PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this __________day of August between Clover Capital
Management, Inc., a corporation organized under the laws of New York
("Portfolio Manager") and THE XXXXXX XXXXXXXXX TRUST, a Delaware business
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 five 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 Small
Capitalization Equity 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, applicable provisions of the Investment
Company Act and the rules and regulations promulgated under that 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, 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. (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. 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 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 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;
(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; 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 Transaction 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,
without prior written approval of 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. Portfolio Manager
shall pay all of its expenses incurred in the
performance of its duties under this Agreement and shall not be required to
pay any other expenses of the Trust. For its services under this Agreement,
Portfolio Manager shall be entitled to receive a fee at the annual rate of .45%
of the average daily net asset value of the Account, which fee shall be
payable monthly.
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 misfeasance, bad faith or 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 written information
provided, in writing, by Portfolio Manager to the Trust (including, without
limitation, information contained in Portfolio Manager's then current Form
ADV) in accordance with Section 9 of the 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"). Portfolio Manager agrees to
indemnify and hold harmless the Trust and each of its Trustees, officers and
employees from any claims, liabilities and expenses, including reasonable
attorneys' fees, incurred as a result of any untrue statement or alleged
untrue statement of a material fact made by Portfolio Manager in any such
written information and upon which the Trust relies in preparing any SEC
Filing, or any omission or alleged omission to state in such written
information a material fact necessary to make such statements not misleading
("material omission"). Portfolio Manager will not, however, be required to so
indemnify any person under this Section 5 to the extent that Portfolio
Manager relied upon an untrue statement or material omission made by an
officer or Trustee of the Trust or where such untrue statement or material
omission was made in reliance upon information furnished to the Portfolio
Manager in writing by such officer or Trustee, or by the Trust's Custodian,
Administrator or Accounting Agent.
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 acknowledges and agrees
that during the course of its responsibilities hereunder, it may have access
to certain information that is proprietary to the Trust or to one or more of
the Trust's agents or service providers. Portfolio Manager agrees that
Portfolio Manager, its officers and its employees shall treat all such
proprietary information as confidential and will not, without the express
written permission of the Trust, use or disclose information contained in, or
derived from such material for any purpose other than in connection with the
carrying out of Portfolio Manager's responsibilities hereunder. In addition,
Portfolio Manager shall use its best efforts to ensure that any agent or
affiliate of Portfolio Manager who may gain access to such proprietary
materials shall be made aware of the proprietary nature of such materials and
shall likewise treat such materials as confidential. This provision shall
not apply, however, to information that is publicly available. 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 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 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 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 provisions of
this Section 8 shall survive termination of this Agreement.
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 ("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) It understands that, as a result of its services hereunder,
certain of its employees and officers may be deemed "access persons" of the
Trust within the meaning of Rule 17j-1 under the Investment Company Act and
that each such access person is subject to the provisions of the code of
ethics ("Trust's Code") adopted by the Trust in compliance with such rule.
Portfolio Manager further represents that it is subject to a written code of
ethics ("Portfolio Manager's Code") complying with the requirements of Rule
204-2(a)(12) under the Investment Advisers Act and will provide the Trust
with a copy of such code of ethics. During the period that this Agreement is
in effect, an officer or director of Portfolio Manager shall certify to the
Trust, on a quarterly basis, that Portfolio Manager has complied with the
requirements of the Portfolio Manager's Code during the prior year; and that
either (i) that no violation of such code occurred or (ii) if such a
violation occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Trust, Portfolio Manager shall
permit the Trust, or it designated agents, to examine the reports required to
be made by Portfolio Manager under rule 17j-1(c)(1) under the Investment
Company Act. In addition, 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, PresidentThe Xxxxxx Xxxxxxxxx
Trust 000 Xxxx Xxxxxxxxxx Xxxx Xxxxx, XX 00000 If to Portfolio Manager:
Xxxxxxx X. Xxxxx Clover Capital Management, Inc. 00 Xxxxx Xxxxxxx Xxxxxx
XxxxXxxxxxxxx, Xxx Xxxx 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 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. 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 Small Capitalization Equity
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.
Clover Capital Management, Inc.
By: /s/
The Xxxxxx Xxxxxxxxx Trust
By: /s/
