Exhibit (d.4)
INTERIM INVESTMENT ADVISORY AGREEMENT
INTERIM INVESTMENT ADVISORY AGREEMENT (the "Agreement") made as of this 1st
day of December, 2009 between BlackRock Fund Advisors, formerly known as
Barclays Global Fund Advisors, a corporation organized under the laws of the
State of California (the "Adviser"), and iShares, Inc., a Maryland corporation
(the "Company").
WHEREAS, the Adviser is engaged in the business of rendering investment
management services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Company is an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Company is authorized to issue shares of common stock in
separate series with each such series representing interests in a separate
portfolio of securities and other assets;
WHEREAS, the Company offers shares representing interests in each of the
separate series listed on Schedule A attached hereto (each, a "Fund" and
collectively, the "Funds");
WHEREAS, the Adviser has previously served as the investment adviser to the
Funds pursuant to an Investment Advisory Agreement between the Company, on
behalf of the Funds, and the Adviser (the "Current Advisory Agreement");
WHEREAS, the Adviser is a wholly-owned subsidiary of BlackRock
Institutional Trust Company, N.A., formerly known as Barclays Global Investors,
N.A. ("BGI"), which in turn was a majority-owned subsidiary of Barclays PLC
("Barclays");
WHEREAS, on June 16, 2009, Barclays announced that it had entered into an
agreement to sell its interest in BGI, the Adviser and certain affiliated
companies to BlackRock, Inc. (the "Transaction");
WHEREAS, the consummation of the Transaction resulted in the assignment of
the Current Advisory Agreement, which caused the automatic termination of such
agreement;
WHEREAS, to address the termination of the Current Advisory Agreement,
shareholder approval of a new Investment Advisory Agreement (the "New Advisory
Agreement") between the Company, on behalf of the Funds, and the Adviser is
being sought;
WHEREAS, in the event that shareholder approval of the New Advisory
Agreement has not been obtained prior to the consummation of the Transaction for
any Fund, the Company, on behalf of the Funds, desires to retain the Adviser to
act as investment adviser to such Funds, and to render investment advisory
services to the Funds in the manner and on the terms set out in this Agreement
for a maximum of 150 days following the consummation of the
Transaction, pending approval of the New Advisory Agreement by the shareholders
of each Fund; and
WHEREAS, the Adviser desires to provide such services on the terms and
conditions set forth in this Agreement;
NOW THEREFORE, the parties hereto hereby agree as follows:
1. APPOINTMENT OF ADVISER
Fund. The Company, pending the consummation of the Transaction and the
failure by that time to obtain shareholder approval of the New Advisory
Agreement by any Fund, hereby appoints the Adviser to act as investment
adviser for any Fund that has not obtained shareholder approval for the
period and on the terms herein set forth. The Adviser accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided, as such compensation may be limited by Rule
15a-4 under the 1940 Act and as provided in this Agreement.
2. DUTIES OF THE ADVISER
The Adviser shall be responsible for the general management of the
Company's affairs. The Adviser, at its own expense (subject to the overall
supervision and review of the Board of Directors of the Company), shall (i)
furnish continuously an investment program for each Fund in compliance with
that fund's investment objective and policies, as set forth in the
then-current prospectus and statement of additional information for such
Fund contained in the Company's Registration Statement Form N-1A, as such
prospectus and statement of additional information is amended or
supplemented from time to time, (ii) determine what investments shall be
purchased, held, sold or exchanged for each Fund and what portion, if any,
of the assets of each Fund shall be held uninvested, (iii) make changes on
behalf of the Company in the investments for each Fund and (iv) provide the
Company with records concerning the Adviser's activities that the Company
is required to maintain and render reports to the Company's officers and
Board of Directors concerning the Adviser's discharge of the foregoing
responsibilities. The Adviser shall furnish to the Company all office
facilities, equipment, services and executive and administrative personnel
necessary for managing the investment program of the Company for each Fund.
