Exhibit (d)(12)(b)
PORTFOLIO MANAGEMENT AGREEMENT
FOR THE FIXED INCOME II PORTFOLIO
AGREEMENT made this ___ day of ________, 2006, between BlackRock Financial
Management, Inc., a Delaware corporation ("BlackRock" or "Portfolio Manager"),
and THE XXXXXX XXXXXXXXX TRUST, a Delaware statutory trust ("Trust").
WHEREAS, the Trust is registered as an open-end, diversified, management series
investment company under the Investment Company Act of 1940, as amended
("Investment Company Act") which currently offers nine series of beneficial
interests ("shares") representing interests in separate investment portfolios,
and may offer additional portfolios in the future; and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide a
continuous program of investment management for The Fixed Income II Portfolio of
the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the
terms and conditions hereof, to provide such services to the Trust;
NOW THEREFORE, in consideration of the promises and covenants set forth herein
and intending to be legally bound hereby, it is agreed between the parties as
follows:
1. Appointment of Portfolio Manager. The Trust hereby retains Portfolio Manager
to provide the investment services set forth herein and Portfolio Manager agrees
to accept such appointment. In carrying out its responsibilities under this
Agreement, the Portfolio Manager shall at all times act in accordance with the
investment objectives, policies and restrictions applicable to the Portfolio as
set forth in the then current Registration Statement of the Trust delivered by
the Trust to the Portfolio Manager, applicable provisions of the Investment
Company Act and the rules and regulations promulgated under the Investment
Company Act and other applicable federal securities laws.
2. Duties of Portfolio Manager.
(a) Portfolio Manager shall provide a continuous program of investment
management for that portion of the assets of the Portfolio ("Account") that may,
from time to time be allocated to it by the Trust's Board of Trustees, as
indicated in writing by an authorized officer of the Trust. It is understood
that the Account may consist of all, a portion of or none of the assets of the
Portfolio, and that the Board of Trustees has the right to allocate and
reallocate such assets to the Account at any time, and from time to time, upon
such notice to the Portfolio Manager as may be reasonably necessary, in the view
of the Trust, to ensure orderly management of the Account or the Portfolio. The
Portfolio Manager's responsibility for providing portfolio management services
to the Portfolio shall be limited to the Account.
(b) Subject to the general supervision of the Trust's Board of Trustees,
Portfolio Manager shall have sole investment discretion with respect to the
Account, including investment research, selection of the securities to be
purchased and sold and the portion of the Account, if any, that shall be held
uninvested, and the selection of brokers and dealers through which securities
transactions in the Account shall be executed. The Portfolio Manager shall not
consult with any other portfolio manager of the Portfolio concerning
transactions for the Portfolio in securities or other assets. Specifically, and
without limiting the generality of the foregoing, Portfolio Manager agrees that
it will:
(i) promptly advise the Portfolio's designated custodian bank and
administrator or accounting agent on each business day of each purchase and
sale, as the case may be, made on behalf of the Account, specifying the
name and quantity of the security purchased or sold, the unit and aggregate
purchase or sale price, commission paid, the market on which the
transaction was effected, the trade date, the settlement date, the identity
of the effecting broker or dealer and/or such other information, and in
such manner, as may from time to time be reasonably requested by the Trust;
(ii) maintain all applicable books and records with respect to the
securities transactions of the Account. Specifically, Portfolio Manager
agrees to maintain with respect to the Account those records required to be
maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment
Company Act with respect to
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transactions in the Account including, without limitation, records which
reflect securities purchased or sold in the Account, showing for each such
transaction, the name and quantity of securities, the unit and aggregate
purchase or sale price, commission paid, the market on which the
transaction was effected, the trade date, the settlement date, and the
identity of the effecting broker or dealer. Portfolio Manager will preserve
such records in the manner and for the periods prescribed by Rule 31a-2
under the Investment Company Act. Portfolio Manager acknowledges and agrees
