BlackRock Funds (the "Registrant"): BlackRock Multi-Manager
Alternative Strategies 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 Sub-Advisory Agreement between BlackRock
Advisors, LLC and MeehanCombs, LP with respect to the Fund
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[Printer Note: Insert Rider G Here]
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT (the "Agreement") is made as of
July 23, 2014 by and between BLACKROCK ADVISORS, LLC, a Delaware
limited liability company (the "Adviser"), and MEEHANCOMBS, LP
(the "Sub-Adviser").
WHEREAS, BlackRock Funds, a Massachusetts business trust (the
"Trust"), is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, pursuant to an Investment Advisory Agreement (the
"Investment Advisory Agreement") by and between the Trust and
the Adviser, the Trust has appointed the Adviser to furnish
investment advisory and other services to the Trust on behalf of
BlackRock Multi-Manager Alternative Strategies Fund, a series of
the Trust (the "Fund"); and
WHEREAS, the Investment Advisory Agreement authorizes the
Adviser to retain one or more sub-advisers to furnish certain
investment advisory services to the Adviser and the Fund; and
WHEREAS, subject to the terms and provisions of this
Agreement, the Adviser desires to retain the Sub-Adviser to
furnish sub-investment advisory services on behalf of the Fund
or a designated portion of the assets of the Fund;
WHEREAS, the Sub-Adviser is willing to furnish such services
in accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the sufficiency of which is hereby
acknowledged, the Adviser and the Sub-Adviser hereby agree as
follows:
1. Appointment of the Sub-Adviser. The Adviser hereby
appoints the Sub-Adviser as an investment sub-adviser
with respect to the Fund for the period and on the
terms set forth in this Agreement. The Adviser may, in
its sole discretion, allocate all, only a portion or
none of the Fund's assets to the Sub-Adviser for
management. The Sub-Adviser will be responsible for
the investment of only the assets which the Adviser
allocates to the Sub-Adviser for management under this
Agreement, plus all investments, reinvestments and
proceeds of the sale thereof, including, without
limitation, all interest, dividends and appreciation
on investments, less depreciation thereof and
withdrawals by the Adviser therefrom (the "Managed
Portion"). The Adviser shall have the right at any
time to increase or decrease the allocation of the
Managed Portion to the Sub-Adviser if the Adviser
deems such increase or decrease appropriate. The Sub-
Adviser accepts that appointment and agrees to render
for the Managed Portion the services herein set forth,
for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Pursuant to this Agreement and subject to the
supervision of the Trust's Board of Trustees and
oversight of the Adviser, the Sub-Adviser shall, with
respect to the Managed Portion, furnish the Fund with
a continuous investment program for and manage the
investment and reinvestment of the Managed Portion. In
this regard, the Sub-Adviser shall, with respect to
the Managed Portion, determine in its discretion the
securities, cash and other financial instruments to be
purchased, retained or sold for the Managed Portion
within the parameters of the investment objective,
policies, restrictions and guidelines applicable to
the Managed Portion as agreed upon in writing by the
Adviser to the Sub-Adviser, as amended from time to
time (the "Investment Guidelines"), the provisions of
this Agreement, all applicable laws, rules and
regulations relating to the Managed Portion, and the
Registration Statement (as defined below).
Notwithstanding anything to the contrary set forth
herein, the Adviser shall provide the Sub-Adviser with
a commercially reasonable amount of prior written
notice ("Minimum Notice") of the effectiveness of (i)
any change in any of the Fund Documents, and (ii)
amendments to the Investment Guidelines. In the
performance of its duties and obligations under this
Agreement, the Sub-Adviser shall manage the Managed
Portion consistently with those changes, provided the
Sub-Adviser has received the Minimum Notice of such
changes from the Trust or the Adviser.
(b) The Adviser will provide the Sub-Adviser a list of
counterparties, brokerage firms or other financial
institutions (collectively, the "Counterparties") with
which the Managed Portion is permitted to engage in
transactions. The Adviser shall negotiate and finalize
on behalf of the Fund the terms of any account opening
documents, prime brokerage, cleared and uncleared swaps,
futures, options, forwards and other related agreements,
any ISDA master agreement, master repurchase agreement,
master securities lending agreement or any other master
swap or over-the-counter trading documentation,
including any schedule or credit support annex thereto,
any related clearing agreements or control agreements
and any other agreement related to the foregoing
(collectively, "Trading Agreements"). With respect to
each Trading Agreement, the Adviser will either (i)
provide a copy of the Trading Agreement to the Sub-
Adviser or (ii) identify certain terms and/or provisions
of the Trading Agreement in writing to Sub-Adviser. In
connection with its management of the Managed Portion,
(a) with respect to any Trading Agreement provided to
the Sub-Adviser, the Sub-Adviser agrees to comply with
the terms and conditions of such Trading Agreements and
(b) with respect to any Trading Agreement for which the
Adviser has identified certain terms and/or provisions
in writing to Sub-Adviser, the Sub-Adviser agrees to
comply with the terms and provisions so identified in
such writing. Adviser may amend or modify a Trading
Agreement or such writing from time to time by sending
written notice thereof to Sub-Adviser, and such
amendment or modification shall become effective on the
fifth calendar day following delivery thereof. Once the
Trading Agreements have been negotiated and executed by
Adviser, subject to any other written instructions of
Adviser or the Trust, the Sub-Adviser is hereby
appointed Adviser's and the Trust's agent and attorney-
in-fact for the limited purposes of executing such
additional documentation, contracts, instructions and
other documents and carrying out such duties as may be
required under the Trading Agreements in connection with
the Sub-Adviser's management of the Managed Portion
(including, where applicable, confirming transactions,
executing transaction-related documentation and causing
the Fund to perform any payment or delivery obligations
required under any Trading Agreement or transaction,
including without limitation, collateral or margin
payments), provided that (i) the Sub-Adviser's actions
in executing such documents and performing such duties
shall comply with applicable federal laws, the
regulations thereunder, the Sub-Adviser's duties and
obligations under this Agreement and the Trust's
Governing Documents (as defined below) and (ii) the Sub-
Adviser shall not execute any documentation pursuant to
the foregoing relating to the tax status or investor
status of the Fund without verifying such status with
the Adviser.
(c) The Sub-Adviser is hereby appointed the Fund's
agent and attorney-in-fact, and shall have a duty
hereunder, to exercise in its discretion all rights
and perform all duties which may be exercisable in
relation to the Managed Portion, including without
limitation the right to vote (or in its discretion,
abstain from voting), tender, exchange, endorse,
transfer, or deliver any securities on behalf of the
Fund, to participate in or consent to any class
action, distribution, bankruptcy proceeding, plan of
reorganization, creditors committee, merger,
combination, consolidation, liquidation, underwriting,
or similar plan with reference to such securities; and
to execute and bind the Fund in waivers, consents and
covenants related thereto. For the avoidance of doubt,
the Sub-Adviser has sole and full discretion to vote
(or abstain from voting) any securities in the Managed
Portion and neither the Fund nor the Adviser will,
directly or indirectly, attempt to influence the Sub-
Adviser's voting decisions. Further, to the extent the
Adviser is affiliated with a bank holding company, the
Adviser will not provide instruction to the Sub-
Adviser on how to vote securities of any U.S. bank
holding company (as that term is defined in the Bank
Holding Company Act of 1956, as amended).
