EXHIBIT 99.4(X)
INVESTMENT ADVISORY AGREEMENT
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AGREEMENT made as of June 6, 2000 between BlackRock Funds/SM/, a
Massachusetts business trust (the "Fund"), and BlackRock International, Ltd., a
corporation registered in Scotland (the "Adviser").
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 Adviser to furnish investment
advisory services to the Fund and the 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 Adviser to act as investment
adviser to the Fund's European Equity Portfolio and Asia Pacific Equity
Portfolio (the "Portfolios") for the period and on the terms set forth in this
Agreement. 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 Portfolios named above with respect to which it
desires to retain Adviser to act as investment adviser hereunder, the Fund shall
notify Adviser in writing. If 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 Portfolios named above in subparagraph
(a) except to the extent that said provisions (including those relating to the
compensation payable by the Fund to Adviser) are modified with respect to such
portfolio in writing by the Fund and Adviser at the time.
c. Adviser 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 Adviser, the Fund will be categorized as a Non-Private Customer (as
defined in IMRO's rules) of Adviser.
2. Sub-Contractors. It is understood that Adviser may from time to
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time employ or associate with such person or persons as 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 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.
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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 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 Adviser as the Portfolios' 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 Portfolios (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 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, 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 each of the Portfolios, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Portfolios. 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 Portfolios and will place
the daily orders for the purchase or sale of securities. Adviser will provide
the services rendered by it under this Agreement in accordance with each
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. Adviser further agrees that it:
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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, Adviser will attempt to
obtain the best price and the most favorable execution of its orders.
In placing orders, 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, 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 a Portfolio and other clients of
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 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
Adviser determines in good faith that such commission is reasonable in
terms of either the transaction or the overall responsibility of
Adviser and sub-advisers to the Portfolios and their other clients and
that the total commissions paid by a Portfolio will be reasonable in
relation to the benefits to the Portfolio over the long-term. In
addition, 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 Adviser, the sub-advisers or the
Fund's distributor) in compliance with applicable law. In no
instance, however, will a Portfolio's securities be purchased from or
sold to 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 each
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 Adviser makes investment
recommendations for a 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, Adviser and the
sub-advisers will not inquire or take into consideration whether
securities of those customers are held by the Fund; and
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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 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. Adviser's services hereunder are not
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deemed to be exclusive, and Adviser shall be free to render similar services to
others so long as its services under this Agreement are not impaired thereby.
Adviser does not have 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 Portfolios in respect of which Adviser has directly
or indirectly a material interest (except for an interest arising solely from
the mere participation of Adviser as agent for the Portfolios) or a relationship
of any description with another party which may involve a conflict with
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, Adviser hereby agrees that all records which it
maintains for each 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.
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, Adviser will pay
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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 Portfolios.
8. Compensation.
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a. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay Adviser and Adviser will accept as full
compensation therefor a fee, computed daily and payable monthly, at the
following annual rates: for each of the Portfolios (considered separately on a
Portfolio-by-Portfolio basis): .90% of the first $1 billion of each Portfolio's
average daily net assets, .85% of the next $1 billion of each Portfolio's
average daily net assets, .80% of the next $1 billion of each Portfolio's
average daily net assets and .75% of the average daily net assets of each
Portfolio in excess of $3 billion. Such fee as is attributable to each
Portfolio shall be a separate charge to such Portfolio and shall be the several
(and neither joint nor joint and several) obligation of such Portfolio.
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b. If in any fiscal year the aggregate expenses of one or more
Portfolios (as defined under the securities regulations of any state having
jurisdiction over the Fund) exceed the expense limitations of any such state,
Adviser will bear its share of the amount of such excess in proportion to the
aggregate fees otherwise payable to it hereunder and to the Fund's co-
administrators under their administration agreements with the Fund. The
obligation of the Adviser 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 Portfolios for such fiscal year, provided, however, that
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notwithstanding the foregoing, Adviser shall reimburse the Fund for the full
amount of its share of any such excess expenses regardless of the amount of fees
otherwise payable to it 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. Adviser shall not be liable for any
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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 each Portfolio listed in Section 1(a)
hereof and, with respect to any additional Portfolio, on the date of receipt by
the Fund of notice from Adviser in accordance with Section 1(b) hereof that
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
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specifically approved at least annually (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 Adviser 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
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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 Adviser's performance of
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its 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.
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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:
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