Exhibit 4(b)
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated September 29, 2006, between BlackRock Advisors, LLC, a
Delaware limited liability company (the "Advisor"), and BlackRock Financial
Management, Inc., a Delaware corporation (the "Sub-Advisor").
WHEREAS, the Advisor has agreed to furnish investment advisory services to
the separate series set forth in Exhibit A (each a "Series"), of Short-Term Bond
Master Trust, a Delaware statutory trust (the "Trust"), 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 Series;
WHEREAS, the advisory agreement between the Advisor and the Trust, dated
September 29, 2006 (such agreement or the most recent successor agreement
between such parties relating to advisory services to the Trust is referred to
herein as the "Advisory Agreement") contemplates that the Advisor may
sub-contract investment advisory services with respect to the Series to a
sub-advisor pursuant to a sub-advisory agreement agreeable to the Trust and
approved in accordance with the provisions of the 1940 Act; and
WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the Sub-Advisor is willing to furnish such
services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. Appointment. The Advisor hereby appoints the Sub-Advisor to act as
sub-advisor with respect to the Series and the Sub-Advisor accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Services of the Sub-Advisor. Subject to the succeeding provisions of
this section, the oversight and supervision of the Advisor and the direction and
control of the Trust's Board of Trustees, the Sub-Advisor will perform certain
of the day-to-day operations of the Series, 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
Series 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 Series and in voting, exercising consents and exercising all
other rights appertaining to such securities and other assets on behalf of the
Series; (b) arranging, subject to the provisions of paragraph 3 hereof, for the
purchase and sale of securities and other assets of the Series; (c) providing
investment research and credit analysis concerning the Series' investments, (d)
assist the Advisor in determining what
portion of the Series' 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 Series, and (f) maintaining the books and records as
are required to support Series investment operations. At the request of the
Advisor, the Sub-Advisor will also, subject to the oversight and supervision of
the Advisor and the direction and control of the Trust's Board of Trustees,
provide to the Advisor or the Series 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 Series and the Advisor informed of
developments materially affecting the Series and shall, on its own initiative,
furnish to the Series 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 Series, 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 Series under the Advisory Agreement. The Sub-Advisor will provide the
services rendered by it under this Agreement in accordance with each Series'
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 Series'
Prospectus and Statement of Additional Information and the resolutions of the
Trust's Board of Trustees.
3. Covenants. (a) In the performance of its duties under this Agreement,
the Sub-Advisor shall at all times conform to, and act in accordance with, any
requirements imposed by: (i) the provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended (the "Advisers Act") and all applicable Rules
and Regulations of the Securities and Exchange Commission (the "SEC"); (ii) any
other applicable provision of law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Trust, as such documents are amended from time to time;
(iv) the investment objectives and policies of the Series as set forth in the
Trust's Registration Statement on Form N-1A and/or the resolutions of the Board
of Trustees; and (v) any policies and determinations of the Board of Trustees of
the Trust 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. 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 Series 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
Series and their other clients and that the total
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commissions paid by each Series will be reasonable in relation
to the benefits to the Series 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 Trust is affiliated;
(ii) maintain books and records with respect to the
Series' securities transactions and will render to the Advisor
and the Trust's Board of Trustees such periodic and special
reports as they may request;
(iii) maintain a policy and practice of conducting its
investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When the
Sub-Advisor makes investment recommendations for the Series,
its investment advisory personnel will not inquire or take
into consideration whether the issuer of securities proposed
for purchase or sale for each Series' account are customers of
the commercial department of its affiliates; and
(iv) treat confidentially and as proprietary information
of the Series all records and other information relative to
the Series, and the Series' 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 each Series, 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 Series.
4. Services Not Exclusive. Nothing in this Agreement shall prevent the
Sub-Advisor or any officer, employee or other affiliate thereof from acting as
investment advisor for any other person, firm or corporation, or from engaging
in any other lawful activity, and shall not in any way limit or restrict the
Sub-Advisor or any of its officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the
Sub-Advisor will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations under this Agreement.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Advisor hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act (to the extent such books and records are not maintained by the
Advisor).
6. Expenses. During the term of this Agreement, the Sub-Advisor will bear
all costs and expenses of its employees and any overhead incurred by the
Sub-Advisor in connection with its duties hereunder; provided that the Board of
Trustees of the Trust may approve reimbursement to the Sub-Advisor of the
pro-rata portion of the salaries, bonuses, health
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insurance, retirement benefits and all similar employment costs for the time
spent on Series 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 Series 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 Series
shall be calculated pursuant to the procedures adopted by resolutions of the
Trustees of the Trust for calculating the value of the Series' assets or
delegating such calculations to third parties.