(d) The Sub-Adviser shall act upon all proxies
solicited by or with respect to the issuers of
securities in which the assets of the Managed Portion
may be invested in accordance with the Sub-Adviser's
proxy voting policies and procedures, as presented to
the Fund, and in a manner that the Sub-Adviser
reasonably believes best serves the interests of the
Fund's shareholders and that complies with applicable
law. The Sub-Adviser represents and covenants that it
has adopted written proxy voting policies and
procedures as required under Rule 206(4)-6 of the
Investment Advisers Act of 1940, as amended ("Advisers
Act"), a copy of which has been provided to the Fund
and the Trust's Board of Trustees (the "Board"), and
that it will promptly provide (i) any material updates
of such policies and procedures to the Fund and the
Board, (ii) its voting records with respect to the
Managed Portion to the Fund or the Fund's proxy voting
service, as the Fund may direct in a format determined
by the Adviser and Sub-Adviser (and in any event
before July 15 of each year), so that the Fund may
meet its annual disclosure requirement pursuant to
Rule 30b1-4 under the 1940 Act, (iii) reports to the
Adviser and/or the Board, as the Fund may direct in
writing, in instances where the Sub-Adviser votes
counter to its proxy voting policies and (iv) a
summary of its proxy voting policies and procedures
for including in the Trust's Registration Statement,
if so requested in writing. The Sub-Adviser shall be
responsible for responding to any class action claim
with respect to any investment(s) made with the
Managed Portion and shall notify promptly the Fund of
any such claims.
(e) Subject to the Adviser's performance of its
obligations under Sections 2(a) and 6(a) hereof, the
Sub-Adviser shall discharge its responsibilities
hereunder subject to the supervision of the Adviser,
the Board and the officers of the Trust and in
compliance with (i) except as set forth in the
Investment Guidelines, the 1940 Act and the Advisers
Act, and the rules and regulations adopted under each
from time to time; (ii) the requirements of Sections
851(b)(2) and 851(b)(3) of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"),
applicable to regulated investment companies (as
defined in the Internal Revenue Code), which would
solely relate to the Managed Portion; (iii) the
Commodity Exchange Act, as amended (the "CEA"), and
the rules and regulations adopted thereunder from time
to time relating solely to the Managed Portion; (iv)
all other applicable federal and state laws and
regulations, including without limitation, the rules
of any self-regulatory organization, except to the
extent that the failure to comply therewith would not
reasonably be expected to have an adverse effect upon
the Fund; (v) any 1940 Act exemptive order applicable
to the Managed Portion; (vi) the Trust's Declaration
of Trust and By-Laws, as each may be amended from time
to time (collectively, the "Governing Documents");
(vii) the objectives, policies and limitations for the
Fund set forth in the Registration Statement (as
defined herein); and (viii) the Investment Guidelines
and such other guidelines, policies and procedures
implemented by the Adviser with respect to the Fund or
to the Sub-Adviser's activities under this Agreement
and provided to the Sub-Adviser in writing ("Adviser
Procedures"). The Sub-Adviser shall maintain
compliance procedures and operational processes only
for the Managed Portion to ensure the Managed
Portion's compliance with the foregoing and that the
Sub-Adviser reasonably believes are adequate to ensure
the Managed Portion's compliance with applicable
securities law. The Sub-Adviser and Adviser
acknowledge that the Sub-Adviser is not the compliance
agent for the Adviser or the Trust, or with respect to
the Fund, and does not have access to all of the
Trust's or the Fund's books and records, or the books
and records of the Adviser or books and records of
another sub-adviser to the Fund which would be
necessary to perform compliance testing, including,
but not limited to, testing for compliance of the Fund
as a whole with the requirements of Sections 851(b)(2)
and 851(b)(3) of the Internal Revenue Code or any
other requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment
companies. To the extent that the Sub-Adviser has
agreed to perform any services specified in this
Section 2(e), the Sub-Adviser shall perform such
services based upon its reasonable interpretations of
applicable securities and tax laws and regulations and
shall not be liable under this Agreement (except to
the extent that the Adviser has otherwise given Sub-
Adviser guidance in writing or Sub-Adviser breaches
the Liability Standard) (i) for any such services
performed in compliance with this Section 2(e), and
(ii) to the extent that any such liability results
solely from the aggregation of any assets being
managed by another sub-adviser to the Fund where the
Managed Portion is in compliance with the Adviser
Procedures.
(f) The Sub-Adviser agrees that it will not consult
with any other sub-investment adviser for the Fund or
the Trust or any other fund under common control with
the Trust, concerning transactions for the Managed
Portion in securities or other assets, except that
such consultations are permitted between the current
and successor sub-investment advisers of the Fund in
order to effect an orderly transition of sub-advisory
duties so long as such consultations are not
transactions prohibited by Section 17(a) of the 1940
Act.
(g) On behalf of the Fund, the Adviser hereby
authorizes any entity or person associated with the
Sub-Adviser which is a member of a national securities
exchange to effect any transaction on the exchange for
the account of the Fund which is permitted by Section
11(a) of the 1934 Act and Rule 11a2-2(T) thereunder,
and on behalf of the Fund, the Adviser hereby consents
to the retention of compensation for such transactions
in accordance with Rule 11a2-2(T)(a)(2)(iv).
Notwithstanding the foregoing, the Sub-Adviser agrees
that it will not deal with itself, or with members of
the Board or any principal underwriter of the Fund, as
principals or agents in making purchases or sales of
securities or other property for the account of the
Fund, nor will the Sub-Adviser purchase any securities
from an underwriting or selling group in which the
Sub-Adviser or its affiliates is participating, or
arrange for purchases and sales of securities between
the Fund and another account advised by the Sub-
Adviser or its affiliates, except in each case as
permitted by the 1940 Act and in accordance with such
policies and procedures as may be adopted by the Fund
from time to time and disclosed to the Sub-Adviser,
and will comply with all other provisions of the
Governing Documents and the Fund's then-current
Registration Statement relative to the Sub-Adviser and
its directors, officers and employees.
3. Fund Transactions.
(a) In connection with purchases and sales of
portfolio securities and other instruments for the
account of the Fund, neither the Sub-Adviser nor its
affiliated persons (as defined in the 0000 Xxx) or any
of their respective partners, officers or employees
shall act as principal, except as otherwise permitted
by the 1940 Act. The Sub-Adviser or its agents shall
arrange for the placing of orders for the purchase and
sale of portfolio securities and other financial
instruments for the Fund's account either directly
with the issuer or with any Counterparty, provided
that the Sub-Adviser complies with Section 2(b) with
respect to each such Counterparty.
(b) In the selection of any such brokers or dealers by
the Sub-Adviser (subject to Section 2(b)) and the
placing of such orders from those brokers or dealers,
the Sub-Adviser is directed at all times to seek to
obtain for the Managed Portion the most favorable
execution and net price available. It is also
understood that it may be desirable for the Managed
Portion that the Sub-Adviser have access to
supplemental investment and market research and
security and economic analyses that are consistent
with Section 28(e) of the 1934 Act, and are provided
by brokers who may execute brokerage transactions at a
higher cost to the Managed Portion than may result
when allocating brokerage to other brokers on the
basis of seeking the most favorable price and
efficient execution. Therefore, subject to compliance
with the safe harbor provided by Section 28(e) of the
1934 Act and such other conditions and limitations as
may be established by the Adviser from time to time,
if any, the Sub-Adviser is authorized to consider such
services provided to the Managed Portion and other
accounts over which the Sub-Adviser or any of its
affiliates exercises investment discretion and to
place orders for the purchase and sale of securities
for the Managed Portion with such brokers, if the Sub-
Adviser determines in good faith that the amount of
commissions for executing such portfolio transactions
is reasonable in relation to the value of the
brokerage and research services provided by such
brokers, subject to review by the Adviser and the
Board from time to time with respect to the extent and
continuation of this practice. It is understood that
the services provided by such brokers may be useful to
the Sub-Adviser in connection with its services to
other clients. The Sub-Adviser may, on occasions when
it deems the purchase or sale of a security to be in
the best interests of the Managed Portion as well as
its other clients, aggregate, to the extent permitted
by applicable laws, rules and regulations, the
securities to be sold or purchased in order to obtain
the best net price and the most favorable execution.
