Exhibit 4(e)
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated December 31, 2008, 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 Global Allocation Portfolio (the "Fund"), a series of
BlackRock Series Fund, Inc. (the "Corporation"), 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 Funds;
WHEREAS, the advisory agreement between the Advisor and the
Corporation, dated September 29, 2006 (such agreement or the most recent
successor agreement between such parties relating to advisory services to the
Corporation is referred to herein as the "Advisory Agreement") contemplates that
the Advisor may sub-contract investment advisory services with respect to the
Funds to a sub-advisor pursuant to a sub-advisory agreement agreeable to the
Corporation 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; and
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.
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 Corporation's Board of Directors, 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 paragraph 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) assist 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 direction and control of the Corporation's Board of Directors, provide
to the Advisor or the Fund 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 Fund 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 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 Fund 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 currently in effect and as they may be amended or
supplemented from time to time) as stated in the Fund's Prospectus and Statement
of Additional Information and the resolutions of the Corporation's Board of
Directors.
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 Agreement and
Charter and By-Laws of the Corporation, as such documents are amended from time
to time; (iv) the investment objectives and policies of the Fund as set forth in
its Registration Statement on Form N-1A and/or the resolutions of the Board of
Directors; and (v) any policies and determinations of the Board of the Directors
of the Corporation and
(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. A summary of the
Sub-Advisor's Order Execution Policy accompanies this Agreement. The Advisor
hereby confirms that it has read and understood this. 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 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's and
their other clients
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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 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 Corporation's
Board of Directors 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.
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 Corporation are the property of the Corporation and further
agrees to surrender promptly to the Corporation any such records upon the
Corporation'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
Directors of the Corporation 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
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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 the 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 Directors
of the Corporation for calculating the value of the Fund's assets or delegating
such calculations to third parties.
8. Indemnity.
(a) The Fund 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 Corporation 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 Corporation or 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
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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 Directors of
the Corporation.
(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 Corporation 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 a Fund
unless it is subsequently determined that such Indemnitee is entitled to such
indemnification and if the Directors of the Corporation 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 Corporation shall be insured
against losses arising by reason of any unlawful advance, or (C) a majority of a
quorum consisting of Directors of the Corporation who are neither "interested
persons" of the Corporation (as defined in Section 2(a)(19) of the 0000 Xxx) nor
parties to the proceeding ("Disinterested Non-Party Directors") 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 Directors of the
Corporation, 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. 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 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.
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 Corporation's Board of Directors 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 Directors, who are
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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 Corporation 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 Corporation, on behalf of the Fund, or the Advisor shall be directed or
approved by the vote of a majority of the Directors of the Trust in office at
the time or by the vote of the holders of a majority of the voting securities of
the Fund 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 Corporation, on
behalf of the Fund, and the Advisor), and will terminate automatically upon any
termination of the Advisory Agreement between the Corporation 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 Directors of the Corporation, including a majority of those Directors 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 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. To the extent that
the applicable laws of the State of New York, 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.
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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: Xxxxxx X. Xxxxx
Title: Managing Director
BLACKROCK INTERNATIONAL LIMITED
By: ______________________________
Name: Xxxxxxxx Xxxx
Title: Managing Director
Agreed and Accepted:
BLACKROCK SERIES FUND, INC.
By: __________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer and
President of the Corporation
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Schedule A
Sub-Investment Advisory Fee
37.00% of the monthly advisory fee received by the Advisor from the Fund.
INFORMATION ON BLACKROCK'S ORDER EXECUTION POLICY
Background
The EU Markets in Financial Instruments Directive (MiFID) came into force on 1st
November 2007. One aspect of the legislation is that BlackRock is required to
take all reasonable steps to obtain the best possible result when dealing for
its clients, taking into account the execution factors referred to below. This
is often referred to as "best execution". Importantly, BlackRock is required to
establish and implement an order execution policy that demonstrates how it seeks
to obtain the best possible result in accordance with that obligation.
The purpose of this document is to provide Customers with a summary of
BlackRock's order execution policy.
This document covers all BlackRock entities resident within the European
Economic Area (EEA) that execute orders, place orders with, or transmit orders
to, other entities for execution. These are set out in more detail in the
Glossary.
Generally all orders and executions of equity instruments and foreign exchange
are managed by centralized, specialized dealing desks. Fixed income trades are
executed by portfolio managers or, in some cases, through specialized dealing
desks. The dealers are recognized as a significant part of the investment
process and BlackRock seeks to harness their dealing expertise to optimize
investment performance.
Execution Factors
Subject to any specific instructions that BlackRock receives, BlackRock takes
into account a range of factors in deciding where to execute deals in order to
obtain the best possible result for Customers. BlackRock dealers and portfolio
managers who place deals (referred to for this purpose collectively as dealers)
will determine the relative importance of a range of sometimes conflicting
factors by using their experience in the particular financial instruments and
markets being traded. Generally the most important factor that the dealers take
into account is the price of the financial instrument being traded, along with
any associated execution costs - the total consideration for the trade.
The diversity of the markets, the types of instruments BlackRock trades and the
kind of orders BlackRock places means that BlackRock often takes into account a
variety of factors in addition to the total consideration of the trade. These
other factors may include speed, likelihood of execution and settlement, the
size and nature of the order and market impact.
