TRADING AGREEMENT
This TRADING AGREEMENT (the "Agreement") is made this 20
day of May, 2016, by and between EnTrustPermal Management LLC
(the "Manager"), the investment manager to Permal Alternative
Select VIT Portfolio ("Fund"), a series of the Xxxx Xxxxx
Partners Variable Equity Trust (the "Trust"), a Maryland
statutory trust registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940
Act"), and XX-XX Systematic Trading LLP, an English limited
liability partnership (the "Trader").
WHEREAS, the Manager has been retained by the Trust to
provide trading, investment advisory, management, and
administrative services to the Trust with respect to the Fund,
whether directly or through the services of one or more
subadvisers or commodity trading advisors;
WHEREAS, the Manager wishes to engage the Trader to provide
certain commodity trading advisory services to the Trust with
respect to such portion of the assets of the Fund as shall be
allocated to the Trader from time to time (the "Allocated
Portion") and the Trader is willing to furnish such services on
the terms and conditions hereinafter set forth; and
WHEREAS, the Trader is registered as a Commodity Trading
Advisor ("CTA") with the Commodity Futures Trading Commission
("CFTC") and is a member of the National Futures Association
("NFA"); and
WHEREAS, the Trader will serve as CTA for the Fund with
respect to the Allocated Portion;
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. In accordance with and subject to the Management
Agreement between the Trust and the Manager with respect to the
Fund (the "Management Agreement"), the Manager hereby appoints
the Trader to act as CTA with respect to the Allocated Portion
of the Fund for the period and on the terms set forth in this
Agreement. The Trader accepts such appointment and agrees to
render the services herein set forth, for the compensation
herein provided.
2. The Manager shall cause the Trader to be kept fully
informed at all times with regard to the Commodity Interests (as
defined below) or other permissible investments owned by the
Fund in respect of the Allocated Portion, its funds available,
or to become available, for investment, and generally as to the
condition of the affairs of the Fund in respect of the Allocated
Portion. The Manager shall furnish the Trader with such other
documents and information with regard to the Fund's affairs as
the Trader may from time to time reasonably request.
3. The Manager shall have the right at any time to
reallocate any or all of the Fund assets to or away from the
Trader pursuant to this Agreement if the Manager deems such
allocation or reallocation appropriate.
4. Duties, Responsibilities and Authorizations of the
Trader. (a) Subject to the oversight of the Trust's Board of
Trustees (the "Board") and the Manager, the Trader shall
regularly provide the Fund, with respect to the Allocated
Portion, with advice, management and supervision with respect to
commodity interests, including futures contracts, options on
futures contracts, forward contracts, other foreign exchange
commodity interests (including futures or spot transactions) or
commodities, swaps and swaptions ("Commodity Interests"), cash
or U.S. government securities, as permitted, and shall furnish a
continuous investment program for the Allocated Portion
consistent with the Fund's investment objectives, strategies,
policies and restrictions, as stated in the Fund's current
Prospectus and Statement of Additional Information (the "SAI").
The Trader shall, with respect to the Allocated Portion,
determine from time to time what Commodity Interests or other
permissible investments will be purchased, retained, sold or
exchanged by the Fund and what portion of the Allocated Portion
will be held in the various Commodity Interests or other
permissible investments in which the Fund invests, and shall
implement those decisions (including the execution of investment
documentation), all subject to the provisions of the Trust's
Declaration of Trust and By-Laws as provided to the Trader
(collectively, the "Governing Documents"), the 1940 Act, the
Commodity Exchange Act ("CEA"), any 1940 Act exemptive order
applicable to the Fund, and the applicable rules and regulations
promulgated thereunder by the Securities and Exchange Commission
(the "SEC") and the CFTC and interpretive guidance issued
thereunder by the SEC staff and the CFTC staff, and any other
applicable federal and state law, the investment objectives,
policies and restrictions of the Fund referred to above as
provided to the Trader, and any other specific policies adopted
by the Board or the Manager and disclosed to the Trader, as
well as the instructions and directions of the Manager. The
Trader is authorized as the agent of the Trust to give
instructions with respect to the Allocated Portion to the Fund's
custodian (the "Custodian") and any Fund sub-custodian or prime
broker as to deliveries of Commodity Interests or other
permissible investments and payments of cash in respect of
transactions or cash margin calls for the account of the Fund.
The Trader will place orders on behalf of the Fund pursuant to
the Trader's investment determinations for the Fund either
directly with the issuer or with any broker or dealer, foreign
currency dealer, futures commission merchant or others selected
by it. The Fund will act as a principal in such transactions.