In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in
the transaction, shall be made by the Sub-Adviser in
the manner it considers to be the most equitable and
consistent with its obligations to the Managed Portion
and to such other clients. The Board may from time to
time adopt policies and procedures that modify and/or
restrict the Sub-Adviser's authority regarding the
execution of the Managed Portion's portfolio
transactions provided herein so long as such policies
and procedures are consistent with applicable law.
(c) The Sub-Adviser shall not acquire on behalf of the
Managed Portion any equity securities registered under
Section 12 of the 1934 Act with the purpose or effect,
at the time of such acquisition, of changing or
influencing control of the issuer of the securities or
in connection with or as a participant in any
transaction having such purpose or effect, including
any transaction subject to Rule 13d-3(b) promulgated
under the 1934 Act. For purposes of all applicable
filing requirements under the 1934 Act, including
without limitation Sections 13(d) and (g), and other
laws, the Sub-Adviser shall be deemed to have sole
investment discretion with respect to all securities
held in the Managed Portion. If any investments made
by the Sub-Adviser on behalf of the Managed Portion
are required to be disclosed in any other reports to
be filed by the Sub-Adviser with any governmental or
self-regulatory agency or organization or exchange,
the Sub-Adviser shall provide the Adviser with prompt
written notice thereof, setting forth in reasonable
detail the nature of the report and the investments of
the Managed Portion to be reported.
(d) The Fund may establish one or more wholly-owned
subsidiaries of the Fund through which it may conduct
a significant portion of its commodities investing
activities or for other investment purposes.
(e) The Adviser has received the Fund's written
consent and authorization for the Sub-Adviser to enter
into "block trades" (as defined in Commodity Futures
Trading Commission ("CFTC") regulations) involving
"swap" transactions (as defined in the CEA) on the
Fund's behalf when available and in accordance with
the Investment Guidelines and applicable laws and
regulations. The Adviser has provided a copy of such
consent to the Sub-Adviser. Pursuant to such consent,
the Sub-Adviser may aggregate orders executed on the
Fund's behalf with orders executed on behalf of other
clients of the Sub-Adviser in order to meet applicable
minimum block size requirements.
4. Compensation of the Sub-Adviser.
(a) For the services provided and the expenses assumed
by the Sub-Adviser pursuant to this Agreement,
Adviser, not the Fund, shall pay to the Sub-Adviser a
fee, computed daily and payable monthly, in arrears,
at an annual rate of the average daily net assets of
the Managed Portion that the Sub-Adviser manages
(computed in the manner specified in the Investment
Advisory Agreement), in accordance with the schedule
attached hereto as Exhibit A.
(b) If this Agreement becomes effective or terminates
before the end of any month, the fee for the period
from the effective date to the end of the month or
from the beginning of such month to the date of
termination, as the case may be, shall be pro-rated
according to the proportion that such period bears to
the full month in which such effectiveness or
termination occurs.
5. Expenses. The Sub-Adviser agrees, at its own expense, to
render the services set forth herein and to provide
the office space, furnishings, equipment and personnel
required by it to perform such services on the terms
and for the compensation provided in this Agreement.
The Fund shall be responsible for payment of brokerage
commissions, transfer fees, pricing services,
registration costs, transaction-related taxes and
other similar costs and transaction-related expenses
and fees arising out of transactions effected on
behalf of the Fund, which shall be deducted from the
Managed Portion. Subject to the foregoing, the Sub-
Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement,
including without limitation, all costs associated
with attending or otherwise participating in regular
or special meetings of the Board or shareholders, or
with the Adviser, as requested, and additions or
modifications to the Sub-Adviser's operations
necessary to perform its services hereunder in
compliance with this Agreement, the Investment
Guidelines, any other adviser Adviser Procedures and
applicable law. The Sub-Adviser shall be responsible
for all costs associated with any information
statements and/or other disclosure materials that are
for the primary benefit of the Sub-Adviser (including,
but not limited to, the legal fees associated with
preparation, printing, filing and mailing thereof, as
well as any shareholder meeting and/or solicitation
costs, if applicable).
6. Delivery of Information, Reports and Certain
Notifications.
(a) At least two days prior to the date of the
Agreement, the Adviser has furnished to the Sub-
Adviser photocopies of all of the most current
Governing Documents, Trading Agreements, a draft of
the Fund's registration statement on Form N-1A under
the 1940 Act, as amended from time to time, or any
successor form thereto ("Registration Statement"),
Adviser Procedures, and current draft prospectus and
statement of additional information. The Adviser
shall timely provide to Sub-Adviser any and all
amendments or supplements to any of the foregoing as
well as all such other information with regard to the
affairs of the Fund as the Sub-Adviser may reasonably
request.
(b) The Sub-Adviser shall report regularly on a timely
basis to the Adviser and to the Board and shall make
appropriate persons, including portfolio managers,
available for the purpose of reviewing with
representatives of the Adviser and the Board on a
regular basis at reasonable times the management of
the Managed Portion, the performance of the Managed
Portion in relation to standard industry indices and
the Fund's own performance benchmark, and general
conditions affecting the marketplace. The Sub-Adviser
agrees to render to the Adviser such other periodic
and special reports on a timely basis regarding its
activities under this Agreement as the Adviser may
reasonably request.
(c) The Sub-Adviser shall provide the Adviser, the
Fund or the Board with such information and assurances
(including certifications and sub-certifications) and
with such assistance as the Adviser, the Fund or the
Board may reasonably request from time to time in
order to assist it in complying with applicable laws,
rules, regulations and exemptive orders, including
requirements in connection with the Adviser's, the
Sub-Adviser's or the Board's fulfillment of its
responsibilities under Section 15(c) of the 1940 Act
and the preparation and/or filing of periodic and
other reports and filings required to maintain the
registration and qualification of the Fund, or to meet
other regulatory or tax requirements applicable to the
Fund, under federal and state securities, commodities
and tax laws and other applicable laws. The Sub-
Adviser shall review draft reports to shareholders,
registration statements, marketing materials or
amendments or supplements thereto or portions thereof
that relate to the Managed Portion or the Sub-Adviser
and other documents provided to the Sub-Adviser,
provide comments on such drafts on a timely basis, and
provide certifications or sub-certifications on a
timely basis as to the accuracy of the information
provided by the Sub-Adviser and/or contained in such
reports or other documents.
(d) The Sub-Adviser agrees to provide and update
promptly but no less frequently than quarterly a list
of all the affiliates of the Sub-Adviser, and to
promptly notify the Adviser and the Fund of any change
of control of those affiliates.
(e) The Sub-Adviser agrees to provide any and all
material composite performance information, records
and supporting documentation about accounts the Sub-
Adviser manages, if appropriate, which are relevant to
the Managed Portion and that have investment
objectives, policies, and strategies substantially
similar to those employed by the Sub-Adviser in
managing the Managed Portion that may be reasonably
necessary, under applicable laws, to allow the Fund or
its agent to present information concerning the Sub-
Adviser's prior performance in the Registration
Statement of the Fund and any permissible reports and
materials prepared by the Fund or its agent.
7. Cooperation with the Fund, the Adviser and Other Service
Providers.