3. ALLOCATION OF EXPENSES
Subject to Section 4 below, the Company shall be responsible for and pay
all expenses for Company operations and activities.
4. ADVISORY FEE
a. For the services to be provided by the Adviser hereunder with respect
to each Fund, the Company shall pay to the Adviser an annual gross
investment advisory fee equal to the amount set forth on Schedule A
attached hereto, subject to the limitations set forth in Section 4(d)
below, provided, and notwithstanding
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anything herein to the contrary, the fees and other compensation paid
to the Adviser hereunder shall be no greater than the compensation the
Adviser would have received under the Current Advisory Agreement. The
Adviser agrees to pay all expense incurred by the Company except for
(i) expenses of the Fund incurred in connection with the execution of
portfolio securities transactions on behalf of such Fund, (ii)
expenses incurred in connection with any distribution plan adopted by
the Company in compliance with Rule 12b-1 under the 1940 Act, (iii)
litigation expenses, (iv) taxes (including, but not limited to,
income, excise, transfer and withholding taxes), (v) any cost or
expense that a majority of the Directors of the Company who are not
"interested persons" (as defined in the 0000 Xxx) deems to be an
extraordinary expense and (vi) the advisory fee payable to the Adviser
hereunder.
b. Schedule A shall be amended from time to time to reflect the
termination of any Fund as a Fund hereunder. All fees payable
hereunder shall be accrued daily and paid as soon as practicable after
the last day of each calendar quarter, subject to the limitations set
forth in Section 4(d) below.
c. In case of commencement or termination of this Agreement with respect
to any Fund during any calendar quarter, the fee with respect to such
Fund for that quarter shall be reduced proportionately based upon the
number of calendar days during which it is in effect, and the fee
shall be computed upon the average daily net assets of such Fund for
the days during which it is in effect, subject to the limitations set
forth in Section 4(d) below.
d. Notwithstanding any provision of Sections 4(a), (b) and (c) or any
other provisions of this Agreement to the contrary, the Adviser hereby
acknowledges and agrees that for the term of this Agreement all
compensation earned by the Adviser under this Agreement will be held
in an interest-bearing escrow account (the "Escrow Account") with the
Company's custodian, or such other bank as the Adviser and the Company
may agree, pending the occurrence of one of the following events:
(1) A "majority of the outstanding voting securities" of a Fund (as
defined in the 0000 Xxx) approves the New Advisory Agreement with
the Adviser by the end of the 150 day maximum term of this
Agreement (the "Adviser Approval Event"); or
(2) A "majority of the outstanding voting securities" of a Fund (as
defined in the 0000 Xxx) does not approve the New Advisory
Agreement with the Adviser by the end of the 150 day maximum term
of this Agreement.
If the Adviser Approval Event occurs for any Fund, then the amount in
the Escrow Account (including any interest earned) for such Fund will
be paid to the Adviser. If the Adviser Approval Event does not occur
for any Fund, then upon termination of this Agreement, the Adviser
will be promptly paid, out of the Escrow Account for such
non-approving Funds, the lesser of (i) any costs
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incurred in performing this Agreement (plus any interest earned on
that amount while in escrow) for such Funds; and (ii) the total amount
in the Escrow Account (plus any interest earned) for such Funds. The
Adviser acknowledges its agreement with the compensation limitations
imposed by this Section 4(d) and hereby waives any and all claims at
law or in equity to any amount of compensation more than is
specifically provided for in this Section 4(d).
5. PORTFOLIO TRANSACTIONS
In connection with the management of the investment and reinvestment of the
assets of the Company, the Adviser, acting by its own officers, directors
or employees, is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Company. In executing
portfolio transactions and selecting brokers or dealers, if any, the
Adviser will use its best efforts to seek on behalf of a Fund the best
overall terms available. In assessing the best overall terms available for
any transaction, the Adviser shall consider all factors it deems relevant,
including the breadth of the market in and the price of the security, the
financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any (for the specific transaction
and on a continuing basis). In evaluating the best overall terms available,
and in selecting the broker or dealer, if any, to execute a particular
transaction, the Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the 0000 Xxx)
provided to any fund of the Company. The Adviser may pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided. The Company acknowledges that any such research
may be useful to the Adviser in connection with other accounts managed by
it.