The Board may adopt policies and procedures that modify and
restrict the Trader's authority regarding the execution of the
Fund's portfolio transactions provided herein. The Trader may
execute on behalf of the Fund certain agreements, instruments
and documents in connection with the services performed by it
under this Agreement. These may include, without limitation,
brokerage agreements, clearing agreements, account
documentation, futures and options agreements, swap agreements,
other investment-related agreements, and any other agreements,
documents or instruments the Trader believes are appropriate or
desirable in performing its duties under this Agreement.
Notwithstanding the foregoing, the Manager or Trust shall be
responsible for establishing the Fund's prime brokerage and
Custodian arrangements. Until such time as notified by the
Manager, the Trader will be responsible for managing any
collateral and margin requirements required by applicable
counterparties and associated with investments made for the
Allocated Portion, if any, and will perform reconciliation
procedures on such custodial accounts with respect to the
Allocated Portion in accordance with the Custodian's standard
practices, and provide information regarding such
reconciliations to the Manager upon request in a form to be
agreed between the Trader and the Manager. The Trader will be
an independent contractor and will have no authority to act for
or represent the Trust, the Fund or the Manager in any way or
otherwise be deemed an agent of the Trust, the Fund or the
Manager except as expressly authorized in this Agreement or
another writing by the Trust, the Manager and the Trader. The
Trust may, from time to time, provide Board resolutions to the
Trader related to the foregoing.
(b) The Trader agrees that, in rendering consulting,
advisory and management services to other Commodity Interest
trading accounts and entities, it will use its best efforts to
achieve an equitable treatment of all accounts and will use a
fair and reasonable system of order entry for all accounts,
taking into consideration any legal and regulatory limitations
applicable to the Fund, in addition to the Trader's policies and
procedures and the Fund's or Manager's policies, procedures and
instructions. The Trader further agrees to be aware of the
position limits imposed on certain Commodity Interest contracts
by the CFTC or applicable contract market. If, at any time
during the term of this Agreement, the Trader is required to
aggregate the Fund's Commodity Interest positions with the
positions of any other person for the purposes of applying the
CFTC or exchange imposed speculative position limits, the Trader
will promptly notify the Manager if the Allocated Portion
positions are included in an aggregate amount which exceeds the
applicable speculative position limit. If the speculative
position limits are reached in any Commodity Interest contract,
the Trader will modify the trading instructions to the Fund's
account and its other accounts in a reasonable and good faith
effort to achieve an equitable treatment of all accounts.
(c) The Trader acknowledges that the Fund may
establish one or more wholly-owned subsidiaries of the Fund
through which it may conduct all or a significant portion of its
commodities investing activities or for other investment
purposes.
(d) Notwithstanding any other provision of this
Agreement, it is agreed that the Trader shall have no
responsibility for: (a) monitoring any limitations or
restrictions in respect of the Fund as a whole (it being agreed
that all such monitoring shall be the responsibility of the
Manager); or (b) the segregation requirement of the 1940 Act or
other applicable law of the Fund as a whole (it being agreed
that any such segregation shall be the responsibility of the
Manager); provided that, in respect of the Allocated Portion
only, the Trader shall (i) conduct its trading activities in a
manner consistent with the segregation and coverage requirements
of the 1940 Act and the CEA or any instructions, restrictions or
policies of the Manager in relation thereto (as described above)
and (ii) share with the Manager, upon request, such information
as the Manager shall require to demonstrate compliance with item
(i) above and shall provide assistance upon request to the
Manager in identifying assets to address segregation
requirements. For the avoidance of doubt, the Trader shall not
be required to provide instructions for any physical segregation
of assets related to Section 18 of the 1940 Act to the
Custodian.
(e) When the Manager provides policies, procedures,
restrictions or Governing Documents, or amendments or revisions
thereto, to the Trader that relate to the Trader's management of
the Allocated Portion, the Manager will provide the relevant
documents in advance of their implementation. The Manager will
use reasonable endeavors under the circumstances to consult with
the Trader in good faith in advance of their adoption as to the
Allocated Portion.
