SUB-INVESTMENT ADVISORY AGREEMENT
Exhibit (g)(2)
AGREEMENT
dated November ____, 2011, among BlackRock Utility and Infrastructure
Trust, a Delaware statutory trust (the “Trust”), 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 Trust, a
closed-end management investment company registered under the Investment Company Act of 1940, as
amended (the “1940 Act”);
WHEREAS, the Advisor wishes to retain the Sub-Advisor to provide it with certain sub-advisory
services as described below in connection with Advisor’s advisory activities on behalf of the
Trust;
WHEREAS, the investment management agreement between the Advisor and the Trust, dated November
22, 2011 (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 appoint a sub-adviser to perform investment advisory services
with respect to the Trust; and
WHEREAS, this Agreement has been approved in accordance with the provisions of the 1940 Act,
and the Sub-Advisor is willing to furnish such services upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants herein contained and
other good and valuable consideration, the receipt of which is hereby acknowledged, it is agreed by
and between the parties hereto as follows:
1. Appointment. The Advisor hereby appoints the Sub-Advisor to act as sub-advisor
with respect to the Trust and the Sub-Advisor accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Services of the Sub-Advisor. Subject to the succeeding provisions of this section,
the oversight and supervision of the Advisor and the direction and control of the Board of Trustees
of the Trust, the Sub-Advisor will perform certain of the day-to-day operations of the Trust, which
may include one or more of the following services, at the request of the Advisor: (a) acting as
investment advisor for and managing the investment and reinvestment of those assets of the Trust as
the Advisor may from time to time request and in connection therewith have complete discretion in
purchasing and selling such securities and other assets for the Trust and in voting, exercising
consents and exercising all other rights appertaining to such securities and other assets on behalf
of the Trust; (b) arranging, subject to the provisions of paragraph 3 hereof, for the purchase and
sale of securities and other assets of the Trust; (c) providing investment research and credit
analysis concerning the Trust’s investments, (d) assist the Advisor in determining what portion of
the Trust’s assets will be invested in cash, cash equivalents and money market instruments, (e)
placing orders for all purchases and sales of such investments
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made for the Trust, and (f) maintaining the books and records as are required to support the
Trust’s 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 Board of
Trustees of the Trust, provide to the Advisor or the Trust any of the facilities and equipment and
perform any of the services described in Section 3 of the Advisory Agreement. In addition, the
Sub-Advisor will keep the Trust and the Advisor informed of developments materially affecting the
Trust and shall, on its own initiative, furnish to the Trust from time to time whatever information
the Sub-Advisor believes appropriate for this purpose. The Sub-Advisor will periodically
communicate to the Advisor, at such times as the Advisor may direct, information concerning the
purchase and sale of securities for the Trust, including: (a) the name of the issuer, (b) the
amount of the purchase or sale, (c) the name of the broker or dealer, if any, through which the
purchase or sale is effected, (d) the CUSIP number of the instrument, if any, and (e) such other
information as the Advisor may reasonably require for purposes of fulfilling its obligations to the
Trust under the Advisory Agreement. The Sub-Advisor will provide the services rendered by it under
this Agreement in accordance with the Trust’s investment objectives, policies and restrictions (as
currently in effect and as they may be amended or supplemented from time to time) as stated in the
Trust’s Prospectus and Statement of Additional Information and the resolutions of the Trust’s Board
of Trustees.
3. Covenants. (a) In the performance of its duties under this Agreement, the
Sub-Advisor shall at all times conform to, and act in accordance with, any requirements imposed by:
(i) the provisions of the 1940 Act and the Investment Advisers Act of 1940, as amended (the
“Advisers Act”), and all applicable Rules and Regulations of the Securities and Exchange
Commission (the “SEC”); (ii) any other applicable provision of law; (iii) the provisions of
the Agreement and Declaration of Trust and By-Laws of the Trust, as such documents are amended from
time to time; (iv) the investment objectives and policies of the Trust as set forth in its
Registration Statement on Form N-2; and (v) any policies and determinations of the Board of
Trustees of the Trust.