(a) The Sub-Adviser agrees to cooperate with and
provide reasonable assistance to the Adviser, the
Fund, the Fund's custodian, accounting agent,
administrator, pricing agents, independent auditors
and all other agents, representatives and service
providers of the Fund and the Adviser, and to provide
the foregoing persons such information with respect to
the Managed Portion as they may reasonably request
from time to time in the performance of their
obligations; provide prompt responses to reasonable
requests made by such persons; and establish and
maintain appropriate operational programs, procedures
and interfaces with such persons so as to promote the
efficient exchange of information and compliance with
applicable laws, rules and regulations, and the
guidelines, policies and procedures adopted or
implemented with respect to the Fund and/or the Sub-
Adviser.
(b) The Fund's assets (including the Managed Portion)
shall be held by a custodian appointed by the Fund
pursuant to a separate custody agreement; the Sub-
Adviser and its affiliates shall at no time have
custody or physical control of any assets or cash of
the Fund. The Sub-Adviser shall advise the Fund's
custodian and accounting agent on a prompt basis of
each purchase and sale of a portfolio security or
other financial instrument specifying the name of the
issuer or Counterparty, the description, terms and
amount of shares or principal amount of the security
or other financial instrument purchased or sold, the
market price, commission and gross or net price, trade
date, settlement date and identity of the effecting
broker or dealer and such other information as may
reasonably be required. The Sub-Adviser shall arrange
for the transmission to the Fund's custodian, Adviser
and accounting agent on a daily basis such
confirmation, trade tickets, and other documents and
information as may be reasonably necessary to enable
the custodian, Adviser and accounting agent to perform
their administrative, recordkeeping and other
responsibilities with respect to the Fund.
(c) Without limiting the generality of the foregoing
and in furtherance thereof, the Sub-Adviser shall
report to the Fund's custodian and accounting agent
all trades and positions in the Managed Portion daily
(in such form and at such times as specified by the
Fund's custodian and accounting agent), including any
trade it has entered into for which it has not
received confirmation, and shall also request each
executing broker and Counterparty to deliver its own
such transaction and position reporting, and any
information related to any corporate action relevant
to the investments of the Managed Portion (in such
form and at such times as specified by the Fund's
custodian and accounting agent).
(d) The Sub-Adviser shall reconcile all trades with
each executing broker and Counterparty daily to ensure
accurate trade settlement and verify open positions
(including cash). The Fund or its designee may also
conduct a reconciliation of trades as reported from
executing brokers and Counterparties and the Sub-
Adviser shall cooperate with the Fund or such designee
in order to effect such reconciliation, including
without limitation by arranging for access by the Fund
or such designee to the files and websites of the
executing brokers and Counterparties. In addition, the
Sub-Adviser shall promptly review each holdings
reconciliation report that it receives from the Fund's
custodian and accounting agent and/or the Adviser, as
appropriate, and shall work to resolve all open
reconciliation items, including trade breaks,
contained in such report promptly in the course of its
duties hereunder, provided that the Adviser, the
Fund's custodian, and accounting agent each provide
their reasonable cooperation relating thereto.
(e) The Sub-Adviser shall provide reasonable
assistance to the Board, the Adviser, the custodian or
administrator for the Fund in determining or
confirming, consistent with the Adviser Procedures and
the Registration Statement, the value of any portfolio
securities or other assets or liabilities of the
Managed Portion for which the Adviser, custodian or
administrator seeks assistance from the Sub-Adviser or
identifies for review by the Sub-Adviser. This
assistance includes (but is not limited to): (i)
designating and providing access to one or more
employees of the Sub-Adviser who are knowledgeable
about the security or other asset or liability, its
issuer or counterparty (as applicable), its financial
condition, trading and/or other relevant factors for
valuation, which employees shall be available for
consultation when the Board or a designated committee
thereof convenes; (ii) assisting the Board, Adviser,
the custodian or the administrator in obtaining bids
and offers or quotes from broker-dealers or market-
makers with respect to investments held in the Managed
Portion, upon the reasonable request of the Adviser,
custodian or administrator; (iii) upon the request of
the Board, Adviser, the custodian or the
administrator, providing recommendations for pricing
and fair valuations (including the methodology and
rationale used in making such recommendation and such
other relevant information as may be requested); and
(iv) maintaining adequate records and written backup
information with respect to the investments valuation
assistance provided hereunder, and providing such
information to the Board, Adviser or the Fund upon
request, with such records being deemed Fund records.
The Sub-Adviser shall promptly notify the Adviser if,
for any reason, the Sub-Adviser believes that the
price of any security or other investment in the
Managed Portion may not accurately reflect the value
thereof. In addition, the Sub-Adviser shall provide to
the Adviser, on a timely basis after the end of each
month but no later than 5 days after the end of each
such month, a report listing all securities and other
instruments in the Managed Portion for which the Sub-
Adviser has made its own valuation determinations or
has obtained valuation determinations made by others,
which report shall include for each security or
instrument the date on which a value was determined,
the value determined, the source of the valuation, and
the methodology and rationale used in making such
determination. Additionally, the Sub-Adviser shall be
responsible for obtaining valuations for derivative
instruments from Counterparties and for providing that
information (and any valuation determinations made by
the Sub-Adviser) to the Adviser for its consideration
on the monthly reports required under this Section
7(e).
(f) From time to time as the Board or the Adviser may
reasonably request, the Sub-Adviser shall furnish to
the Adviser, the Board and the officers of the Trust
reports on portfolio transactions and reports on
issuers of securities and other financial instruments,
Counterparties and underlying reference terms of
Trading Agreements and any other relevant information
regarding any positions held in the portfolio, all in
such detail as the Trust or the Adviser may reasonably
request, including but not limited to, quarterly
reports documenting the Sub-Adviser's compliance with
Sections 10(f), 12(d)(3), 17(a) and 17(e) of the 1940
Act, and the rules thereunder, in its management of
the assets in the Managed Portion, quarterly
compliance checklists developed for the Managed
Portion by the Adviser, quarterly and annual
certifications under Rule 38a-1 under the 1940 Act and
under Rule 206(4)-7 under the Advisers Act, annual
reports under Rule 206(4)-7 under the Advisers Act and
an annual due diligence questionnaire and, to the
extent available, any external third party audit
reports, including pursuant to Statement on Standards
for Attestation Engagements (SSAE) No. 16. Without
limiting the foregoing, the Sub-Adviser agrees that it
shall certify to the Fund on a timely basis after the
end of each calendar quarter that it has complied with
all of the Investment Guidelines, all applicable laws
and regulations and other conditions and agreements
contained herein during the prior calendar quarter.
(g) In addition, the Sub-Adviser shall assist the Fund
and the Adviser in complying with the provisions of
the Xxxxxxxx-Xxxxx Act of 2002 and shall provide
certifications in the form reasonably requested by the
Fund relating to the Sub-Adviser's services under this
Agreement. The Sub-Adviser shall provide necessary
support to the Fund and the Adviser in preparing and
presenting the Fund's financial statements, and in
doing so shall be responsible for applying appropriate
accounting and financial reporting principles and
maintaining policies and internal controls and
procedures, including internal controls over financial
reporting, designed to assure compliance with
generally accepted accounting principles (GAAP) and
applicable laws and regulations.
