EX-25.2(g)(2)
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INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT dated as of February [ ], 2003, between Partners Balanced
Trust, a Delaware statutory 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 February [ ], 2003 (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 the fixed-income portfolio of the Trust and 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 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:
(a) (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 de terminations of the Board
of Trustees of the Trust; in addition, the Sub-Advisor;
(b) will place orders either directly with the issuer or with
any broker or dealer. Subject to the other provisions of this paragraph, in
placing orders with brokers and dealers, the 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;
(c) 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;
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the 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
(e) 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 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.
(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
19% of the monthly advisory fees received by the Advisor. 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 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.
(a) 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 Indemnitee was
authorized by a majority of the full Board of Trustees of the Trust.
(b) 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.
(c) 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.
(a) The Sub-Advisor will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Advisor, any other
sub- advisor to the Trust or the Trust 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.
(b) 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 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.
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:_________________________________________
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BLACKROCK FINANCIAL MANAGEMENT, INC.
By:_________________________________________
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
PARTNERS BALANCED TRUST
By:_________________________________________
Name: Xxxx X. Xxxxxxxx
Title: Secretary
