EXHIBIT (G)(ii)
SUB-INVESTMENT ADVISORY AGREEMENT
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AGREEMENT dated as of __________, 1998, between BlackRock Advisors, Inc. a
Delaware corporation ("Adviser"), and BlackRock Financial Management, Inc., a
Delaware corporation (the "Sub-Adviser").
WHEREAS, the Adviser has agreed to furnish investment advisory services to
The BlackRock High Yield Trust (the "Trust"), a closed-end management investment
company registered under the Investment Company Act of 1940 (the "Act");
WHEREAS, the Adviser wishes to retain the Sub-Adviser to provide it with
sub-advisory services as described below in connection with Adviser's advisory
activities on behalf of the Trust;
WHEREAS, the investment advisory agreement between the Adviser and the
Trust dated December , 1998 (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 Adviser
may sub-contract investment advisory services with respect to the Trust to a
sub-adviser pursuant to a sub-investment advisory agreement agreeable to the
Trust and approved in accordance with the provisions of the Act; and
WHEREAS, this Agreement has been approved in accordance with the provisions
of the Act, and The Sub-Adviser is willing to furnish such services upon the
terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual 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 Adviser hereby appoints The Sub-Adviser to act as
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sub-adviser with respect to the Trust and The Sub-Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Services of The Sub-Adviser. Subject to the oversight and supervision
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of the Adviser and the Trust's Board of Trustees, The Sub-Adviser will supervise
the day-to-day operations of the Trust and perform the following services: (a)
provide investment research and credit analysis concerning the Trust's
investments, (b) conduct a continual program of investment of the Trust's
assets, (c) determine what portion of the Trust's assets will be invested in
cash, cash equivalents and money market instruments, (d) place orders for all
purchases and sales of the investments made for the Trust, and (e) maintain the
books and records as are required to support Trust operations (in conjunction
with record-keeping and accounting functions performed by Adviser). In addition,
the Sub-Adviser will keep the Trust and the Adviser 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-Adviser believes
appropriate for this purpose. The Sub-Adviser will communicate to the Adviser on
each day that a purchase or sale of an instrument is effected for the Trust (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 will be
effected, (d) the CUSIP number of the instrument, if any, and (e) such other
information as the Adviser may reasonably require for purposes of fulfilling its
obligations to the Trust under the Advisory Agreement. The Sub-Adviser will
provide the services rendered by it under this Agreement in accordance with the
Trust's investment objectives, policies and restrictions as stated in the
Trust's Prospectus (as currently in effect and as they may be amended or
supplemented from time to time), and the resolutions of the Trust's Board of
Trustees.
3. Covenants. In the performance of its duties under this Agreement, the
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Sub-Adviser shall at all times conform to, and act in accordance with, any
requirements imposed by:
(a) (i) the provisions of the Act and the Investment Advisers Act of
1940, as amended 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 and By-Laws of
the Trust, as such documents are amended from time to time; (iv) the investment
objective 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;
(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
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orders with brokers and dealers, the Sub-Adviser will attempt to obtain the best
price and the most favorable execution of its orders. In placing orders, the
Sub-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, the Sub-Adviser may, subject to
the approval of the Trust's Board of Trustees, select brokers on the basis of
the research, statistical and pricing services they provide to the Trust and
other clients of the Adviser or the 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 the Sub-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 the Sub-
Adviser determines in good faith that such commission is reasonable in terms
either of the transaction or the overall responsibility of the Adviser and the
Sub-Adviser 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-Adviser 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 Adviser or the Sub-Adviser), provided
that the Sub-Adviser 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 Adviser, the Sub-Adviser or any affiliated person thereof, except to the
extent permitted by the SEC or by applicable law;
(c) will maintain or cause the Adviser to maintain books and records
with respect to the Trust's securities transactions and will render to the
Adviser 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-Adviser 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
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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-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 Trust.
4. Services Not Exclusive. Nothing in this Agreement shall prevent the
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Sub-Adviser or any officer, employee or other affiliate thereof from acting as
investment adviser 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-Adviser 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-
Adviser 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
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under the Act, the Sub-Adviser 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-
Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the Act the records required to be maintained by Rule 31a-1 under the Act.
6. Agency Cross Transactions.
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[From time to time, the Sub-Adviser 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-Adviser'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 Adviser 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-Adviser is making the investment decision (as opposed to
a brokerage client who makes his own investment decisions), and the Sub-Adviser
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-Adviser's part regarding the advisory client. The
Securities and Exchange Commission
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has adopted a rule under the Investment Advisers Act of 1940, as amended which
permits the Sub-Adviser 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-Adviser 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-
Adviser.]
7. Indemnity.
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(a) The Trust hereby agrees to indemnify the Sub-Adviser and each of
the Adviser'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-Adviser'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
corporate 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
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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 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 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.
8. Expenses. During the term of this Agreement, the Sub-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
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(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Trust.
a. The Adviser agrees to pay to the Sub-Adviser and the Sub-Adviser
agrees to accept as full compensation for all services rendered by
the Sub-Adviser as such, a monthly fee in arrears at an annual
rate equal to .35% the Trust's Managed Assets. "Managed Assets"
means the total assets of the Trust minus the sum of accrued
liabilities (other than the aggregate indebtedness constituting
financial leverage). For any period less than a month during which
the 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 and the Investment Advisory
Agreement, the total assets of the Trust shall be calculated
pursuant to the procedures adopted by resolutions of the Trustees
of the Trust for calculating the total asset value of the Trust's
shares or delegating such calculations to third parties.
10. Limitation on Liability. The Sub-Adviser will not be liable for any
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error of judgment or mistake of law or for any loss suffered by the Adviser or
by 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 obligations or duties under this Agreement.
11. Duration and Termination. This Agreement shall become effective as of
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the date hereof, unless sooner terminated with respect to the Trust as provided
herein, and 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 annual periods ending [December 31], provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust'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, or (b) by a vote of a
majority of the outstanding voting securities of the Trust. Notwithstanding the
foregoing, this Agreement may be terminated by the Trust or the Adviser at any
time, without the payment of any penalty, upon giving the Sub-Adviser 60 days'
notice (which notice may be waived by the Sub-Adviser),
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provided that such termination by the Trust or the Adviser 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" (as defined in the Act) of
the voting securities of the Trust at the time outstanding and entitled to vote,
or by the Sub-Adviser on 60 days' written notice (which notice may be waived by
the Trust and the Adviser), and will terminate automatically upon any
termination of the Investment Advisory Agreement between the Trust and the
Adviser. 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 Act.)
12. Notices.
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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
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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 Act.
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.
15. Governing Law
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This Agreement shall be 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 Act
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16. Counterparts. This Agreement may be executed in counterparts by the
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parties hereto, each of which shall constitute an original counterpart, and all
of which, together, shall constitute one Agreement.
[End of Text]
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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 ADVISORS, INC.
By:______________________________
BLACKROCK FINANCIAL MANAGEMENT, INC.
By:______________________________
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