(h) The Sub-Adviser shall, in connection with its
management of the Managed Portion, further notify the
Adviser promptly upon detection of (i) any error that
causes any financial impact to the Fund, (ii) any
violation of law regardless of whether there is a
financial impact to the Fund or (iii) any operational
error arising out of or resulting from a significant
breakdown in the Sub-Adviser's processes or controls
that causes or could reasonably be expected to cause
financial or reputational exposure to the Adviser or
the Fund, in each case, including but not limited to
any trade errors. In the event of any such error,
violation of law or operational error, including any
trade error, the Sub-Adviser shall provide a
memorandum to the Adviser that sufficiently describes
any such error, violation of law or operational error
and the action to be taken to prevent future
occurrences of such error, violation of law or
operational error or, alternatively, a statement that
the Sub-Adviser has reviewed the relevant controls,
and has determined those controls are reasonably
designed to prevent additional errors, violations of
law or operational errors in the future (and, to the
extent relevant, that such controls are reasonably
designed to prevent violations of the federal
securities laws), and as such no further action is
required. Further, the Sub-Adviser shall provide
access to the Adviser and the Fund, or their agents,
to all documents and information related to any such
error, violations of law or operational error, its
analysis and correction. The correction of all such
errors, violations of law or operational errors
impacting the Fund must be corrected to the
satisfaction of the Adviser and the Fund, which will
include reimbursement to the Fund of costs incurred
due to the error, violation of law or operational
error, if any, provided, further, that any such
reimbursement shall only be required in the event that
such error, violations of law or operational errors
was caused by or resulted from a breach of the
Liability Standard.
(i) Each party to this Agreement agrees to cooperate
with each other party and with all appropriate
governmental authorities having the requisite
jurisdiction (including, but not limited to, the
Securities and Exchange Commission, CFTC and state
regulators) in connection with any investigation or
inquiry relating to this Agreement or the Fund.
8. Compliance.
(a) The Sub-Adviser shall notify the Adviser promptly
(and, in any event, within 24 hours) upon detection of
(i) any breach by it of any of the Investment
Guidelines, any Adviser Procedures, the Registration
Statement and of any violation of the Adviser's Act or
the 1940 Act and Sections 851(b)(2) and 851(b)(3) of
the Internal Revenue Code relating solely to the
Managed Portion. The Sub-Adviser shall also notify the
Adviser promptly upon detection of any violations of
the Sub-Adviser's own compliance policies and
procedures that relate to (1) its management of the
Managed Portion, and (2) its activities as investment
adviser generally to the extent such violation could
be considered material to the Sub-Adviser's advisory
clients. In addition, the Sub-Adviser shall promptly
provide the Adviser a memorandum of the type described
in Section 7(h).
(b) The Sub-Adviser represents and warrants that it
has adopted and implemented written policies and
procedures, as required by: (i) Rule 206(4)-7 under
the Advisers Act that are reasonably designed to
prevent violations of the Advisers Act and the rules
thereunder by the Sub-Adviser and its supervised
persons ("Advisers Act Compliance Procedures"), and
the Adviser and the Trust have been provided a copy of
a summary of the Advisers Act Compliance Procedures
and will be provided with any future amendments
thereto; and (ii) Rule 38a-1 under the 1940 Act, with
respect to the Sub-Adviser and the Managed Portion,
that are reasonably designed to prevent violations of
the Federal Securities Laws, as defined in Rule 38a-1,
by the Sub-Adviser, its employees, officers, and
agents ("Fund Compliance Procedures"), and the Adviser
and the Trust have been provided a copy of a summary
of the Fund Compliance Procedures and will be provided
with any future amendments thereto. The Sub-Adviser
has and shall provide its compliance policies and
procedures pertaining to the Sub-Adviser's services
provided to the Fund under this Agreement to the
Fund's Chief Compliance Officer to permit the Fund's
Chief Compliance Officer to conduct review and
oversight of such policies and procedures in
accordance with Rule 38a-1 under the 1940 Act and
shall promptly notify the Adviser of: (1) any material
changes to its compliance policies and procedures; (2)
any new policies and procedures that the Sub-Adviser
adopts pursuant to Rule 206(4)-7 under the Advisers
Act or otherwise as they pertain to activities
performed for or on behalf of the Fund; and (3) the
retirement of any policies and procedures previously
adopted by the Sub-Adviser pursuant to Rule 206(4)-7
under the Advisers Act or otherwise as they pertained
to activities performed for or on behalf of the Fund.
The Sub-Adviser shall also prepare and provide to the
Adviser and the Board summaries of its compliance
policies and procedures that reflect the objective and
key controls of each corresponding policy. The Fund,
the Adviser, or the Fund's Chief Compliance Officer
may make any reasonable request for the provision of
information or for other cooperation from the Sub-
Adviser with respect to the Sub-Adviser's duties under
this Agreement, and the Sub-Adviser shall use its best
efforts to promptly comply with such request,
including without limitation furnishing the Fund, the
Adviser, or the Fund's Chief Compliance Officer with
such documents, reports, data and other information as
the Fund may reasonably request regarding transactions
on behalf of the Fund, the Sub-Adviser's performance
hereunder or compliance with the terms hereof, and
participating in such meetings (and on-site visits
among representatives of the Fund and the Sub-Adviser)
as the Fund may reasonably request. The Sub-Adviser
agrees to maintain and implement a compliance program
that complies with the requirements of Rule 206(4)-7
under the Advisers Act.
(c) The Sub-Adviser represents and warrants that it
has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and
Section 204A of the Advisers Act and has provided the
Fund with a copy of the code of ethics and evidence of
its adoption, and will promptly notify the Sub-Adviser
of any material changes to (including policies added
to or deleted from) its code of ethics. Within thirty
(30) days of the end of the last calendar quarter of
each year while this Agreement is in effect or upon
the written request of the Fund, the Adviser, or the
Fund's Chief Compliance Officer, the president or a
vice president or general partner or managing member
or the equivalent of the Sub-Adviser shall certify to
the Fund that (i) the Sub-Adviser has complied with
the requirements of Rule 17j-1 and Section 204A during
the previous year and that there has been no violation
of the Sub-Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was
taken in response to such violation and Sub-Adviser
has provided a written report to the Adviser regarding
the violation and (ii) the Sub-Adviser has adopted
procedures reasonably designed to prevent Access
Persons from violating the code of ethics. Upon the
written request of the Fund, the Adviser, or the
Fund's Chief Compliance Officer, the Sub-Adviser shall
permit the Fund, the Adviser, and their employees or
agents to examine the reports required to be made to
the Sub-Adviser by Rule 17j-1(d)(1).
(d) The Sub-Adviser has established and will keep in
effect a "disaster recovery" preparedness plan that
sets forth procedures for recovery of critical
business functions at minimum operating levels and can
be implemented within a 6 hour time period. The Sub-
Adviser shall notify the Adviser, as soon as
practicable by telephone, electronic mail or such
other method of prompt communication as may be
available under the circumstances, of the occurrence
of any event requiring the Sub-Adviser to implement
any procedures under such plan.
9. Insurance. The Sub-Adviser shall maintain errors and
omissions insurance coverage and fidelity insurance
coverage, each in such amounts as agreed upon from
time to time by the Adviser and the Sub-Adviser, and
from insurance providers that are in the business of
regularly providing insurance coverage to investment
advisers. In no event shall the Sub-Adviser's errors
and omissions insurance coverage be less than $1
million or the Sub-Adviser's fidelity insurance
coverage be less than $1 million. The Sub-Adviser
shall provide prior written notice to the Adviser (i)
of any material changes in its insurance policies or
insurance coverage; or (ii) if any material claims
will be made on its insurance policies. Furthermore,
it shall upon request provide to the Adviser any
information it may reasonably require concerning the
amount of or scope of such insurance.
10. Status of the Sub-Adviser. The Sub-Adviser shall, for
all purposes herein provided, be deemed to be an
independent contractor and, except as expressly
provided or authorized herein, shall have no authority
to act for or represent the Fund in any way or
otherwise be deemed an agent of the Adviser or the
Fund.
