Exhibit (d)
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated [ ] , 2003, between BlackRock Bond Allocation Target
Shares (the "Trust"), a Delaware statutory trust, and BlackRock Advisors, Inc.
(the "Advisor"), a Delaware corporation.
WHEREAS, Advisor has agreed to furnish investment advisory services to
each Series of the Trust specified on Annex A hereto (each, a "Fund"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act");
WHEREAS, this Agreement has been approved in accordance with the
provisions of the 1940 Act, and the 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. In General. The Advisor agrees, all as more fully set forth herein,
to act as investment advisor to the Trust with respect to the investment of the
assets of each of the Funds and to supervise and arrange for the day-to-day
operations of each of the Funds and the purchase of securities for and the sale
of securities held in the investment portfolio of each of the Funds.
2. Duties and Obligations of the Advisor with Respect to Investment of
Assets of the Trust. Subject to the succeeding provisions of this section and
subject to the direction and control of the Trust's Board of Trustees, the
Advisor shall (i) act as investment advisor for and supervise and manage the
investment and reinvestment of the Trust's assets and in connection therewith
have complete discretion in purchasing and selling securities and other assets
for each of the Funds and in voting, exercising consents and exercising all
other rights appertaining to such securities and other assets on behalf of each
of the Funds; (ii) supervise continuously the investment program of the Trust
and the composition of its investment portfolio; (iii) arrange, subject to the
provisions of paragraph 4 hereof, for the purchase and sale of securities and
other assets held in the investment portfolio of each of the Funds; and (iv)
provide investment research to each of the Funds. The Advisor may delegate any
of the forgoing services to any wholly owned affiliate of BlackRock, Inc. (or
its successors).
3. Duties and Obligations of Advisor with Respect to the
Administration of the Trust. The Advisor also agrees to furnish office
facilities and equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Trust's Custodian, Transfer
Agent and Dividend Disbursing Agent and other service providers) for the Trust.
To the extent requested by the Trust, the Advisor agrees to provide, at its own
cost, the following administrative services:
(a) Oversee the determination and publication of each Fund's net
asset value in accordance with the Trust's policy as adopted from time to time
by the Board of Trustees;
(b) Oversee the maintenance of the Trust's Custodian and
Transfer Agent and Dividend Disbursing Agent of certain books and records of
the Trust as required under Rule 31a-1(b)(4) of the 1940 Act and maintain (or
oversee maintenance by such other persons as approved by the Board of Trustees)
such other books and records required by law or for the proper operation of the
Trust;
(c) Oversee the preparation and filing of each Fund's federal,
state and local income tax returns and any other required tax returns;
(d) Review the appropriateness of and arrange for payment of the
Trust's expenses;
(e) Prepare for review and approval by officers of the Trust
financial information for the Trust's semi-annual and annual reports, proxy
statements and other communications with shareholders required or otherwise to
be sent to Trust shareholders, and arrange for the printing and dissemination
of such reports and communications to shareholders;
(f) Prepare for review by an officer of the Trust the Trust's
periodic financial reports required to be filed with the Securities and
Exchange Commission ("SEC") on Form N-SAR, Form N-CSR, Form N-PX, and such
other reports, forms and filings, as may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the
Trust as may be mutually agreed upon and not otherwise appropriately prepared
by the Trust's custodian, counsel or auditors;
(h) Make such reports and recommendations to the Board of
Trustees concerning the performance of the independent accountants as the Board
of Trustees may reasonably request or deems appropriate;
(i) Make such reports and recommendations to the Board of
Trustees concerning the performance and fees of the Trust's Custodian and
Transfer and Dividend disbursing agent as the Board of Trustees may reasonably
request or deems appropriate;
(j) Oversee and review calculations of fees paid to the Trust's
service providers;
(k) Oversee the investment portfolio of each of the Funds and
perform necessary calculations as required under Section 18 of the 1940 Act;
(l) Consult with the Trust's officers, independent accountants,
legal counsel, custodian, accounting agent and transfer and dividend disbursing
agent in establishing the accounting policies of the Trust and monitor
financial and shareholder accounting services;
(m) Determine the amounts available for distribution as
dividends and distributions to be paid by the Trust to its shareholders;
prepare and arrange for the printing of dividend notices to shareholders; and
provide the Trust's dividend disbursing agent and custodian with such
information as is required for such parties to effect the payment of dividends
and distributions and to implement the Trust's dividend reinvestment plan;
(n) Prepare such information and reports as may be required by
any banks from which the Trust borrows funds;
(o) Provide such assistance to the Custodian and the Trust's
counsel and auditors as generally may be required to properly carry on the
business and operations of the Trust;
(p) Respond to or refer to the Trust's officers or transfer
agent, shareholder (including any potential shareholder) inquiries relating to
the Trust.
(q) Supervise any other aspects of the Trust's administration as
may be agreed to by the Trust and the Advisor.