5. Delegation. The Trader may delegate some or all of
its duties under this Agreement to affiliated parties (each a
"Delegatee"); provided, however, that (i) the Trader provides
written notice to the Manager and the Manager consents in
writing, (ii) any such services will not be advisory services
under the 1940 Act or Investment Advisers Act of 1940, as
amended, or any delegation of advisory duties is subject to and
conditioned on the Fund Board's and/or Fund shareholders'
approval as may be required pursuant to Section 15 of the 1940
Act and is otherwise consistent with the 1940 Act, (iii) the
entity performing the function is either registered as a CTA
under the CEA and a member of the NFA, or is exempt or excluded
from registration as a CTA (or does not provide commodity
trading advice); (iv) no additional charges, fees or other
compensation will be paid for such services and neither the Fund
nor the Manager will incur any expenses as a result of such
delegation, (v) the Trader hereby agrees to advise the Manager
of any changes required to be made to the disclosure in the
Fund's registration statement relating to the Fund's portfolio
managers provided by the Trader or any Delegatee, and (vi) the
Trader at all times remains liable and responsible to the
Manager, the Trust and the Fund for the Trader's duties,
obligations, responsibilities, representations, warranties,
agreements and indemnification hereunder regardless of whether
services hereunder are provided by the Trader or any Delegatee.
6. Records. The Trader agrees that it will keep and
preserve records relating to its services hereunder in
accordance with all applicable laws and resolutions, including
compliance with the requirements of Rule 31a-1 and 31a-2 under
the 1940 Act and CFTC Rule 4.7(c)(2). The Trader hereby agrees
that any such records that it maintains for the Fund are the
property of the Fund, and further agrees to surrender promptly
to the Fund any of such records upon the Fund's request;
provided that the Trader may retain duplicate copies of all such
books and records subject to the confidentiality provisions of
this Agreement.
7. Valuation. The Trader shall, in accordance with
procedures established by the Board and provided to the Trader
in advance, which may be amended from time to time, provide
assistance to the Trust, Manager or the Custodian for the Fund
in determining or confirming the value of any investments of the
Allocated Portion for which the Trust, Manager or Custodian
seeks assistance from the Trader or identifies for review by the
Trader. This assistance includes (but is not limited to): (i)
designating and providing access to one or more employees of the
Trader who are knowledgeable about the investments, trading
and/or any relevant factors for valuation, which employees shall
be available for consultation when the Valuation Committee of
the Trust, the Manager or its affiliates convenes; (ii) with
respect to the investments held by the Allocated Portion, upon
the reasonable request of the Trust, Manager or Custodian,
assisting the Trust, the Manager or the Custodian in obtaining
bids and offers or quotes from broker/dealers, market makers,
valuation agents, evaluators or counterparties, each independent
of the Trader; (iii) upon the request of the Trust, Manager or
Custodian, confirming pricing and providing recommendations for
fair valuations; and (iv) maintaining adequate records and
written backup information with respect to the valuation
assistance provided hereunder, and providing such information to
the Trust, the Manager or the Fund upon request, with such
records being deemed Fund records (subject to the Trader's
retention of a duplicate copy). The parties acknowledge that
the Trader, on the one hand, and the Custodian or recordkeeping
agent of the Fund, on the other hand, may use different pricing
vendors, which may result in valuation discrepancies.
8. Additional Responsibilities of the Trader. (a) The
Trader shall, as reasonably requested by the Trust or the
Manager and in accordance with the scope of the Trader's
obligations and responsibilities contained in this Agreement
(i.e., with respect to the Allocated Portion and the Trader's
provision of portfolio management services hereunder), provide
reasonable assistance to the Trust and the Manager in connection
with the Trust's compliance with the Xxxxxxxx-Xxxxx Act and the
rules and regulations promulgated by the SEC thereunder, and
Rule 38a-1 under the 1940 Act or any similar requirement under
the CEA. Specifically, the Trader agrees to (i) certify
periodically, upon the reasonable request of the Trust, that
with respect to the Allocated Portion and the Trader's provision
of portfolio management services hereunder, the Allocated
Portion is in compliance with all "federal securities laws"
applicable to the Fund, as required by Rule 38a-l under the 1940
Act; (ii) as requested by the Trust or Manager: (a) review
draft reports to shareholders, proxy statements, marketing
materials, Board materials, registration statements or portions
thereof and other documents provided to the Trader, which relate
to the Fund or the Trader, (b) provide comments on such drafts
on a timely basis, and (c) provide certifications or sub-
certifications on a timely basis as to the accuracy of the
information pertaining to the Trader or the Allocated Portion
contained in such reports or other documents, (iii) with respect
to the Trader or the Allocated Portion, provide reasonable
assistance as needed in the preparation of all periodic reports
by the Trust or the Fund to shareholders of the Fund and all
reports and filings required to maintain the registration and
qualification of the Fund, or to meet other regulatory or tax
requirements applicable to the Fund, under federal and state
securities and tax laws; (iv) upon request and reasonable prior
notice, cooperate with audits (including compliance audits
conducted by the Manager, its affiliates or the Fund's
independent auditors or any of such auditors' overseas
affiliates); (v) upon request and reasonable prior notice,
provide the Trust's chief compliance officer with direct access
to its chief compliance officer (or his/her designee); (vi) upon
request, provide the Trust's chief compliance officer with
periodic reports pertaining to the Trader's services hereunder;
and (vii) promptly provide notice of any material compliance
matters of, or related to, the Trader. Except as may be limited
by Section 8(c), the Trader, at its expense, shall supply the
Board, the officers of the Trust and the Manager (and its
affiliates) with all information and reports of the Trader
reasonably required by them and reasonably available to the
Trader relating to the services provided by the Trader
hereunder.