In some markets, price volatility may mean that the timeliness of execution is a
key factor, whereas in other markets or instruments that have low liquidity, it
may be the mere ability to execute the trade that is a key factor. In other
cases, BlackRock's choice of venue may be limited (even to the fact that there
may only be one platform/ market upon which BlackRock can execute Customers
orders) because of the nature of the trade.
For some types of financial instruments such as over-the-counter transactions
there is no formalized market or settlement infrastructure, which is
particularly relevant for certain fixed income and derivative trades.
Execution Criteria
When executing a deal, BlackRock will take into account a number of criteria for
determining the relative importance of the execution factors noted above. These
include a Customer's status, either as a Retail client or as a Professional
client, the nature of the order, the characteristics of the financial
instruments that are the subject of that order and the characteristics of the
execution venues to which that order can be directed.
Choice of Venue
BlackRock will take all reasonable steps to select venues that it believes are
most likely to provide the best result in the execution of orders. These venues
are generally accessed via brokers and include Regulated Markets such as the
London Stock Exchange, Multilateral Trading Facilities (MTFs) and electronic
communication networks (ECNs). Please see the Glossary for more information.
Where permitted, BlackRock may match buy and sell orders of stock between
Customers either through internal crossing arrangements or via ECNs in order to
minimize broker commission and market impact. BlackRock may also undertake
programmed trades where there is an appropriate basket of stocks to trade in
order to reduce overall transaction costs. In certain circumstances BlackRock
may execute trades outside of a Regulated Market or MTF.
To enable the dealers to assess the appropriate venue, they have access to
several sources of price information and news including Reuters and Bloomberg,
and receive indications of interest, quotes and information on market flow and
liquidity from brokers. This access to information is designed to allow dealers
to obtain the best possible result for BlackRock's Customers. BlackRock also
take steps to ensure that it does not structure or charge commissions in such a
way as to discriminate unfairly between execution venues.
More detailed information about the execution venues that BlackRock uses for
specific financial instruments is available on request.
Specific Instructions
BlackRock are not required to take the steps mentioned above when placing an
order with, or transmitting an order to, another entity for execution to the
extent that BlackRock is following specific instructions from a Customer.
Customers should be aware that any specific instruction given regarding the
execution of orders may prevent BlackRock from taking the steps that it has
designed and implemented in its execution policy to obtain the best possible
result in respect of the elements covered by those instructions.
Where a Customer's instructions relate only to part of an order, BlackRock will
continue to apply its execution policy to those aspects not covered by the
instruction.
Review
BlackRock will review its order execution policy and order execution
arrangements on an annual basis, as well as whenever a material change occurs
that affects its ability to continue to obtain the best possible result for its
Customers. BlackRock will notify Customers of any material change to its order
execution policy and order execution arrangements.
Consent to the Order Execution Policy
For a financial instrument admitted to trading on a Regulated Market or MTF,
BlackRock are required to obtain a Customer's prior express consent before it
executes an order in such instrument outside of a Regulated Market or MTF. This
allows BlackRock greater choice in the venues that it can use to execute orders,
and therefore restricting the execution of orders to Regulated Markets and MTFs
may have a detrimental effect on the quality of the execution that is provided.
Executing orders off-exchange though may provide less regulatory protection than
dealing on a Regulated Market or MTF.
Glossary
BlackRock - any BlackRock legal entity resident in the EEA (or branch thereof)
or branch of a non-EEA BlackRock legal entity resident in the EEA, from which
investment services are provided to clients including, but not restricted to,
BlackRock Investment Management (UK) Limited, BlackRock Asset Management UK
Limited, BlackRock Investment Management International Limited, BlackRock
International Limited and BlackRock (Netherlands) B.V.
Bid/ ask spreads - the difference between the market price quotations, for
buying and selling particular securities.
Electronic Communication Networks ("ECN") - an electronic execution venue for
fund managers that enables them to match buying and selling orders in securities
directly with other fund managers. Commissions are typically lower, while market
impact and bid/ ask spreads are removed altogether.
Financial instruments - the list of financial instruments set out in Annex 1
Section C of MiFID, as amended from time to time. These include, for example,
equity and fixed income securities, money market instruments, units in pooled
funds, derivatives and contracts for differences.
Internal crossing - a manager's decision to match a selling order of one client
with a buying order of another client without placing the order through the
market, thereby saving both clients the cost of the bid/ ask spread and broker
commissions.
MiFID - the Markets in Financial Instruments Directive (2004/39/EC), a European
Union Directive that forms part of the EU's Financial Services Action Plan,
which is the EU's ongoing initiative to improve the single market in financial
services.
Multilateral Trading Facility ("MTF") - a system, operated by an investment firm
or a market operator, which brings together multiple third-party buying and
selling interests in financial instruments.
Programmed trades - bulk trades for multiple securities placed through a single
broker at a significantly reduced commission rate.
Regulated Market - a multilateral system operated and/ or managed by an
authorized market operator, which brings together (or facilitates the bringing
together of) multiple third-party buying and selling interests in financial
instruments.