that all records it maintains for the Trust are the property of the Trust
and Portfolio Manager will surrender promptly to the Trust any such records
upon the Trust's request. The Trust agrees, however, that Portfolio Manager
may retain copies of those records that are required to be maintained by
Portfolio Manager under federal or state regulations to which it may be
subject or are reasonably necessary for purposes of conducting its
business;
(iii) provide, in a timely manner, such information as may be reasonably
requested by the Trust or its designated agents in connection with, among
other things, the daily computation of the Portfolio's net asset value and
net income, preparation of proxy statements or amendments to the Trust's
registration statement and monitoring investments made in the Account to
ensure compliance with the various limitations on investments applicable to
the Portfolio and to ensure that the Portfolio will continue to qualify for
the special tax treatment accorded to regulated investment companies under
Subchapter M of the Internal Revenue Code of 1986, as amended ("Code"); and
(iv) render regular reports to the Trust concerning the performance of
Portfolio Manager of its responsibilities under this Agreement. In
particular, Portfolio Manager agrees that it will, at the reasonable
request of the Board of Trustees, attend meetings of the Board or its
validly constituted committees and will, in addition, make its officers and
employees available to meet with the officers and employees of the Trust at
least quarterly and at other times upon reasonable notice, to review the
investments and investment program of the Account.
3. Portfolio Transactions and Brokerage. In placing orders for portfolio
securities with brokers and dealers, Portfolio Manager shall use its best
efforts to execute securities transactions on behalf of the Account in such a
manner that the total cost or proceeds in each transaction is the most favorable
under the circumstances. Portfolio Manager may, however, in its discretion,
direct orders to brokers that provide to Portfolio Manager research, analysis,
advice and similar services, and Portfolio Manager may cause the Account to pay
to those brokers a higher commission than may be charged by other brokers for
similar transactions, provided that Portfolio Manager determines in good faith
that such commission is reasonable in terms either of the particular transaction
or of the overall responsibility of the Portfolio Manager to the Account and any
other accounts with respect to which Portfolio Manager exercises investment
discretion, and provided further that the extent and continuation of any such
practice is subject to review by the Trust's Board of Trustees. Portfolio
Manager shall not execute any portfolio transactions for the Trust with a broker
or dealer which is an "affiliated person" of the Trust or Portfolio Manager,
including any other investment advisory organization that may, from time to time
act as a portfolio manager for the Portfolio or any of the Trust's other
Portfolios, except in a manner that complies with the procedures adopted by the
Trust pursuant to Rule 17e-1 under the Investment Company Act, as they may be
amended from time to time, or as otherwise approved by the Trust. The Trust
shall provide a list of such affiliated brokers and dealers to Portfolio Manager
and will promptly advise Portfolio Manager of any changes in such list.
4. Expenses and Compensation. Except for expenses specifically assumed or agreed
to be paid by the Portfolio Manager under this Agreement, the Portfolio Manager
shall not be liable for any expenses of the Trust, including, without
limitation, (i) interest and taxes, (ii) brokerage commissions and other costs
in connection with the purchase and sale of securities or other investment
instruments with respect to the Portfolio, and (iii) custodian fees and
expenses. For its services under this Agreement, Portfolio Manager shall be
entitled to receive a fee, which fee shall be payable monthly, at the annual
rate of .25% of the first $100 million of the average daily net assets of the
Account; .20% of such assets over $100 million up to and including $200 million,
and .175% of such assets over $200 million.
5. Limitation of Liability and Indemnification. (a) Portfolio Manager shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with the matters to which this Agreement relates
including, without limitation, losses that may be sustained in connection with
the purchase, holding, redemption or sale of any security or other investment by
the Trust, except a loss resulting from willful
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misfeasance, bad faith or gross negligence on the part of Portfolio Manager in
the performance of its duties or from reckless disregard by it of its duties
under this Agreement.