(b) The Trader shall prepare and furnish to the
Manager, Trust, and/or the Board such reports, statistical data
and other information in such form and at such intervals as they
may reasonably request. The Trader shall also make available to
the Manager and/or the Board at reasonable times, and with
reasonable advance notice under the circumstances, its portfolio
managers and other appropriate personnel as mutually agreed by
the Trust, the Manager and the Trader, either in person
(including attendance at Board meetings) or, at the mutual
convenience of the Trust, the Manager, the Board and the
Trader, by telephone or other electronic media, in order to
review the investment policies, performance and other matters
relating to the management of the Allocated Portion.
(c) In furnishing services hereunder, the Trader will
not consult with any subadviser or other trader to (i) the Fund,
(ii) any other Fund of the Trust or (iii) any other investment
company under common control with the Trust concerning
transactions of the Fund in Commodity Interests or other
permissible investments. This paragraph shall not be deemed to
prohibit the Trader from consulting with any of its affiliated
persons concerning transactions in Commodity Interests or other
permissible investments
(d) The Trader shall bear all expenses, and shall
furnish all necessary services, facilities and personnel, in
connection with its responsibilities under this Agreement. Other
than as herein specifically indicated, the Trader shall not be
responsible for the Fund's expenses, including, without
limitation, advisory fees; distribution fees; interest; taxes;
governmental fees; voluntary assessments and other expenses
incurred in connection with membership in investment company
organizations; organization costs of the Fund; the cost
(including brokerage commissions, transaction fees or charges,
if any) in connection with the purchase or sale of the Fund's
Commodity Interests or other permissible investments and any
losses in connection therewith; fees and expenses of custodians,
transfer agents, registrars, independent pricing vendors or
other agents; Fund legal expenses; loan commitment fees;
expenses relating to the issuing and redemption or repurchase of
the Fund's shares and servicing shareholder accounts; expenses
of registering and qualifying the Fund's shares for sale under
applicable federal and state law; the Fund's expenses relating
to preparing, setting in print, printing and distributing
prospectuses and statements of additional information and any
supplements thereto, reports, proxy statements, notices and
dividends to the Fund's shareholders; costs of stationery; Fund
website costs; costs of meetings of the Board or any committee
thereof, meetings of shareholders and other meetings of the Fund
(other than the costs of the attendance and travel of the
Trader's personnel to Board meetings); Board fees; Fund audit
fees; travel expenses of officers, members of the Board and
employees of the Fund (other than the travel expenses of
officers and employees of the Trader), if any; and the Fund's
pro rata portion of premiums on any fidelity bond and other
insurance covering the Fund and its officers, Board members and
employees; litigation expenses of the Fund and any non-recurring
or extraordinary expenses of the Fund as may arise, including,
without limitation, those relating to actions, suits or
proceedings to which the Fund is a party and the legal
obligation which the Fund may have to indemnify the Fund's Board
members and officers with respect thereto. Neither the Trust,
the Fund, the Manager or their affiliates or subsidiaries shall
be responsible for the costs associated with any special
meetings of the Board or shareholders convened for the primary
benefit of the Trader (including, but not limited to, the legal
fees associated with preparing a proxy statement or information
statement and associated mailing and solicitation costs) unless
agreed-upon in writing.
9. Compensation of Board Members and Officers. No member
of the Board, officer or employee of the Trust or Fund shall
receive from the Trust or Fund any salary or other compensation
as such member of the Board, officer or employee while he is at
the same time a director, officer, or employee of the Trader or
any affiliated company of the Trader, except as the Board may
decide. This paragraph shall not apply to Board members,
executive committee members, consultants and other persons who
are not regular members of the Trader's or any affiliated
company's staff.