(b) 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 Trust and other clients of
the Advisor or the Sub-Advisor. Information and research received from such
brokers will be in addition to, and not in lieu of, the services required to be
performed by the Sub-Advisor hereunder. A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided
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that the Sub-Advisor determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of the
Advisor and the Sub-Advisor to the Trust and their other clients and that the
total commissions paid by the Trust will be reasonable in relation to the benefits
to the Trust over the long-term. In no instance, however, will the Trust’s
securities be purchased from or sold to the Advisor, the Sub-Advisor or any
affiliated person thereof, except to the extent permitted by the SEC or by
applicable law. 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 Sub-Advisor may select brokers and dealers with which it or the Trust is
affiliated;
(ii) maintain books and records with respect to the Trust’s securities
transactions and will render to the Advisor and the Trust’s Board of Trustees,
such periodic and special reports as they may request;
(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 Trust,
its investment advisory personnel will not inquire or take into consideration
whether the issuer of securities proposed for purchase or sale for the Trust’s
accounts are customers of the commercial department of its affiliates; and
(iv) treat confidentially and as proprietary information of the Trust all
records and other information relative to the Trust, and the Trust’s prior,
current or potential shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the Trust
which approval shall not be unreasonably withheld and may not be withheld where
the Sub-Advisor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
4. Services Not Exclusive. Nothing in this Agreement shall prevent the Sub-Advisor or
any officer, employee or other affiliate thereof from acting as investment advisor for any other
person, firm or corporation, or from engaging in any other lawful activity, and shall not in any
way limit or restrict the Sub-Advisor or any of its officers, employees or agents from buying,
selling or trading any securities for its or their own accounts or for the accounts of others for
whom it or they may be acting; provided, however, that the Sub-Advisor will undertake no activities
which, in its judgment, will adversely affect the performance of its obligations under this
Agreement.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Advisor hereby agrees that all records which it
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maintains for the Trust are the property of the Trust as the case may be and further agrees to
surrender promptly to the Trust, any such records upon the Trust’s request as the case may be. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act (to the extent such books
and records are not maintained by the Advisor).
6. Agency Cross Transactions. From time to time, the Sub-Advisor or brokers or
dealers affiliated with it may find themselves in a position to buy for certain of their brokerage
clients (each an “Account”) securities which the Sub-Advisor’s investment advisory clients
wish to sell, and to sell for certain of their brokerage clients securities which advisory clients
wish to buy. Where one of the parties is an advisory client, the Advisor or the affiliated broker
or dealer cannot participate in this type of transaction (known as a cross transaction) on behalf
of an advisory client and retain commissions from both parties to the transaction without the
advisory client’s consent. This is because in a situation where the Sub-Advisor is making the
investment decision (as opposed to a brokerage client who makes his own investment decisions), and
the Sub-Advisor or an affiliate is receiving commissions from one or both sides of the transaction,
there is a potential conflicting division of loyalties and responsibilities on the Sub-Advisor’s
part regarding the advisory client. The SEC has adopted a rule under the Advisers Act which
permits the Sub-Advisor or its affiliates to participate on behalf of an Account in agency cross
transactions if the advisory client has given written consent in advance. By execution of this
Agreement, the Trust authorizes the Sub-Advisor or its affiliates to participate in agency cross
transactions involving an Account. The Trust may revoke its consent at any time by written notice
to the Sub-Advisor.
7. Expenses. During the term of this Agreement, the Sub-Advisor will bear all costs
and expenses of its employees and any overhead incurred by the Sub-Advisor in connection with its
duties hereunder; provided that the Board of Trustees of the Trust may approve reimbursement to the
Sub-Advisor of the pro-rata portion of the salaries, bonuses, health insurance, retirement benefits
and all similar employment costs for the time spent on the Trust’s operations (including, without
limitation, compliance matters) (other than the provision of investment advice and administrative
services required to be provided hereunder) of all personnel employed by the Sub-Advisor who devote
substantial time to the Trust’s operations or the operations of other investment companies advised
or sub-advised by the Sub-Advisor.
8. Compensation.
(a) The Advisor agrees to pay to the Sub-Advisor and the Sub-Advisor agrees to accept as full
compensation for all services rendered by the Sub-Advisor pursuant to this Agreement, a monthly fee
in arrears in an amount equal to 51% of the monthly advisory fees received by the Advisor from the
Trust with respect to the average daily value of the net assets of the Trust allocated to the
Sub-Advisor.