8. Indemnity.
(a) The Trust may, in the discretion of the Board of Trustees of the
Trust, indemnify the Sub-Advisor, and each of the Sub-Advisor's directors,
officers, employees, agents, associates and controlling persons and the
directors, partners, members, officers, employees and agents thereof (including
any individual who serves at the Sub-Advisor's request as director, officer,
partner, member, trustee or the like of another entity) (each such person being
an "Indemnitee") against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees (all as provided in accordance with applicable state law) reasonably
incurred by such Indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such Indemnitee may be or may have
been involved as a party or otherwise or with which such Indemnitee may be or
may have been threatened, while acting in any capacity set forth herein or
thereafter by reason of such Indemnitee having acted in any such capacity,
except with respect to any matter as to which such Indemnitee shall have been
adjudicated not to have acted in good faith in the reasonable belief that such
Indemnitee's action was in the best interest of the Trust and furthermore, in
the case of any criminal proceeding, so long as such Indemnitee had no
reasonable cause to believe that the conduct was unlawful; provided, however,
that (1) no Indemnitee shall be indemnified hereunder against any liability to
the Trust or its shareholders or any expense of such Indemnitee arising by
reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence or
(iv) reckless disregard of the duties involved in the conduct of such
Indemnitee's position (the conduct referred to in such clauses (i) through (iv)
being sometimes referred to herein as "disabling conduct"), (2) as to any matter
disposed of by settlement or a compromise payment by such Indemnitee, pursuant
to a consent decree or otherwise, no indemnification either for said payment or
for any other expenses shall be provided unless there has been a determination
that such settlement or compromise is in the best interests of the Trust and
that such Indemnitee appears to have acted in
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good faith in the reasonable belief that such Indemnitee's action was in the
best interest of the Trust and did not involve disabling conduct by such
Indemnitee and (3) with respect to any action, suit or other proceeding
voluntarily prosecuted by any Indemnitee as plaintiff, indemnification shall be
mandatory only if the prosecution of such action, suit or other proceeding by
such Indemnitee was authorized by a majority of the full Board of Trustees of
the Trust.
(b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Trust unless it is
subsequently determined that such Indemnitee is entitled to such indemnification
and if the Trustees of the Trust determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the Indemnitee shall provide a security for such
Indemnitee undertaking, (B) the Series shall be insured against losses arising
by reason of any unlawful advance, or (C) a majority of a quorum consisting of
Trustees of the Trust who are neither "interested persons" of the Trust (as
defined in Section 2(a)(19) of the 0000 Xxx) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe that
the Indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to the standards for
indemnification hereunder shall be made (1) by a final decision on the merits by
a court or other body before whom the proceeding was brought that such
Indemnitee is not liable by reason of disabling conduct, or (2) in the absence
of such a decision, by (i) a majority vote of a quorum of the Disinterested
Non-Party Trustees of the Trust, or (ii) if such a quorum is not obtainable or
even, if obtainable, if a majority vote of such quorum so directs, independent
legal counsel in a written opinion. All determinations that advance payments in
connection with the expense of defending any proceeding shall be authorized
shall be made in accordance with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these provisions shall not
exclude any other right to which such Indemnitee may be lawfully entitled.
9. Limitation on Liability. 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 Series in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement. As used in this
Section 9(a), the term "Sub-Advisor" shall include any affiliates of the
Sub-Advisor performing services for the Series contemplated hereby and partners,
directors, officers and employees of the Sub-Advisor and such affiliates.
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10. Duration and Termination. This Agreement shall become effective as of
the date hereof and, unless sooner terminated with respect to the Series 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
Series for successive periods of 12 months, provided such continuance is
specifically approved at least annually by both (a) the vote of a majority of
the Trust's Board of Trustees or a vote of a majority of the outstanding voting
securities of each Series at the time outstanding and entitled to vote and (b)
by the vote of a majority of the Trustees, who are not parties to this Agreement
or interested persons (as such term is defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated by the
Trust or the Advisor at any time, without the payment of any penalty, upon
giving the Sub-Advisor 60 days' notice (which notice may be waived by the
Sub-Advisor), provided that such termination by the Trust or the Advisor shall
be directed or approved by the vote of a majority of the Trustees of the Trust
in office at the time or by the vote of the holders of a majority of the
outstanding voting securities of each Series entitled to vote, or by the
Sub-Advisor on 60 days' written notice (which notice may be waived by the Trust
and the Advisor), and will terminate automatically upon any termination of the
Advisory Agreement between the Trust and the Advisor. This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings of such terms
in the 1940 Act.)
11. Notices. Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the earlier
of the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.
12. Amendment of this Agreement. This Agreement may be amended by the
parties only if such amendment is specifically approved by the vote of the Board
of Trustees of the Trust, including a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval and, where
required by the 1940 Act, by a vote of a majority of the outstanding voting
securities of each Series.
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.
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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 FINANCIAL MANAGEMENT, INC.
By: ___________________________
Name:
Title:
AGREED AND ACCEPTED
as of the date first set forth above
SHORT-TERM BOND MASTER TRUST
By: __________________
Name: Xxxxxx X. Xxxxx
Title: Vice President
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Exhibit A
Name of Series
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Short-Term Bond Master Portfolio
Schedule A
Sub-Investment Advisory Fee
Short-Term Bond Master Portfolio
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59% of the monthly advisory fee received by the Advisor from the Series.
