1
EXHIBIT
-------
EX-99.5(a):
-----------
FORM OF MANAGEMENT AGREEMENT BETWEEN THE TRUST AND PSAM RELATING TO THE FUND.
2
PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST
MANAGEMENT AGREEMENT
(MARKET NEUTRAL PORTFOLIO)
This MANAGEMENT AGREEMENT (this "Agreement") is entered into as of
________, 1998 by and between PUGET SOUND ALTERNATIVE INVESTMENT SERIES TRUST, a
Massachusetts business trust (the "Trust"), with respect to its Market Neutral
Portfolio series (the "Series"), and PUGET SOUND ASSET MANAGEMENT CO., LLC, a
Washington limited liability company (the "Manager").
WITNESSETH:
WHEREAS, the Trust and the Manager wish to enter into an agreement
setting forth the terms upon which the Manager (or certain other parties acting
pursuant to delegation from the Manager) will perform certain services for the
Series;
NOW, THEREFORE, in consideration of the premises and covenants
hereinafter contained, the parties agree as follows:
1. (a) The Trust hereby employs the Manager to furnish the Trust
with Portfolio Management Services (as defined in Section 2 hereof),
subject to the authority of the Manager to delegate certain of its
responsibilities hereunder to other parties as provided in Section 1(b)
hereof. The Manager hereby accepts such employment and agrees, at its
own expense, to furnish such services (either directly or pursuant to
delegation to other parties as and to the extent permitted by Section
1(b) hereof) and to assume the obligations herein set forth, for the
compensation herein provided. The Manager shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the
Trust.
(b) The Manager may delegate any or all of its
responsibilities hereunder with respect to the provision of Portfolio
Management Services (and assumption of related expenses) to one or more
other parties (each such party, a "Sub-Adviser"), pursuant in each case
to a written agreement with such Sub-Adviser that meets the
requirements of Section 15 of the Investment Company Act of 1940 and
the rules thereunder (the "1940 Act") applicable to contracts for
service as investment adviser of a registered investment company
(including without limitation the requirements for approval by the
trustees of the Trust and the shareholders of the Series), subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission. Any Sub-Adviser may (but need not) be affiliated
with the Manager.
3
(c) In the event that the Manager delegates to one or more
Sub-Advisers all or part of its responsibilities hereunder with respect
to the provision of Portfolio Management Services, the Manager hereby
agrees to furnish to the Trust the following services ("Oversight
Services"):
(i) supervision and oversight of each Sub-Adviser's
provision of Portfolio Management Services with
respect to the Series;
(ii) periodic evaluation of the Portfolio Management
Services provided by each Sub-Adviser, and of the
investment performance of the Series;
(iii) advice to and consultation with the Board of
Trustees of the Trust with respect to matters
relating to the investment operations of the Series,
including matters relating to the selection,
evaluation, retention and possible termination of
each Sub-Adviser; and
(iv) regular reporting to the Board of Trustees of
the Trust with respect to the foregoing matters.
2. As used in this Agreement, "Portfolio Management Services" means
management of the investment and reinvestment of the assets belonging to the
Series, consisting specifically of the following:
(a) obtaining and evaluating such economic, statistical and
financial data and information and undertaking such additional
investment research as shall be necessary or advisable for the
management of the investment and reinvestment of the assets belonging
to the Series in accordance with the Series' investment objectives and
policies;
(b) taking such steps as are necessary to implement the
investment policies of the Series by purchasing and selling of
securities, including the placing of orders for such purchase and sale;
and
(c) regularly reporting to the Board of Trustees of the Trust
with respect to the implementation of the investment policies of the
Series.
3. Nothing in this Agreement shall require the Manager to bear, or to
reimburse the Trust for:
(a) office space, office supplies, facilities and equipment
for the Trust;
-2-
4
(b) executive and other personnel for managing the affairs of
the Trust, other than for the provision of (1) Portfolio Management
Services and (2) Oversight Services (if the Manager shall have
delegated to one or more Sub-Advisers any or all of its
responsibilities hereunder with respect to the provision of Portfolio
Management Services);
(c) any of the costs of printing and mailing the items
referred to in SubSection (p) of this Section 3;
(d) any of the costs of preparing, printing and distributing
sales literature;
(e) compensation of trustees of the Trust who are not
directors, officers or employees of the Manager or of any affiliated
person (other than a registered investment company) of the Manager;
(f) registration, filing and other fees in connection with
requirements of regulatory authorities;
(g) the charges and expenses of any entity appointed by the
Trust for custodial, paying agent, shareholder servicing and plan agent
services;
(h) charges and expenses of independent accountants retained
by the Trust;
(i) charges and expenses of any transfer agents and registrars
appointed by the Trust;
(j) brokers' commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to
which the Trust is a party;
(k) taxes and fees payable by the Trust to federal, state or
other governmental agencies;
(l) any cost of certificates representing shares of the Trust;
(m) legal fees and expenses in connection with the affairs of
the Trust, including registering and qualifying its shares with federal
and state regulatory authorities;
(n) expenses of meetings of shareholders and trustees of the
Trust;
(o) interest, including interest on borrowings by the Trust;
-3-
5
(p) the costs of services, including services of counsel,
required in connection with the preparation of the Trust's registration
statements and prospectuses, including amendments and revisions
thereto, annual, semiannual and other periodic reports of the Trust,
and notices and proxy solicitation material furnished to shareholders
of the Trust or regulatory authorities; and
(q) the Trust's expenses of bookkeeping, accounting, auditing
and financial reporting, including related clerical expenses.
4. All activities undertaken by the Manager or any Sub-Adviser pursuant
to this Agreement shall at all times be subject to the supervision and control
of the Board of Trustees of the Trust, any duly constituted committee thereof or
any officer of the Trust acting pursuant to like authority.