(b) For purposes of this Agreement, the net assets of the Trust shall be calculated pursuant
to the procedures adopted by resolutions of the Board of
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Trustees of the Trust for calculating the value of the Trust’s assets or delegating such
calculations to third parties.
9. Indemnity.
(a) The Trust may, with the prior consent of the Board of Trustees of the Trust, including a
majority of the trustees of the Trust that are not “interested persons” of the Trust (as defined in
Section 2(a)(19) of the 1940 Act), 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, the Trust’s 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, including a majority of the trustees of the Trust who are not “interested
persons” of the Trust (as defined in Section 2(a)(19) of the 1940 Act).
(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
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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
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 indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before whom the proceeding was brought that such
Indemnitee is not liable by reason of disabling conduct, or (2) in the absence of such a decision,
by (i) a majority vote of a quorum of the Disinterested Non-Party Trustees of the Trust, or (ii) if
such a quorum is not obtainable or even, if obtainable, if a majority vote of such quorum so
directs, independent legal counsel in a written opinion. All determinations that advance payments
in connection with the expense of defending any proceeding shall be authorized shall be made in
accordance with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under these provisions shall not exclude any other right
to which such Indemnitee may be lawfully entitled.
10. Limitation on Liability.
(a) The Sub-Advisor will not be liable for any error of judgment or mistake of law or for any
loss suffered by the Advisor or by the Trust in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation
for services or a loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its duties under this
Agreement.
(b) Notwithstanding anything to the contrary contained in this Agreement, the parties hereto
acknowledge and agree that, as provided in Section 5.1 of Article V of the Agreement and
Declaration of Trust, this Agreement is executed by the Trustees and/or officers of the Trust, not
individually but as such Trustees and/or officers of the Trust, and the obligations hereunder are
not binding upon any of the Trustees or Shareholders individually but bind only the estate of the
Trust.
11. Duration and Termination.
(a) This Agreement shall become effective as of the date hereof and, unless sooner terminated
with respect to the Trust as provided herein, shall continue in effect for a period of two years.
Thereafter, if not terminated, this Agreement
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shall continue in effect with respect to the Trust for successive periods of 12 months,
provided such continuance is specifically approved at least annually by both (a) the vote of a
majority of the Trust’s Board of Trustees or a vote of a majority of the outstanding voting
securities of the Trust at the time outstanding and entitled to vote and (b) by the vote of a
majority of the Trustees, who are not parties to this Agreement or interested persons (as such term
is defined in the 0000 Xxx) of any such party, cast in person at a meeting called for the purpose
of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated by the Trust or the
Advisor at any time, without the payment of any penalty, upon giving the Sub-Advisor 60 days’
notice (which notice may be waived by the Sub-Advisor), provided that such termination by the Trust
or the Advisor shall be directed or approved by the vote of a majority of the Trustees of the Trust
in office at the time or by the vote of the holders of a majority of the voting securities of the
Trust at the time outstanding and entitled to vote, or by the Sub-Advisor on 60 days’ written
notice (which notice may be waived by the Trust and the Advisor), and will terminate automatically
upon any termination of the Advisory Agreement between the Trust and the Advisor. This Agreement
will also immediately terminate in the event of its assignment. (As used in this Agreement, the
terms “majority of the outstanding voting securities,” “interested person” and
“assignment” shall have the same meanings of such terms in the 1940 Act.)
12. Notices. Any notice under this Agreement shall be in writing to the other party
at such address as the other party may designate from time to time for the receipt of such notice
and shall be deemed to be received on the earlier of the date actually received or on the fourth
day after the postmark if such notice is mailed first class postage prepaid.
13. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is sought. Any amendment
of this Agreement shall be subject to the 1940 Act.
14. Miscellaneous. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding on, and shall inure to the benefit of the parties hereto
and their respective successors.
15. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York for contracts to be performed entirely therein without
reference to choice of law principles thereof and in accordance with the applicable provisions of
the 1940 Act.
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16. Counterparts. This Agreement may be executed in counterparts by the parties
hereto, each of which shall constitute an original counterpart, and all of which, together, shall
constitute one Agreement.
[Signature Page Follows]
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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 |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| BLACKROCK FINANCIAL MANAGEMENT, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| BLACKROCK UTILITY AND INFRASTRUCTURE TRUST |
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| By: | ||||
| Name: | ||||
| Title: | ||||
