask spreads are removed altogether.
Financial instruments — the list of financial instruments set out in Annex 1 Section C of MiFID,
as amended from time to time. These include, for example, equity and fixed income securities,
money market instruments, units in pooled funds, derivatives and contracts for differences.
Internal crossing — a manager’s decision to match a selling order of one client with a buying
order of another client without placing the order through the market, thereby saving both clients
the cost of the bid/ ask spread and broker commissions.
MiFID — the Markets in Financial Instruments Directive (2004/39/EC), a European Union Directive
that forms part of the EU’s Financial Services Action Plan, which is the EU’s ongoing initiative
to improve the single market in financial services.
Multilateral Trading Facility (“MTF”) — a system, operated by an investment firm or a market
operator, which brings together multiple third-party buying and selling interests in financial
Programmed trades — bulk trades for multiple securities placed through a single broker at a
significantly reduced commission rate.
Regulated Market - a multilateral system operated and/ or managed by an authorized market operator,
which brings together (or facilitates the bringing together of) multiple third-party buying and
selling interests in financial instruments.