All services are to be furnished through the medium of any directors,
officers or employees of the Advisor or its affiliates as the Advisor deems
appropriate in order to fulfill its obligations hereunder.
4. Covenants. In the performance of its duties under this Agreement,
the Advisor shall at all times conform to, and act in accordance with, any
requirements imposed by:
(a) (i) the provisions of the 1940 Act and the Investment
Advisers Act of 1940, as amended, and all applicable Rules and Regulations of
the Securities and Exchange Commission (the "SEC"); (ii) any other applicable
provision of law; (iii) the provisions of the Agreement and Declaration of
Trust, as amended and restated, and By- Laws of the Trust, as such documents
are amended from time to time; (iv) the investment objectives and policies of
each Fund as set forth in the Trust's Registration Statement on Form N-1A; and
(v) any policies and determinations of the Board of Trustees of the Trust;
(b) will place orders either directly with the issuer or with
any broker or dealer. Subject to the other provisions of this paragraph, in
placing orders with brokers and dealers, the Advisor will attempt to obtain the
best price and the most favorable execution of its orders. In placing orders,
the 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 Advisor may select brokers on
the basis of the research, statistical and pricing services they provide to the
Trust and other clients of the Advisor. 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 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 Advisor determines in good
faith that such commission is reasonable in terms either of the transaction or
the overall responsibility of the Advisor to the Trust and its other clients
and that the total commissions paid by the Trust will be reasonable in relation
to the benefits to the Trust over the long-term. In addition, the Advisor is
authorized to take into account the sale of shares of the Trust in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Advisor), provided
that the Advisor believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified firms. In
no instance, however, will the Trust's securities be purchased from or sold to
the Advisor, or any affiliated person thereof, except to the extent permitted
by the SEC or by applicable law;
(c) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Advisor makes investment recommendations
for the Fund, its investment advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed for purchase or sale
for the such Fund's account are customers of the commercial department of its
affiliates; and
(d) will treat confidentially and as proprietary information of
the Trust all records and other information relative to each of the Funds, and
each Fund's prior, current or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the Advisor may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Trust.
5. Services Not Exclusive. Nothing in this Agreement shall prevent the
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
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 Advisor
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations under this Agreement.
6. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the 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
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.
7. Agency Cross Transactions. From time to time, the Advisor or
brokers or dealers affiliated with it may find themselves in a position to buy
for certain of their brokerage clients (each an "Account") securities which the
Advisor's investment advisory clients wish to sell, and to sell for certain of
their brokerage clients securities which advisory clients wish to buy. Where
one of the parties is an advisory client, the Advisor or the affiliated broker
or dealer cannot participate in this type of transaction (known as a cross
transaction) on behalf of an advisory client and retain commissions from one or
both parties to the transaction without the advisory client's consent. This is
because in a situation where the Advisor is making the investment decision (as
opposed to a brokerage client who makes his own investment decisions), and the
Advisor or an affiliate is receiving commissions from both sides of the
transaction, there is a potential conflicting division of loyalties and
responsibilities on the Advisor's part regarding the advisory client. The
Securities and Exchange Commission has adopted a rule under the Investment
Advisers Act of 1940, as amended, which permits the Advisor or its affiliates
to participate on behalf of an Account in agency cross transactions if the
advisory client has given written consent in advance. By execution of this
Agreement, the Trust authorizes the Advisor or its affiliates to participate in
agency cross transactions involving an Account. The Trust may revoke its
consent at any time by written notice to the Advisor.
8. Expenses. During the term of this Agreement, the Advisor will bear
all costs and expenses of its employees and any overhead incurred in connection
with its duties hereunder and shall bear the costs of any salaries or trustees
fees of any officers or trustees of the Trust who are affiliated persons (as
defined in the 0000 Xxx) of the Advisor. In addition, the Advisor will be
responsible for the payment of all fees and expenses incurred by the Trust,
except fees and expenses incurred by the Trust with respect to extraordinary
expenses.
9. Compensation of the Advisor. The Investment Advisor shall not
receive an advisory fee for the investment advisory or other services that it
provides to the Trust pursuant to this Agreement.
10. Indemnity. (a) The Trust hereby agrees to indemnify the Advisor,
and each of the 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
Advisor's request as director, officer, partner, member, trustee or the like of
another entity) (each such person being an "Indemnitee") against any
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees (all as provided in
accordance with applicable state law) reasonably incurred by such Indemnitee in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
investigative body in which such Indemnitee may be or may have been involved as
a party or otherwise or with which such Indemnitee may be or may have been
threatened, while acting in any capacity set forth herein or thereafter by
reason of such Indemnitee having acted in any such capacity, except with
respect to any matter as to which such Indemnitee shall have been adjudicated
not to have acted in good faith in the reasonable belief that such Indemnitee's
action was in the best interest of the Trust and furthermore, in the case of
any criminal proceeding, so long as such Indemnitee had no reasonable cause to
believe that the conduct was unlawful; provided, however, that (1) no
Indemnitee shall be indemnified hereunder against any liability to the Trust or
its shareholders or any expense of such Indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv) reckless
disregard of the duties involved in the conduct of such Indemnitee's position
(the conduct referred to in such clauses (i) through (iv) being sometimes
referred to herein as "disabling conduct"), (2) as to any matter disposed of by
settlement or a compromise payment by such Indemnitee, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any
other expenses shall be provided unless there has been a determination that
such settlement or compromise is in the best interests of the Trust and that
such Indemnitee appears to have acted in good faith in the reasonable belief
that such Indemnitee's action was in the best interest of the Trust and did not
involve disabling conduct by such Indemnitee and (3) with respect to any
action, suit or other proceeding voluntarily prosecuted by any Indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Indemnitee was authorized by a
majority of the full Board of Trustees of the Trust.