11. Services Not Exclusive. Nothing in this Agreement shall
limit or restrict the right of the Sub-Adviser or any
director, officer, affiliate or employee of the Sub-
Adviser to engage in any other business or to devote
his or her time and attention in part to the
management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
12. Representations and Warranties of the Sub-Adviser.
(a) The Sub-Adviser represents and warrants to the
Adviser that: (i) it is registered as an investment
adviser under the Advisers Act and is registered or
licensed as an investment adviser under the laws of
all jurisdictions in which its activities require it
to be so registered or licensed; (ii) it is registered
as a commodity trading advisor ("CTA") and a member of
the National Futures Association; (iii) it will
maintain each such registration, license or membership
in effect at all times during the term of this
Agreement to the extent that such registration is
required of it and will obtain and maintain such
additional governmental, self-regulatory, exchange or
other licenses, approvals and/or memberships and file
and maintain effective such other registrations as may
be required to enable the Sub-Adviser to perform its
obligations under this Agreement; (iv) it is duly
organized and validly existing, and is authorized to
enter into this Agreement and to perform its
obligations hereunder and this Agreement has been duly
executed and delivered by the Sub-Adviser; (v) this
Agreement is enforceable against the Sub-Adviser in
accordance with its terms, subject as to enforcement
to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of
general applicability relating to or affecting
creditors' rights and to general equity principles;
and (vi) neither the execution or delivery of this
Agreement by the Sub-Adviser nor its performance of
its obligations hereunder shall conflict with,
violate, breach or constitute a default under any term
or provision of its constituent or governing documents
or any indenture, mortgage, deed of trust, instrument,
agreement or other document to which the Sub-Adviser
is a party or by which it is bound or to which any of
its assets are subject or any applicable statute, law,
rule, regulation, order or other legal requirement
applicable to the Sub-Adviser or any of its assets.
(b) The Sub-Adviser shall promptly notify the Adviser
and the Trust in writing of the occurrence of any of
the following events: (i) any breach of this
Agreement; (ii) any of the representations and
warranties of the Sub-Adviser contained herein becomes
untrue after the execution of this Agreement; (iii)
any event that would disqualify the Sub-Adviser from
serving as an investment adviser of an investment
company pursuant to Section 9(a) of the 1940 Act or
other applicable law, rule or regulation or if the
Sub-Adviser becomes aware that it is or likely may
become subject to any statutory disqualification
pursuant to Section 9(b) of the 1940 Act or otherwise
that prevents the Sub-Adviser from serving as an
investment adviser or performing its duties pursuant
to this Agreement; (iv) the Sub-Adviser shall have
been served or otherwise becomes aware of any action,
suit, proceeding, inquiry or investigation applicable
to it, at law or in equity, before or by any court,
public board or body, involving or in any way relevant
to the affairs of the Fund which could reasonably be
expected to have a material adverse effect on the Sub-
Adviser, which, for the avoidance of doubt, shall not
include periodic, general sweeps, inspections, notices
of inquiries from any governmental administrative or
self-regulatory agency; (v) Xxxxxxx Xxxxxx, CIO of the
Sub-Adviser (together with such other persons as the
Adviser and the Sub-Adviser may agree in writing from
time to time, the "Key Personnel") is no longer
active, or is proposed to no longer be active, in the
day-to-day management of and/or trading decisions for
the Managed Portion; (vi) any adverse change in the
position, function, regulatory or licensing status or
other circumstances of any such person) of any of the
Key Personnel which may adversely affect the Managed
Portion; (vii) any imminent change in control of the
Sub-Adviser; (viii) any proposed assignment of this
Agreement; (ix) the Sub-Adviser becomes aware of any
material fact respecting or relating to the Sub-
Adviser or the investment strategies of the Managed
Portion that is not contained in the Registration
Statement, as amended and supplemented from time to
time, regarding the Fund, or any amendment or
supplement thereto, but that is required to be
disclosed therein, and of any statement respecting or
relating to the Sub-Adviser, the Sub-Adviser's
investment strategies or the Managed Portion contained
therein that becomes untrue in any material respect;
(x) any change in the Sub-Adviser's financial
condition which would reasonably be likely to have a
materially adverse impact on its abilities to perform
its duties hereunder and of any reduction in the
amount of coverage under the Sub-Adviser's errors and
omissions or professional liability insurance
coverage; (xi) Sub-Adviser becomes aware of any event
or circumstance that could reasonably constitute (or
will constitute with the passage of time) a default,
event of default, or termination event (or other
similar event or circumstance, however defined) under
any Trading Agreement or otherwise with respect to the
Managed Portion, and Sub-Adviser hereby agrees to use
its commercially reasonable efforts to monitor the
occurrence of any such event or circumstance; (xii)
any Counterparty (A) communicates to Sub-Adviser (in
any manner whatsoever) that such Counterparty will
declare, might declare, or believes it is entitled to
declare, a default, event of default, or termination
event (or other similar event or circumstance, however
defined) or (B) makes any changes to (i) the fees,
rates, or other charges or (ii) the daily or aggregate
trading limits, margin requirements, eligible
collateral requirements, or other risk parameters
applicable to the Managed Portion, and in each case
Sub-Adviser shall forward to Adviser all
correspondence received from such Counterparty in
connection therewith; and (xiii) any change in the
Sub-Adviser's status as a registered CTA, or any event
that will make it ineligible to be registered as a
CTA. The Sub-Adviser further agrees to notify the
Adviser and the Trust promptly if any statement
regarding the Sub-Adviser contained in the Trust's
Registration Statement with respect to the Fund, or
any amendment or supplement thereto, becomes untrue or
incomplete in any material respect.
(c) The Sub-Adviser represents and warrants that it
has delivered to the Fund at least 48 hours prior to
the execution of this Agreement a copy of the Sub-
Adviser's current Form ADV (Parts 1 and 2) and all
information in such document is complete and accurate
in all material respects as of the date hereof and is
in conformity in all material respects with applicable
securities laws, rules and regulations. The Sub-
Adviser hereby covenants and agrees promptly to
deliver to the Fund all amendments to its Form ADV.
(d) The Sub-Adviser acknowledges and agrees that it
has not received legal or regulatory advice from the
Fund, the Adviser or any of their respective employees
or representatives, and is not entitled to rely on any
statements or omissions by such employees or
representatives regarding applicable law or regulation
in satisfying its obligations hereunder, including its
obligation to comply with all applicable laws and
regulations.
13. Representations, Warranties and Covenants of the
Adviser.
(a) The Adviser represents, warrants and covenants to the
Sub-Adviser that: (i) it is registered as an
investment adviser under the Advisers Act and is
registered or licensed as an investment adviser under
the laws of all jurisdictions in which its activities
require it to be so registered or licensed, (ii) it is
duly organized and validly existing, and is authorized
to enter into this Agreement and to perform its
obligations hereunder; (iii) neither the execution or
delivery of this Agreement by the Adviser nor its
performance of its obligations hereunder shall
conflict with, violate, breach or constitute a default
under any term or provision of its constituent or
governing documents or any indenture, mortgage, deed
of trust, instrument, agreement or other document to
which the Adviser is a party or by which it is bound
or to which any of its assets are subject or any
applicable statute, law, rule, regulation, order or
other legal requirement applicable to the Adviser or
any of its assets; (iv) the Adviser shall provide to
the Sub-Adviser on an ongoing basis a copy of (a) each
amendment and supplement to the Prospectus, SAI and
Registration Statement promptly following the filing
thereof with the SEC, any financial statement or
report or proxy statement (and any amendments thereof)
prepared with respect to the Fund and filed with the
SEC promptly following the filing thereof, and (b)
such other reports and information relating to the
Fund's business and affairs as the Sub-Adviser may, at
any time or from time to time, reasonably require in
order to discharge its obligations under the
Agreement; (v) it has received a copy of Parts 2A and
2B of Sub-Adviser's Form ADV at least 48 hours prior
to entering the Agreement; and (vi) to the extent
permitted by law or regulation, it shall promptly
notify the Sub-Adviser of the occurrence of any non-
confidential governmental, administrative or self-
regulatory agency notice, action, suit or proceeding,
in each case specifically related to the Fund or the
Sub-Adviser's management of the Managed Portion that
in the Adviser's judgment would reasonably be expected
to have a material adverse impact on the Fund, which
for the avoidance of doubt shall not include periodic
general sweeps, inspections, or notices of inquiries
from any governmental administrative or self-
regulatory agency.
