Exhibit Exhibit (g)(3)
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated as of [ ], 2001, between BlackRock
Municipal Income Trust, a Delaware business 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 [ ], 2001 (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 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 held in the investment
portfolio 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 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 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 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: (i) prior to July 31, 2002, to 38% of the monthly
advisory fees received by the Advisor, (ii) from August 1, 2002 to July 31,
2003, to 19% of the monthly advisory fee received by the Advisor; and (iii)
after July 31, 2003, 0% of the advisory fees received by the Advisor;
provided that thereafter the Sub-Advisor may be compensated at cost for any
services rendered to the Trust at the request of the Advisor and approved
of by the Board of Trustees. 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 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 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, 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:
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By:______________________________
Name:
Title:
BLACKROCK MUNICIPAL INCOME TRUST
By:______________________________
Name:
Title:
