PORTFOLIO MANAGEMENT AGREEMENT For The Fixed Income II Portfolio
Exhibit d(12)
PORTFOLIO MANAGEMENT AGREEMENT
For The Fixed Income II Portfolio
For The Fixed Income II Portfolio
AGREEMENT made this 26th day of November, 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
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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. 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
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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 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)
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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
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
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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.
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
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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
The Xxxxxx Xxxxxxxxx Trust
Five Tower Bridge, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, XX 00000
If to Portfolio Manager:
Mr. Xxxxxx Xxxxxxxx, General Counsel
BlackRock Financial Management, Inc.
c/o BlackRock, Inc.
00 Xxxx 00xx Xx.
Xxx Xxxx, XX 00000
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 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.
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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:
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BlackRock Financial Management, Inc. | |||
illegible
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By: illegible | |||
ATTEST:
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The Xxxxxx Xxxxxxxxx Trust (on behalf of The Fixed Income II Portfolio) | |||
/s/ Xxxxxxx Xxxx
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By: /s/ Xxxxxx X. Xxxx |
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