(b) The Fund is a "qualified eligible person" ("QEP")
as defined in Commodity Futures Trading Commission
Rule 4.7 ("CFTC Rule 4.7"). The Adviser will promptly
notify the Sub-Adviser if the Fund ceases to be a QEP.
The Adviser hereby consents, on behalf of the Fund, to
the Fund being treated as an "exempt account" under
CFTC Rule 4.7.
14. Certain Records.
(a) The Sub-Adviser agrees to maintain, in the form
and for the period required by Rule 31a-2 under the
1940 Act or such longer period as the Adviser or Fund
may direct, all records relating to the Sub-Adviser's
services under this Agreement and the Fund's
investments made by the Sub-Adviser as are required by
Section 31 of the 1940 Act, and rules and regulations
thereunder, and by other applicable legal provisions,
including the Advisers Act, the 1934 Act, the CEA, and
rules and regulations thereunder, and the Fund's
compliance policies and procedures, and to preserve
such records for the periods and in the manner
required by that Section, and those rules,
regulations, legal provisions and compliance policies
and procedures. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, any records required to
be maintained and preserved pursuant to the provisions
of Rule 31a-1 and Rule 31a-2 promulgated under the
1940 Act that are prepared or maintained by the Sub-
Adviser on behalf of the Fund are the property of the
Fund and shall be surrendered promptly to the Fund or
the Adviser on request.
(b) The Sub-Adviser agrees that all accounts, books
and other records maintained and preserved by it as
required hereby shall be subject at any time, and from
time to time, to such periodic, special and other
examinations by the Securities and Exchange
Commission, the Fund's auditors, the Fund or any
representative of the Fund (including, without
limitation, the Fund's Chief Compliance Officer), the
Adviser, or any governmental agency or other
instrumentality having regulatory authority over the
Adviser or the Fund.
15. Liability of Sub-Adviser.
(a) Neither the Sub-Adviser, nor any of its members,
directors, officers, employees or agents shall be
liable to the Trust, the Fund, the Adviser or to any
of their respective affiliates or to any shareholder
for any error of judgment, mistake of law or for any
loss suffered by the Fund in connection with the
performance of this Agreement, except for a loss
resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss
resulting from the Sub-Adviser's (i) willful
misfeasance, bad faith, gross negligence or reckless
disregard in the performance of its obligations and
duties hereunder, or (ii) material breach of this
Agreement (the "Liability Standard").
(b) In no event will the Sub-Adviser or its affiliates
have any responsibility for any other fund of the
Trust, for any portion of the Fund not managed by the
Sub-Adviser or for the acts or omissions of any other
sub-investment adviser to the Trust or Fund.
Nothing in this Section 15 shall be deemed a
limitation or waiver of any obligation or duty that
may not by law be limited or waived.
16. Indemnification.
(a) Sub-Adviser will, to the extent permissible under
applicable law, indemnify and hold harmless Adviser
and the Trust, their affiliates, and their respective
employees, managers, members, officers, trustees,
directors and shareholders from and against all
losses, claims, damages, liabilities, costs and
expenses (including, without limitation, reasonable
attorneys' and accountants' fees and disbursements)
arising out of this Agreement except to the extent
such claims arise out of: (i) Adviser's willful
misfeasance, bad faith, gross negligence or reckless
disregard in the performance of its obligations and
duties hereunder; or (ii) Adviser's material breach of
this Agreement;
(b) Adviser will, to the extent permissible under
applicable law, indemnify and hold harmless Sub-
Adviser, its affiliates, and their respective
employees, officers and directors from and against all
losses, claims, damages, liabilities, costs and
expenses (including, without limitation, reasonable
attorneys' and accountants' fees and disbursements)
arising out of this Agreement, except to the extent
such claims arise out of: (i) Sub-Adviser's willful
misfeasance, bad faith, gross negligence or reckless
disregard in the performance of its obligations and
duties hereunder; (ii) Sub-Adviser's material breach
of this Agreement; or (iii) Sub-Adviser's breach of
fiduciary duty with respect to the receipt of
compensation for services.
17. Duration and Termination.
(a) This Agreement is effective as of the date first
written above, provided that this Agreement shall not
take effect unless it has first been approved (i) by
the vote of a majority of those Trustees of the Trust
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
(ii) by vote of a majority of the Fund's outstanding
voting securities (within the meaning of the 1940
Act), unless the Adviser has authority to enter into
this Agreement pursuant to exemptive relief from the
SEC without a vote of the Fund's outstanding voting
securities.
(b) Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from
its date of execution. Thereafter, if not terminated,
this Agreement shall continue automatically for
successive periods of twelve months each, provided
that such continuance is specifically approved at
least annually (i) by the vote of a majority of those
Trustees of the Trust 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 (ii) by either the vote
of (A) the Board or (B) a majority of the outstanding
voting securities of the Fund (within the meaning of
the 1940 Act); provided further, that if the
shareholders fail to approve the Agreement as provided
herein, the Sub-Adviser may continue to serve
hereunder in the manner and to the extent permitted by
the 1940 Act and the rules and regulations thereunder.
The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the
1940 Act and the rules and regulations thereunder.
(c) Notwithstanding the foregoing, this Agreement may
be terminated at any time, without the payment of any
penalty, by vote of a majority of the Board or by a
vote of a majority of the outstanding voting
securities of the Fund. This Agreement may also be
terminated, without the payment of any penalty, by the
Adviser: (i) upon 60 days written notice to the Sub-
Adviser; (ii) immediately upon material breach by the
Sub-Adviser of any of the representations, warranties
and agreements set forth in this Agreement; or (iii)
immediately if, in the reasonable judgment of Adviser,
the Sub-Adviser becomes unable to discharge its duties
and obligations under this Agreement, including
without limitation, circumstances such as financial
insolvency of the Sub-Adviser. The Sub-Adviser may
terminate this Agreement at any time, without the
payment of any penalty, on 90 days written notice to
Adviser and the Trust. This Agreement will terminate
automatically in the event of its assignment or upon
termination of the Investment Advisory Agreement, as
it relates to this Fund.
(d) In the event of termination for any reason, all
records of the Fund that are maintained by the Sub-
Adviser in accordance with the 1940 Act and Section 14
of this Agreement shall promptly be returned to the
Adviser or the Trust, free from any claim or retention
of rights in such records by the Sub-Adviser, although
the Sub-Adviser may, at its expense, make and retain a
copy of such records.
18. Notices. Unless otherwise provided in this Agreement or
otherwise agreed by the Adviser in writing, all
notices and other communications hereunder shall be in
writing. Notices and other writings delivered or
mailed postage prepaid to the Adviser and the Trust at
BlackRock Advisors, LLC, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx,
XX 00000, Attention: General Counsel-Mutual Funds, or
to the Sub-Adviser at MeehanCombs, LP, 000 Xxxxxxxxx
Xxxx, Xxxxxxxxx, XX 00000, Attention: Xxx Xxxxx,
President, or to such other address as the Adviser or
the Sub-Adviser may hereafter specify by written
notice to the most recent address specified by the
other party, shall be deemed to have been properly
delivered or given hereunder to the respective
addressee when delivered by hand or facsimile or five
days after mailed by certified mail, post-paid, by
return receipt requested to the other party at the
principal office of such party.