5. The services to be provided by the Manager and any Sub-Adviser
hereunder are not to be deemed exclusive and the Manager and any Sub-Adviser
shall be free to render similar services to others, so long as its services
hereunder are not impaired thereby.
6. As full compensation for all services rendered, facilities furnished
and expenses borne by the Manager hereunder, the Trust shall pay the Manager
compensation at the annual rate of 2.00% of the average daily net assets of the
Series (or such lesser amount as the Manager may from time to time agree to
receive). Such compensation shall be payable monthly in arrears or at such other
intervals, not less frequently than quarterly, as the Board of Trustees of the
Trust may from time to time determine and specify in writing to the Manager. The
Manager hereby acknowledges that the Trust's obligation to pay such compensation
is binding only on the assets and property belonging to the Series.
7. It is understood that any of the shareholders, trustees, officers,
employees and agents of the Trust may be a member, director, officer, employee
or agent of, or be otherwise interested in, the Manager, any affiliated person
of the Manager, any organization in which the Manager may have an interest or
any organization which may have an interest in the Manager; that the Manager,
any such affiliated person or any such organization may have an interest in the
Trust; and that the existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder except as otherwise provided in
the Agreement and Declaration of Trust of the Trust, the partnership agreement
of the Manager or specific provisions of applicable law.
8. The Trust acknowledges that, as between the Trust and the Manager,
the Manager owns and controls the name "Puget Sound." The Manager consents to
the use by the Trust of the name "Puget Sound Alternative Investment Series
Trust" and by the Series of the name "Puget Sound Market Neutral Portfolio" or
any other name embodying the words "Puget Sound," in such forms as the Manager
shall in writing approve, but only on condition and so long as (i) this
Agreement shall remain in full force and (ii) the Trust shall fully perform,
-4-
6
fulfill and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by the
Trust or the Series at any time or in any place or for any purposes or under any
conditions except as in this section provided. The foregoing authorization by
the Manager to the Trust and the Series to use said words as part of a business
or name is not exclusive of the right of the Manager itself to use, or to
authorize others to use, the same; the Trust acknowledges and agrees that as
between the Manager and the Trust, the Manager has the exclusive right so to
use, or authorize others to use, said words, and the Trust agrees to take such
action as may reasonably be requested by the Manager to give full effect to the
provisions of this section (including, without limitation, consenting to such
use of said words). Without limiting the generality of the foregoing, the Trust
agrees that, upon any termination of this Agreement by either party or upon the
violation of any of its provisions by the Trust, the Trust will, at the request
of the Manager made at any time after the Manager has knowledge of such
termination or violation, use its best efforts to change the name of the Trust
and the Series so as to eliminate all reference, if any, to the words "Puget"
and "Sound" and will not thereafter transact any business in a name containing
the words "Puget" or "Sound" in any form or combination whatsoever, or (except
as may otherwise be required by law) designate itself as the same entity as or
successor to any entity of such name, or otherwise use the words "Puget" or
"Sound" or any other reference to the Manager. Such covenants on the part of the
Trust and the Series shall be binding upon it, its trustees, officers,
shareholders, creditors and all other persons claiming under or through it.
9. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, this Agreement shall continue
in effect for two years from the date of execution, and from year to
year thereafter so long as such continuance is specifically approved at
least annually (i) by the Board of Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Series, and (ii)
by vote of a majority of the trustees of the Trust who are not
interested persons of the Trust or the Manager, cast in person at a
meeting called for the purpose of voting on, such approval;
(b) this Agreement may at any time be terminated on sixty
days' written notice to the Manager either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series;
(c) this Agreement shall automatically terminate in the event
of its assignment;
(d) this Agreement may be terminated by the Manager on ninety
days' written notice to the Trust; and
(e) if the Manager requires the Trust or the Series to change
its name so as to eliminate all references to the words "Puget Sound,"
this Agreement shall
-5-
7
automatically terminate at the time of such change unless the
continuance of this Agreement after such change shall have been
specifically approved by vote of a majority of the outstanding voting
securities of the Series and by vote of a majority of the trustees of
the Trust who are not interested persons of the Trust or the Manager,
cast in person at a meeting called for the purpose of voting on such
approval.
Termination of this Agreement pursuant to this Section 9 shall be
without the payment of any penalty.
10. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the trustees of the Trust who are not
interested persons of the Trust or the Manager, cast in person at a meeting
called for the purpose of voting on such approval.
11. For the purpose of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under the 1940 Act. References in this Agreement to any
assets, property or liabilities "belonging to" the Series shall have the meaning
defined in the Trust's Agreement and Declaration of Trust as amended from time
to time.
12. In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of its obligations
and duties hereunder, the Manager shall not be subject to any liability to the
Trust, to any shareholder of the Trust or to any other person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder.
-6-
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
PUGET SOUND ALTERNATIVE INVESTMENT
SERIES TRUST, on behalf of its Market Neutral
Portfolio series
By:
----------------------------------
Xxxxxxxx X. Xxxxx
President
PUGET SOUND ASSET MANAGEMENT CO., LLC
By:
----------------------------------
Xxxxxxxx X. Xxxxx
Chief Executive Officer
NOTICE
A copy of the Agreement and Declaration of Trust establishing Puget
Sound Alternative Investment Series Trust (the "Trust") is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this Agreement is executed with respect to the Trust's Market Neutral Portfolio
series (the "Series") on behalf of the Trust by officers of the Trust as
officers and not individually and that the obligations of or arising out of this
Agreement are not binding upon any of the trustees, officers or shareholders
individually but are binding only upon the assets and property belonging to the
Series.