(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the
Trust may rely upon information provided, in writing, by Portfolio Manager to
the Trust (including, without limitation, information contained in the Portfolio
Manager's then current Form ADV) in accordance with Section 9 of this Agreement
or otherwise in preparing the Trust's registration statement and amendments
thereto and certain periodic reports relating to the Trust and its Portfolios
that are required to be furnished to shareholders of the Trust and/or filed with
the Securities and Exchange Commission ("SEC Filings") provided that a copy of
any such filing is provided to Portfolio Manager (i) at least 10 business days
prior to the date upon which it is filed with the SEC in the case of the Trust's
semi-annual report on Form N-SAR or any shareholder report or proxy statement.
(c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each
of its Trustees, officers, and employees from any claims, liabilities and
reasonable expenses, including reasonable attorneys' fees (collectively,
"Losses"), to the extent that Losses are incurred as a result of statements
contained in an SEC Filing ("Disputed Statements") that are misleading because
they are (i) untrue statements of material fact; or (ii) omitted to state any
material fact necessary in order to make the statements made, in the light of
the circumstances under which they are made, not misleading. For purposes of the
indemnification obligation set forth in this Section 5(c), a Disputed Statement
will be deemed misleading if so declared by a decision of a court or
administrative law judge or in an order of settlement issued by any court or
administrative body.
(d) Portfolio Manager further agrees to indemnify and hold harmless the Trust
and each of its Trustees from any Losses to the extent that such Losses are
incurred as a result of Disputed Statements that are alleged (i) to be untrue
statements of material fact; or (ii) to have omitted to state any material fact
necessary in order to make the statements made, in the light of the
circumstances under which they are made, provided that the indemnification
obligation set forth in this Section 5(d) is expressly limited to Losses arising
from Disputed Statements that accurately reflect information provided to the
Trust in writing by the Portfolio Manager and that cannot be independently
verified by the Trust. Further, the indemnification set forth in this Section
5(d) will not require reimbursement of fees or expenses other than those
incurred by the Trust's regular counsel in connection with such counsel's
representation of the Trust or its Trustees.
(e) The indemnification obligations set forth in Section 5 (c) and (d) shall not
apply unless: (i) Disputed Statements accurately reflect information provided to
the Trust in writing by the Portfolio Manager; (ii) Disputed Statements were
included in an SEC Filing in reliance upon written information provided to the
Trust by the Portfolio Manager; (iii) the Portfolio Manager was afforded the
opportunity to review Disputed Statements in connection with the 10 business day
review requirement set forth in Section 5(b) above; and (iv) upon receipt by the
Trust of any notice of the commencement of any action or the assertion of any
claim to which the indemnification obligations set forth in Section 5(c) and (d)
may apply, the Trust notifies the Portfolio Manager, within 30 days and in
writing, of such receipt and provides to Portfolio Manager the opportunity to
participate in the defense and/or settlement of any such action or claim.
Further, Portfolio Manager will not be required to indemnify any person under
this Section 5 to the extent that Portfolio Manager relied upon statements or
information furnished to the Portfolio Manager, in writing, by any officer,
employee or Trustee of the Trust, or by the Trust's Custodian, Administrator or
Accounting Agent or any other agent of the Trust, in preparing written
information provided to the Trust and upon which the Trust relied in preparing
any Disputed Statement.
(f) Neither the Portfolio Manager nor any person that is an "affiliated person"
of the Portfolio Manager or any of its affiliated companies (collectively,
"Associated Persons") shall be liable for (i) any acts of any other portfolio
manager to the Portfolio or the Trust with respect to the portion of the assets
of the Account not managed by the Portfolio Manager; and (ii) acts of the
Portfolio Manager which result from acts of the Trust, including, but not
limited to, a failure of the Trust to provide accurate and current information
with respect to any records maintained by Trust or any other portfolio manager
to the Portfolio. The Trust agrees that the Portfolio Manager shall manage the
Account as if it was a separate operating series and shall comply with (a) the
objectives, policies, and limitations for the Account set forth in the Trust's
current prospectus and statement of additional information, and (b) applicable
laws and regulations (including, but not limited to, the investment objectives,
policies and restrictions applicable to the Account and qualification of the
Account as a regulated investment company under the Internal Revenue Code of
1986, as amended) with respect to the portion of the assets of the Account
allocated to the
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Portfolio Manager. In no event shall the Portfolio Manager or its Associated
Persons have any liability arising from the conduct of the Trust and any other
portfolio manager with respect to the portion of the Portfolio's assets not
allocated to the Portfolio Manager.
6. Permissible Interest. Subject to and in accordance with the Trust's
Declaration of Trust and Bylaws and corresponding governing documents of
Portfolio Manager, Trustees, officers, agents and shareholders of the Trust may
have an interest in the Portfolio Manager as officers, directors, agents and/or
shareholders or otherwise. Portfolio Manager may have similar interests in the
Trust. The effect of any such interrelationships shall be governed by said
governing documents and the provisions of the Investment Company Act.
7. Duration, Termination and Amendments. This Agreement shall become effective
as of the date first written above and shall continue in effect for two years.
Thereafter, this Agreement shall continue in effect from year to year for so
long as its continuance is specifically approved, at least annually, by: (i) a
majority of the Board of Trustees or the vote of the holders of a majority of
the Portfolio's outstanding voting securities; and (ii) the affirmative vote,
cast in person at a meeting called for the purpose of voting on such
continuance, of a majority of those members of the Board of Trustees
("Independent Trustees") who are not "interested persons" of the Trust or any
investment adviser to the Trust.
This Agreement may be terminated by the Trust or by Portfolio Manager at any
time and without penalty upon sixty days written notice to the other party,
which notice may be waived by the party entitled to it. This Agreement may not
be amended except by an instrument in writing and signed by the party to be
bound thereby provided that if the Investment Company Act requires that such
amendment be approved by the vote of the Board, the Independent Trustees and/or
the holders of the Trust's or the Portfolio's outstanding shareholders, such
approval must be obtained before any such amendment may become effective. This
Agreement shall terminate upon its assignment. For purposes of this Agreement,
the terms "majority of the outstanding voting securities," "assignment" and
"interested person" shall have the meanings set forth in the Investment Company
Act.
8. Confidentiality; Use of Name. Portfolio Manager and the Trust acknowledge and
agree that during the term of this Agreement the parties may have access to
certain information that is proprietary to the Trust or Portfolio Manager,
respectively (or to their affiliates and/or service providers). The parties
agree that their respective officers and employees shall treat all such
proprietary information as confidential and will not use or disclose information
contained in, or derived from such material for any purpose other than in
connection with the carrying out of their responsibilities under this Agreement
and the management of the Trust's assets, provided, however, that this shall not
apply in the case of: (i) information that is publicly available; and (ii)
disclosures required by law or requested by any regulatory authority that may
have jurisdiction over Portfolio Manager or the Trust, as the case may be, in
which case such party shall request such confidential treatment of such
information as may be reasonably available. In addition, each party shall use
its reasonable efforts to ensure that its agents or affiliates who may gain
access to such proprietary information shall be made aware of the proprietary
nature and shall likewise treat such materials as confidential.
It is acknowledged and agreed that the names "Xxxxxx Xxxxxxxxx," "Xxxxxx
Xxxxxxxxx Chief Investment Officers" (which is a registered trademark of Xxxxxx
Xxxxxxxxx & Co., Inc. ("HCCI")), and derivative of either, as well as any logo
that is now or shall later become associated with either name ("Marks") are
valuable property of HCCI and that the use of the Marks, or any one of them, by
the Trust or its agents is subject to the license granted to the Trust by HCCI.
Portfolio Manager agrees that it will not use any Xxxx without the prior written
consent of the Trust. Portfolio Manager consents to use of its name, performance
data, biographical data and other pertinent data, and the BlackRock Marks (as
defined below), by the Trust for use in marketing and sales literature, provided
that any such marketing and sales literature shall not be used by the Trust
without the prior written consent of Portfolio Manager, which consent shall not
be unreasonably withheld. The Trust shall have full responsibility for the
compliance by any such marketing and sales literature with all applicable laws,
rules, and regulations, and Portfolio Manager will have no responsibility or
liability therefor.
It is acknowledged and agreed that the name "BlackRock" and any portion or
derivative thereof, as well as any logo that is now or shall later become
associated with the name ("BlackRock Marks"), are valuable property of the
Portfolio Manager and that the use of the BlackRock Marks by the Trust or its
agents is permitted only so long as this Agreement is in place.
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9. Representation, Warranties and Agreements of Portfolio Manager. Portfolio
Manager represents and warrants that:
(a) It is registered as an investment adviser under the Investment Advisers Act
of 1940, as amended ("Investment Advisers Act"), it will maintain such
registration in full force and effect and will promptly report to the Trust the
commencement of any formal proceeding that could render the Portfolio Manager
ineligible to serve as an investment adviser to a registered investment company
under Section 9 of the Investment Company Act.
(b) Portfolio Manager represents that it is subject to a written code of ethics
("Portfolio Manager's Code") complying with the requirements of Rule 17j-1 under
the Investment Company Act and will provide the Trust with a copy of such code
of ethics. Portfolio Manager acknowledges that the Trust may, in response to
regulations or recommendations issued by the Securities and Exchange Commission
or other regulatory agencies, from time to time, request additional information
regarding the personal securities trading of its directors, partners, officers
and employees and the policies of Portfolio Manager with regard to such trading.
Portfolio Manager agrees that it make every effort to respond to the Trust's
reasonable requests in this area.
(c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust
with any information concerning Portfolio Manager and its stockholders,
employees and affiliates that the Trust may reasonably require in connection
with the preparation of its registration statements, proxy materials, reports
and other documents required, under applicable state or Federal laws, to be
filed with state or Federal agencies or to be provided to shareholders of the
Trust.
10. Status of Portfolio Manager. The Trust and Portfolio Manager acknowledge and
agree that the relationship between Portfolio Manager and the Trust is that of
an independent contractor and under no circumstances shall any employee of
Portfolio Manager be deemed an employee of the Trust or any other organization
that the Trust may, from time to time, engage to provide services to the Trust,
its Portfolios or its shareholders. The parties also acknowledge and agree that
nothing in this Agreement shall be construed to restrict the right of Portfolio
Manager or its affiliates to perform investment management or other services to
any person or entity, including without limitation, other investment companies
and persons who may retain Portfolio Manager to provide investment management
services and the performance of such services shall not be deemed to violate or
give rise to any duty or obligations to the Trust.
11. Counterparts and Notice. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original. Any notice
required to be given under this Agreement shall be deemed given when received,
in writing addressed and delivered, by certified mail, by hand or via overnight
delivery service as follows:
If to the Trust:
Xx. Xxxxxx X. Xxxxxxxxx, President
The Xxxxxx Xxxxxxxxx Trust
Five Tower Bridge, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
If to Portfolio Manager:
BlackRock Financial Management, Inc.
c/o BlackRock, Inc.
00 Xxxx 00xx Xx.
Xxx Xxxx, XX 00000
12. 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
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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 upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
law of the State of Delaware provided that nothing herein shall be construed as
inconsistent with the Investment Company Act or the Investment Advisers Act.
The Trust acknowledges receipt of Part II of Portfolio Manager's Form ADV,
copies of which have been provided to the Trust's Board of Trustees.
Portfolio Manager is hereby expressly put on notice of the limitations of
shareholder and Trustee liability set forth in the Declaration of Trust of the
Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the assets of the Fixed Income II
Portfolio. Portfolio Manager further agrees that it will not seek satisfaction
of any such obligations from the shareholders or any individual shareholder of
the Trust, or from the Trustees of the Trust or any individual Trustee of the
Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized as of the day and year first written
above.
ATTEST: BlackRock Financial Management, Inc.
By:
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ATTEST: The Xxxxxx Xxxxxxxxx Trust (on behalf of
The Fixed Income II Portfolio)
By:
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