Exhibit 4(d)
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of ____________, 2008, between BlackRock Advisors, LLC,
a Delaware limited liability company ("Adviser"), and BlackRock Financial
Management, Inc., a Delaware corporation ("Sub-Adviser").
WHEREAS, Adviser has agreed to furnish investment advisory services to the
International Diversification Fund (the "Portfolio") of BlackRock Funds (the
"Fund"), an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, Adviser wishes to retain Sub-Adviser to provide it with
sub-advisory services as described below in connection with Adviser's advisory
activities on behalf of the Portfolio;
WHEREAS, the investment advisory agreement between Adviser and Fund with
respect to the Portfolio (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Portfolio is referred
to herein as the "Advisory Agreement") contemplates that Adviser may appoint a
sub-adviser to perform investment advisory services with respect to the
Portfolio;
WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and 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, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to act as sub-adviser
with respect to the Portfolio as provided in Section 2 of the Advisory
Agreement. Sub-Adviser accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Services of Sub-Adviser. Subject to the oversight and supervision of
Adviser and the Fund's Board of Trustees, Sub-Adviser will supervise the
day-to-day operations of the Portfolio and perform the following services: (i)
act as investment adviser for and manage the investment and reinvestment of
those assets of the Portfolio as Adviser may from time to time request and in
connection therewith have complete discretion in purchasing and selling such
securities and other assets for the Portfolio and in voting, exercising consents
and exercising all other rights appertaining to such securities and other assets
on behalf of the Portfolio; (ii) provide investment research and credit analysis
concerning the Portfolio's investments; (iii) assist Adviser in determining what
portion of the Portfolio's assets will be invested in cash and cash equivalents
and money market instruments; (iv) place orders for all purchases and sales of
the investments made for the Portfolio; and (v) maintain the books and records
as are required to support Fund operations (in conjunction with record-keeping
and accounting functions performed by Adviser). At the request of Adviser,
Sub-Adviser will also, subject to the
oversight and supervision of Adviser and the direction and control of the Fund's
Board of Trustees, provide to Adviser or the Fund any of the facilities and
equipment and perform any of the services described in Section 4 of the Advisory
Agreement. In addition, Sub-Adviser will keep the Fund and Adviser informed of
developments materially affecting the Portfolio and shall, on its own
initiative, furnish to the Fund from time to time whatever information
Sub-Adviser believes appropriate for this purpose. Sub-Adviser will periodically
communicate to Adviser, at such times as Adviser may direct, information
concerning the purchase and sale of securities for the Portfolio, including (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the name
of the broker or dealer, if any, through which the purchase or sale will be
effected, (iv) the CUSIP number of the instrument, if any, and (v) such other
information as Adviser may reasonably require for purposes of fulfilling its
obligations to the Fund under the Advisory Agreement. Sub-Adviser will provide
the services rendered by it under this Agreement in accordance with the
Portfolio's investment objective, policies and restrictions as stated in the
Portfolio's prospectuses and statements of additional information (as currently
in effect and as they may be amended or supplemented from time to time), and the
resolutions of the Fund's Board of Trustees.
3. Other Sub-Adviser Covenants. Sub-Adviser further agrees that it:
(a) will comply with (i) the provisions of the 1940 Act and the
Investment Advisers Act of 1940, as amended, and all applicable rules and
regulations of the Securities and Exchange Commission ("SEC"), (ii) any other
applicable provision of law and (iii) the provisions of this Agreement, the
Declaration of Trust and the Code of Regulations of the Fund as such are amended
from time to time.
(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, Sub-Adviser will attempt to obtain the best
price and the most favorable execution of its orders. In placing orders,
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, Sub-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 the Portfolio and
other clients of Adviser or 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 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 Sub-Adviser determines in good
faith that such commission is reasonable in terms of either the transaction or
the overall responsibility of Adviser and Sub-Adviser to the Portfolio and their
other clients and that the total commissions paid by the Portfolio will be
reasonable in relation to the benefits to the Portfolio over the long-term. In
no instance, however, will the Portfolio's securities be purchased from or sold
to Adviser, Sub-Adviser, the Fund's distributor or any affiliated person
thereof, except to the extent permitted by the SEC or by applicable law. 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, Sub-Adviser may
select brokers and dealers with which it or the Fund is affiliated;
(c) will maintain or cause Adviser to maintain books and records
with respect to the Portfolio's securities transactions and will furnish Adviser
and the Fund'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 Sub-Adviser make investment recommendations for the
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, Sub-Adviser
will not inquire or take into consideration whether securities of those
customers are held by the Fund; and
(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 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
Fund.
4. Services Not Exclusive. Sub-Adviser's services hereunder are not deemed
to be exclusive, and Sub-Adviser shall be free to render similar services to
others so long as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Sub-Adviser hereby agrees that all record which it maintains
for the Portfolio are the property of the Fund and further agrees to surrender
promptly to the Fund any such records upon the Fund's request. Sub-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.
6. Expenses. During the term of this Agreement, Sub-Adviser will bear all
costs and expenses of its employees and any overhead incurred by Sub-Adviser in
connection with its duties hereunder.
7. Compensation. The Sub-Adviser shall not receive any compensation from
the Fund for the services provided and the expenses assumed pursuant to this
Agreement.
8. Limitation of Liability. Sub-Adviser shall not be liable for any error
of judgment or mistake of law or for any loss suffered by Adviser or by the
Portfolio 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.
9. Duration and Termination. This Agreement will become effective as of
the date hereof and, unless sooner terminated with respect to the Portfolio as
provided herein,
shall continue in effect with respect to the Portfolio until March 31, 2010.
thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Portfolio for successive annual periods ending on March 31,
provided such continuance is specifically approved at least annually (a) by the
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 a vote of a majority of the outstanding voting securities of
the Portfolio. Notwithstanding the foregoing, this Agreement may be terminated
with respect to the 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 or
Sub-Adviser on sixty days' written notice, and will terminate automatically upon
any termination of the Advisory Agreement between the Fund and 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
as such terms in the 1940 Act.)
10. 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.
11. 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.
12. 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.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware 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.
14. Counterparts. This Agreement may be executed in counterparts by the
parties hereto, each of which shall constitute an original counterparty, and all
of which, together, shall constitute one Agreement.
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, LLC
By: ___________________________________
Name:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By: ___________________________________
Name:
Title:
