Exhibit (d)(12)(a)
INTERIM PORTFOLIO MANAGEMENT AGREEMENT
For Fixed Income II Portfolio
AGREEMENT between BlackRock Financial Management, Inc., a Delaware corporation,
("Portfolio Manager") and THE XXXXXX XXXXXXXXX TRUST, a Delaware business trust
("Trust"), effective as of the date on which that certain contract between
BlackRock and the Trust related to the Fixed Income II Portfolio is terminated
("Effective Date").
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, 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. 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
without being invested, 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 sub-adviser 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 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. 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; 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
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 Sections 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 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. The Effective Date of this Agreement
shall be the date on which that certain contract between BlackRock and the Trust
related to the Fixed Income II Portfolio is terminated. It shall continue in
effect thereafter until the earlier of the date on which a subsequent agreement
with Portfolio Manager is approved by the shareholders of the Portfolio in
accordance with Section 15(a) of the 1940 Act or the 150th day following the
Effective Date.
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 best 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 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.
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 are 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 ("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 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 [Date of Termination]..
ATTEST: BlackRock Financial
Management, Inc.
By: /s/ Illegible
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ATTEST: The Xxxxxx Xxxxxxxxx Trust
(on behalf of the Fixed
Income II Portfolio)
By: /s/ Illegible
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