19. Confidentiality.
(a) The Sub-Adviser shall treat all non-public records
and other information relative to the Trust, the Fund
and the Adviser and their prior, present or potential
shareholders and clients, including the list of
portfolio securities, instruments, assets and
liabilities of the Fund, and any Trading Agreements,
or excerpts thereof, which it shall receive or have
access to in the performance of its duties
confidentially and as proprietary information of the
Trust and the Adviser. The Sub-Adviser shall not
disclose such records or information to any third
party or use such records or 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 and the
Adviser). The Sub-Adviser shall not use its knowledge
of non-public information regarding the Fund's
portfolio as a basis to place or recommend any
securities or other transactions for its own benefit
or the benefit of others or to the detriment of the
Fund.
(b) The Sub-Adviser hereby authorizes the Fund and the
Adviser to use all related evaluation material,
analyses and information regarding the Sub-Adviser and
the investment program of the Fund, including
information about portfolio holdings and positions, in
connection with (1) marketing the Fund and the
Adviser's services to the Trust, (2) providing ongoing
information to existing shareholders and (3) providing
any required regulatory disclosures.
(c) The confidentiality provisions of this Section 19
will not apply to any information that either party
hereto can show: (a) is or subsequently becomes
publicly available without breach of any obligation
owed to the other party; (b) became known to either
party from a source other than the other party, and
without breach of an obligation of confidentiality
owed to the other party; (c) is independently
developed by either party without reference to the
information required by this Agreement to be treated
confidentially; or (d) is used by either party in
order to enforce any of its rights, claims or defenses
under, or as otherwise contemplated in, this
Agreement. Nothing in this Section 19 will be deemed
to prevent a party from disclosing any information
received hereunder pursuant to any applicable law,
rule or regulation or in response to a request from a
duly constituted regulatory, self-regulatory or other
judicial authority with appropriate jurisdiction over
such party.
(d) Notwithstanding anything to the contrary set forth
herein, the Sub-Adviser may disclose information
regarding the Managed Portion's performance
information, aggregated risk metrics and any similar
information to any third party (other than the
portfolio holdings of the Managed Portion, which
holdings shall be disclosed only in accordance with
the Fund's portfolio holdings disclosure policy).
20. Use of BlackRock Names.
The Sub-Adviser acknowledges and agrees that the names
"BlackRock Funds" and BlackRock Advisors, LLC, and
abbreviations or logos associated with those names,
are the valuable property of the Adviser and its
affiliates; that the Trust, has the right to use such
names, abbreviations and logos; and that the Sub-
Adviser shall use the names "BlackRock Funds,"
BlackRock Advisors, LLC, and associated abbreviations
and logos, only in connection with the Sub-Adviser's
performance of its duties hereunder. Further, in any
communication with the public and in any marketing
communications of any sort, the Sub-Adviser agrees to
obtain prior written approval from the Adviser before
using or referring to "BlackRock Funds" and the
Adviser, or the Fund or any abbreviations or logos
associated with those names.
21. Use of Sub-Adviser Name. The Adviser and the Trust are
authorized to publish and distribute any information,
including but not limited to registration statements,
advertising or promotional material, regarding the
provision of sub-investment advisory services by the
Sub-Adviser pursuant to this Agreement and to use in
advertising, publicity or otherwise the name of the
Sub-Adviser, or any trade name, trademark, trade
device, service xxxx, symbol or logo of the Sub-
Adviser, without the prior written consent of the Sub-
Adviser. In addition, the Adviser may distribute
information regarding the provision of sub-investment
advisory services by the Sub-Adviser to the Board
without the prior written consent of the Sub-Adviser.
The Adviser shall provide copies of such items to the
Sub-Adviser upon request within a reasonable time
following such use, publication or distribution.
22. Severability. 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.
23. Amendments. 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 whom enforcement of the change, waiver,
discharge or termination is sought. To the extent
required by applicable law, no amendment of this
Agreement shall be effective until approved (i) by a
vote of a majority of the Independent Trustees, and
(ii) if the terms of this Agreement shall have
changed, by a vote of a majority of the Fund's
outstanding voting securities (except in the case of
(ii), pursuant to the terms and conditions of the SEC
order permitting it to modify the Agreement without
such vote).
24. Third-Party Beneficiary. The Fund is an intended third-
party beneficiary under this Agreement and is entitled
to enforce this Agreement as if it were a party
thereto.
25. Survival. Sections 4, 12, 13, 14, 15, 16, 17(d), 18, 20
and 24 shall survive the termination of this
Agreement.
26. Captions. The captions of this Agreement are included
for convenience only and in no way define or limit any
of the provisions hereof or otherwise affect their
construction or effect.
27. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same instrument.
28. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware, and
in accordance with the applicable provisions of the
1940 Act and the rules and regulations thereunder. To
the extent that the applicable laws of the State of
Delaware or any provisions herein conflict with the
applicable provisions of the 1940 Act, the latter
shall control.
29. Series of BlackRock Funds. "BlackRock Funds" and
"Trustees" refer respectively to the trust created by
the Trustees, as trustees but not individually or
personally, acting from time to time under a
Declaration of Trust dated December 22, 1988, as
amended, which is hereby referred to and a copy of
which is on file at the office of the State of
Secretary of the Commonwealth of Massachusetts and at
the principal office of the Fund. The obligations of
"BlackRock Funds" entered into in the name or on
behalf thereof by any of the Trustees, officer,
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 Fund personally, but
bind only the Trust Property (as defined in the
Declaration of Trust), and all persons dealing with
any class of shares of the Fund must look solely to
the Trust Property belonging to such class for the
enforcement of any claims against the Fund.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING
COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE
PERSONS, THIS ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS
NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES
TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF
PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR
ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY,
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR
APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused their
respective duly authorized officers to execute this Agreement as
of the day and year first written above.
BlackRock Advisors, LLC
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Managing Director
MeehanCombs, LP
By: /s/ Xxxxxxx Xxx Xxxxx
Name: Xxxxxxx Xxx Xxxxx
Title: President
ACKNOWLEDGEMENT:
The undersigned officer of the
Trust hereby executes this
Agreement on behalf of the Fund
as of the date first written
above. The Trust does not hereby
undertake, on behalf of the Fund
or otherwise, any obligation to
the Sub-Adviser.
BlackRock Funds,
on behalf of its series
BlackRock Multi-Manager Alternative Strategies Fund
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer and Assistant Treasurer
[PAGE BREAK]
Exhibit A
to
Sub-Advisory Agreement between
BlackRock Advisors, LLC and
MeehanCombs, LP
Fee (as a percentage of average daily net assets of the Managed
Portion):
[ ] %
If, at any time, (i) the Sub-Adviser or any of its affiliates
provides to any other investment company registered under the
1940 Act investment advisory services using investment
strategies comparable to those provided by the Sub-Adviser to
the Fund pursuant to this Agreement, (ii) the value of the
assets under management with respect to which the Sub-Adviser
provides such services to such other investment company is
comparable to or less than the value of the Managed Portion, and
(iii) the Sub-Adviser is compensated for providing such services
at a rate less than the rate set forth on this Exhibit A, then
the Sub-Adviser shall promptly notify the Adviser of the
foregoing in reasonable detail and, as of the date of such
notice, the rate set forth on this Exhibit A shall immediately
and without requirement of further action be deemed amended to
reflect a rate equal to the lower rate at which the Sub-Adviser
is compensated by such other investment company.