(b) The Trust shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Trust receives a written affirmation of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse the Trust
unless it is subsequently determined that such Indemnitee is entitled to such
indemnification and if the trustees of the Trust determine that the facts then
known to them would not preclude indemnification. In addition, at least one of
the following conditions must be met: (A) the Indemnitee shall provide a
security for such Indemnitee-undertaking, (B) the Trust shall be insured
against losses arising by reason of any lawful advance, or (C) a majority of a
quorum consisting of trustees of the Trust who are neither "interested persons"
of the Trust (as defined in Section 2(a)(19) of the 0000 Xxx) nor parties to
the proceeding ("Disinterested Non-Party Trustees") or an independent legal
counsel in a written opinion, shall determine, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Indemnitee ultimately will be found entitled to
indemnification.
(c) All determinations with respect to indemnification hereunder
shall be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such Indemnitee is not liable or 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.
11. Limitation on Liability. (a) The Advisor will not be liable for
any error of judgment or mistake of law or for any loss suffered by Advisor or
by the Trust in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge and agree that, as provided in
Section 5.1 of Article V of the Declaration of Trust, as amended and restated,
this Agreement is executed by the Trustees and/or officers of the Trust, not
individually but as such Trustees and/or officers of the Trust, and the
obligations hereunder are not binding upon any of the Trustees or Shareholders
individually but bind only the estate of the Trust.
12. Duration and Termination. This Agreement shall become effective as
of the date hereof and, unless sooner terminated with respect to any Fund set
forth on Annex A as of the date hereof as provided herein, shall continue in
effect for a period of two years with respect to such Fund. New Funds may be
added to Annex A by resolution of the Board of Trustees, approval by the
shareholder or shareholders of such Fund and acceptance by the Advisor and this
agreement with respect to each subsequent Fund shall become effective as of
such time and, unless sooner terminated with respect to such Fund as provided
herein, shall continue in effect for a period of two years with respect to such
Fund. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to each Fund for successive periods of 12 months, provided such
continuance is specifically approved at least annually by both (a) the vote of
a majority of the Trust's Board of Trustees or the vote of a majority of the
outstanding voting securities of the Trust at the time outstanding and entitled
to vote, and (b) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, 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
with respect to any or all the Funds at any time, without the payment of any
penalty, upon giving the Advisor 60 days' notice (which notice may be waived by
the Advisor), provided that such termination by the Trust shall be directed or
approved by the vote of a majority of the Trustees of the Trust in office at
the time or by the vote of the holders of a majority of the voting securities
of the relevant Fund or Funds at the time outstanding and entitled to vote, or
by the Advisor on 60 days' written notice (which notice may be waived by the
Trust). 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.)
13. 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.
14. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. Any amendment of this Agreement
shall be subject to the 1940 Act.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York for contracts to be
performed entirely therein without reference to choice of law principles
thereof and in accordance with the applicable provisions of the 1940 Act.
16. Use of the Name BlackRock. The Advisor has consented to the use by
the Trust of the name or identifying word "BlackRock" in the name of the Trust.
Such consent is conditioned upon the employment of the Advisor as the
investment advisor to the Trust. The name or identifying word "BlackRock" may
be used from time to time in other connections and for other purposes by the
Advisor and any of its affiliates. The Advisor may require the Trust to cease
using "BlackRock" in the name of the Trust if the Trust ceases to employ, for
any reason, the Advisor, any successor thereto or any affiliate thereof as
investment advisor of the Trust.
17. 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.
18. Counterparts. This Agreement may be executed in counterparts by
the parties hereto, each of which shall constitute an original counterpart, and
all of which, together, shall constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
BLACKROCK BOND ALLOCATION
TARGET SHARES
By:
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Name: Xxxx X. Xxxxxxxx
Title: Vice President
BLACKROCK ADVISORS, INC.
By:
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Name: Xxxx X. Xxxxxxxx
Title: Managing Director
ANNEX A
Lists of Series of BlackRock Bond Allocation Target Shares
1) BATS: Series S Portfolio
2) BATS: Series C Portfolio
3) BATS: Series M Portfolio
4) BATS: Series P Portfolio
5) BATS: Series I Portfolio
