EXHIBIT A
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made as of July 29, 1996 between HOTCHKIS and WILEY, a California
limited partnership, ("Portfolio Manager") and THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ TRUST, a
Delaware business trust ("Trust"), for effectiveness in accordance with
Section 7 hereof.
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 Value 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
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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 .30% 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 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 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"), provided that a
copy of any such filing is provided to Portfolio Manager (i) at least 10
business days prior to the date on which it will become effective, in the case
of a registration statement; (ii) 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
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 either 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
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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.
6. PERMISSIBLE INTEREST.
Subject to and in accordance with the Trust's Declaration of Trust and Bylaws
and corresponding governing documents of Portfolio Manager, the 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 on which that certain
contract between Cowen Asset Management and the Trust relating to the
Portfolio terminates. This Agreement shall continue in effect for two years
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from its effective date, unless sooner terminated, provided that this
Agreement is approved by the shareholders of The Value Equity Portfolio within
120 days of such effective date. 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 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.
It is acknowledged and agreed that the names "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇," "▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Chief Investment Officers" (which is a registered trademark of)
HCCI, and derivatives of either, as well as any logo that is now or shall
later become associated with either name ("Marks") are valuable property of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and Co. Inc. ("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 ▇▇▇▇
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.
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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 ("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. In addition,
Portfolio Manager acknowledges that the Trust may, in response to regulations
or recommendations issued by the SEC 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.
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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, or to such other person or address as may be designated, in writing,
by the party to whom such notice is to be given:
If to the Trust:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Trust
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Portfolio Manager:
Hotchkis and Wiley
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 Portfolio.
Portfolio Manager further agrees that it will not seek the 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: Hotchkis and Wiley
/s/ By: /s/ Hotchkis and Wiley
Chief Financial Officer
ATTEST: The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Trust
/s/ By: /s/ The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Trust
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Page 7
EXHIBIT B
FORM OF AGREEMENT (POST ACQUISITION)
THE FORM OF AGREEMENT BELOW IS MARKED TO SHOW CHANGES FROM THE HOTCHKIS
AGREEMENT.
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this __________day of __________ 1996, between HOTCHKIS and
WILEY, ("Portfolio Manager"), a division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management,
L.P. and THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ TRUST, a Delaware business trust ("Trust"), for
effectiveness in accordance with Section 7 hereof.
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 Value 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.
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Page 8
(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.
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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 .30% 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 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 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"), provided that a
copy of any such filing is provided to Portfolio Manager (i) at least 10
business days prior to the date on which it will become effective, in the case
of a registration statement; (ii) 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.
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Page 10
(c) 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, (collectively, "Losses") to
the extent that Losses are incurred as a result of statements contained in an
SEC Filing ("Disputed Statements") that are misleading either 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.
6. PERMISSIBLE INTEREST.
Subject to and in accordance with the Trust's Declaration of Trust and Bylaws
and corresponding governing documents of Portfolio Manager, the 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
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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 on which that certain
agreement between Portfolio Manager's predecessor limited partnership and the
Trust terminates as a result of its assignment, provided that this Agreement
is approved by the shareholders of the Portfolio prior to such effective date.
This Agreement shall continuefor two years following such effective date, and
thereafter 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 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.
It is acknowledged and agreed that the names "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇," "▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Chief Investment Officers" (which is a registered trademark of HCCI,
and derivatives of either, as well as any logo that is now or shall later
become associated with either name ("Marks") are valuable property of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ and Co. Inc. ("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 ▇▇▇▇ without
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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) no
violation of such code occurred or (ii) if such a violation occurred, that
appropriate action was taken in response to such violation. 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
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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, or to such other person or address as may be designated, in writing,
by the party to whom such notice is to be given:
If to the Trust:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Trust
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Portfolio Manager:
Hotchkis and Wiley
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 Portfolio.
Portfolio Manager further agrees that it will not seek the 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.
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