BlackRock Funds II (the "Registrant")
BlackRock Managed Income Fund (the "Fund")
77Q1(e):
Copies of any new or amended Registrant investment advisory
contracts
Attached please find as an exhibit to sub-item 77Q1(e) of Form
N-SAR, a copy of the Form of Sub-Investment Advisory Agreement
between BlackRock Advisors, LLC and BlackRock International
Limited with respect to the Fund.
Exhibit 77Q1(e)
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated [ ], 2016, 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 Managed Income Fund (the "Fund"), a series
of BlackRock Funds II, a Massachusetts business trust (the
"Trust"), which is 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 amended advisory agreement between the Advisor and
the Trust, dated May 31, 2007, as amended from time to time
(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 Fund to a sub-advisor; 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 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 Conduct 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 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 Section 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)
assisting 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 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 4 of the Advisory Agreement. In
addition, the Sub-Advisor will keep the Trust 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 will be 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 Fund's investment
objectives, policies and restrictions as stated in the Fund's
Prospectus and Statement of Additional Information (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.
The Sub-Advisor represents, warrants and covenants that it is
authorized and regulated by the Financial Conduct Authority.
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 Amended and Restated Code of
Regulations 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 the Fund's 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 Trustees of the
Trust.
(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. The Advisor has been provided
with a copy of the Sub-Advisor's order execution policy and
hereby confirms that it has read and understood the information
in the order execution policy and agrees to it. 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
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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 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 Sub-Advisor may select brokers
and dealers with which it or the Fund is affiliated;
(ii) maintain books and records with respect to the Fund'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.
(c) In addition, the Advisor:
(i) agrees that the Sub-Advisor may aggregate transactions for
the Fund with transactions for other clients and/or its own
account. In relation to a particular order, aggregation may
operate on some occasions to the advantage of the Advisor and on
other occasions to the Advisor's disadvantage. However, it must
be unlikely that the aggregation of orders and transactions will
work overall to the disadvantage of the Advisor before
transactions will be aggregated; and
(ii) instructs the Sub-Advisor not to make or book client limit
orders (being a specific instruction from the Advisor to buy or
sell a financial instrument at a
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specified price limit or better and for a specified size) in
respect of securities admitted to trading on a regulated market
which are not immediately executed under prevailing market
conditions.
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 Fund 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 Fund operations or the operations of
other investment companies advised or sub-advised by the Sub-
Advisor.
7. 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 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.
(c) If Advisor waives any or all of its advisory fee payable
under the Advisory Agreement, or reimburses the Trust pursuant
to Section 8(b) of that Agreement, with respect to the Fund,
Sub-Advisor will bear its share of the amount of such waiver or
reimbursement by waiving fees otherwise payable to it hereunder
on a proportionate basis to be determined by
4
comparing the aggregate fees that would otherwise be paid to it
hereunder with respect to the Fund to the aggregate fees that
would otherwise be paid by the Trust to Advisor under the
Advisory Agreement with respect to the Fund. Advisor shall
inform Sub-Advisor prior to waiving any advisory fees.
8. Indemnity.
(a) The Fund may, in the discretion of the Board of Trustees of
the Trust, 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 Fund 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 Fund 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 Fund 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's undertaking, (B) the
5
Fund 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 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 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.
(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 or by
the Trust or 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. As
used in this Section 9(a), the term "Sub-Advisor" shall include
any affiliates of the Sub-Advisor performing services for the
Fund contemplated hereby and partners, directors, officers and
employees of the Sub-Advisor and such affiliates.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge and agree that, as
provided in Article Nine of the Declaration of Trust, 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.
(c) The names "BlackRock Funds II" and "Trustees" of BlackRock
Funds II 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 April 26,
2007, which is hereby referred to and a copy of which is on file
at the office of the Secretary of the Commonwealth of
Massachusetts and at the principal office of the Trust, as may
be amended from time to time. The obligations of "BlackRock
Funds II" 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 Trust personally, but bind only
the Trust Property (as
6
defined in the Declaration of Trust), and all persons dealing
with any class of shares of the Trust must look solely to the
Trust Property belonging to such class for the enforcement of
any claims against the Trust.
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 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
outstanding voting securities of the Fund 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.)
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 Delaware
for contracts to be performed entirely therein without reference
to choice of law principles thereof and in accordance with the
applicable
7
provisions of the 1940 Act. To the extent that the applicable
laws of the State of Delaware, 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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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
By.
Name: [ ]
Title: [ ]
BLACKROCK INTERNATIONAL LIMITED
By.
Name: [ ]
Title: [ ]
BLACKROCK INTERNATIONAL LIMITED
By.
Name: [ ]
Title: [ ]
AGREED AND ACCEPTED
as of the date first set forth above
BLACKROCK FUNDS II, on behalf of BlackRock Managed Income Fund
By.
Name: [ ]
Title: [ ]
9
Schedule A
Sub-Investment Advisory Fee
Pursuant to Section 7, for that portion of the Fund for which
the Sub-Advisor acts as sub-advisor, Advisor shall pay a fee to
Sub-Advisor equal to [.]% of the advisory fee received by the
Advisor from the Fund with respect to such portion, net of: (i)
expense waivers and reimbursements, (ii) expenses relating to
distribution and sales support activities borne by the Advisor,
and (iii) administrative, networking, recordkeeping, sub-
transfer agency and shareholder services expenses borne by the
Advisor.