6. LIABILITY OF ADVISER
Neither the Adviser nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Company or its shareholders
in connection with the matters to which this Agreement relates; provided,
however, that no provision of this Agreement shall be deemed to protect the
Adviser against any liability to the company or its shareholders to which
it might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement.
7. DURATION AND TERMINATION OF THIS AGREEMENT
a. Duration. This Agreement shall become effective with respect to a Fund
on the first business day following the consummation of the
Transaction, if, by that date, shareholders of that Fund have not
approved the New Advisory Agreement, and, unless terminated in
accordance with its terms, will continue for a maximum of 150 days;
provided, however, this Agreement will terminate upon the execution of
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the New Advisory Agreement after the Adviser Approval Event. For the
avoidance of doubt, it is acknowledged and agreed that if the
Transaction is not consummated for any reason, this Agreement will not
go into effect and the Current Advisory Agreement between the Company,
on behalf of the Funds, and the Adviser will remain in effect, and any
compensation owed by the Company, on behalf of the Funds, to the
Adviser will be paid pursuant to the terms of the Current Advisory
Agreement.
b. Amendment. Any amendment to this Agreement shall become effective with
respect to a Fund upon approval of the Adviser and of a majority of
Directors who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting such approval and
of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of that fund.
c. Termination. This Agreement may be terminated with respect to any Fund
at any time, without payment of any penalty, by vote of the Directors
or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of that Fund, or by the Adviser, in each case
on ten (10) calendar days' prior written notice to the other party;
provided, that a shorter notice period shall be permitted for a Fund
in the event its shares are no longer listed on a national securities
exchange.
d. Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its "assignment" (as defined in
the 1940 Act).
e. Approval, Amendment or, Termination by a Fund. Any approval, amendment
or termination of this Agreement by the holders of a "majority of the
outstanding voting securities" (as defined in the 0000 Xxx) of any
Fund shall be effective to continue, amend or terminate this Agreement
with respect to any such Fund notwithstanding (i) that such action has
not been approved by the holders of a majority of the outstanding
voting securities of any other Fund affected thereby, and (ii) that
such action has not been approved by the vote of a majority of the
outstanding voting securities of the Company, unless such action shall
be required by any applicable law or otherwise
8. SERVICES NOT EXCLUSIVE
The services of the Adviser to the Company hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to
others so long as its service hereunder are not impaired thereby.
9. MISCELLANEOUS
a. "iShares" Name. The Company shall, at the request of the Adviser, stop
all use of the "iShares" name in the event that the Adviser or its
affiliates is no longer the Company's investment advisor.
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b. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party ma designate in writing for the receipt of
such notices.
c. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision statute, rule or otherwise, the remainder
shall not be thereby affected.
d. Applicable Law. This Agreement shall be constituted in accordance with
and governed by the laws of New York.
e. Execution by Counterpart. This Agreement may be executed in any number
of counterparts, all of which together shall constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
iSHARES, INC.
By: /s/ Xxxx Xxx
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Name: Xxxx Xxx
Title: Chief Financial Officer,
iShares, Inc.
BLACKROCK FUND ADVISORS
By: /s/ Xxxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Managing Director
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
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SCHEDULE A
TO THE
INTERIM ADVISORY AGREEMENT DATED DECEMBER 1, 2009
BETWEEN
iSHARES, INC.
AND
BLACKROCK FUND ADVISORS
Pursuant to Section 4 of this Agreement, the Company, on behalf of the Funds,
shall pay the Adviser compensation at the following annual rates, subject to the
limitations set forth in Section 4(d) of the Agreement.