10. Compensation. As compensation for the services
performed by the Trader, the Manager shall pay the Trader,
within twenty (20) days after the last day of each month, a fee,
computed daily at an annual rate set forth on Schedule A annexed
hereto. The first payment of the fee shall be made within twenty
(20) days after the end of the month succeeding the effective
date of this Agreement. If this Agreement is terminated as of
any date not the last day of a month, such fee shall be paid
within twenty (20) days after the end of the month of
termination, and the fee for such month will be based on the
average daily net assets of the days in that month, up to and
including the last day for which this Agreement is in effect.
The average daily net assets of the Fund shall in all cases be
based only on business days and be computed as of the time of
the regular close of business of the New York Stock Exchange, or
such other time as may be determined by the Board.
11. Representations, Warranties and Agreements of the
Trader. (a) The Trader represents and warrants that it: (i) is
not prohibited by the 1940 Act, the Investment Advisers Act of
1940 (the "Advisers Act") or other law, regulation or order from
performing the services contemplated by this Agreement; (ii) is
registered as a CTA and a member of the NFA; (iii) has met and
will seek to continue to meet for so long as this Agreement
remains in effect, any other applicable federal or state
requirements, or the applicable requirements of any regulatory
or industry self-regulatory agency necessary to be met in order
to perform the services contemplated by this Agreement
(including without limitation the adoption of written policies
and procedures with respect to the Allocated Portion, that are
reasonably designed to prevent violations of the federal
securities laws, as defined in Rule 38a-1, by the Trader, its
employees, officers, and agents) and will comply in all material
respects with the policies and procedures of the Manager, Trust
and the Fund with respect to the Allocated Portion as provided
to them; (iv) has the authority to enter into and perform the
services contemplated by this Agreement; (v) has taken all
necessary corporate action to authorize the execution, delivery
and performance of this Agreement; and (vi) and has duly
executed and delivered this Agreement.
(b) The Trader will promptly notify the Trust and the
Manager: (i) of the occurrence of any event that would
disqualify the Trader from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act
or other applicable law, rule or regulation; (ii) if the Trader
is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body ("Action"),
involving the affairs of the Fund, or the Trader is involved in
any pending litigation or administrative proceeding brought
against the Trader or any of its senior management persons or
other personnel of the Trader involved in the management or
operations of the Allocated Portion, other than frivolous or
vexatious litigation (such frivolous or vexatious litigation,
for the avoidance of doubt, would not include litigation under
securities or other financial law or regulation or brought by
any government authority or regulator) and except where Trader's
provision of notice of such Action to the Manager is forbidden
by applicable law; (iii) of any material fact known to the
Trader respecting or relating to the Trader or the investment
strategies of the Trader's Allocated Portion that is not
contained in the Fund's prospectus and/or SAI, as amended and
supplemented from time to time, regarding the Fund, or any
amendment or supplement thereto, but that is required to be
disclosed therein, and of any statement respecting or relating
to the Trader, the Trader's investment strategies or the
Trader's Allocated Portion contained therein that becomes untrue
in any material respect; (iv) of any change in the Trader's
financial condition which would reasonably be expected to
materially impact its abilities to perform its duties hereunder
and of any reduction in the amount of coverage under the
Trader's errors and omissions or professional liability
insurance coverage; and (v) of any change in its status as a
registered CTA or member of the NFA.
(c) The Trader represents and warrants that it has
adopted a written code of ethics complying with the requirements
of Rule 17j-1 under the 1940 Act, will provide the Manager and
the Board with a copy of such code of ethics, together with
evidence of its adoption, and will provide copies of any future
amendments thereto. Upon request within forty-five days of the
end of the last calendar quarter of each year that this
Agreement is in effect, and as otherwise requested, the Chief
Compliance Officer of the Trader or his/her designee shall
certify to the Manager that the Trader has complied with the
requirements of Rule 17j-1 during the previous year and that
there has been no material violation of the Trader's code of
ethics or, if such a material violation has occurred, that
appropriate action was taken in response to such violation.
Upon the reasonable written request of the Manager and subject
to applicable law, the Trader shall permit the Manager, its
employees or officers or their agents to examine the reports
required to be made to the Trader by Rule 17j-1(c)(1) and all
other records relevant to the Trader's code of ethics. The
Trader shall use its best efforts to obtain consents from those
individuals subject to its code of ethics to permit the Manager,
its employees or officers or their agents to examine the reports
required to be made to the Trader by Rule 17j-1(c)(1) and all
other records relevant to the Trader's code of ethics. By
entering into this Agreement, the Trader consents to the filing
of its code of ethics as an exhibit to the Trust's registration
statement, as may be required by law or regulation.
(d) The commodity trading advisor disclosure document
of the Trader (where it is legally obligated to produce or has
produced such a disclosure document or is required to deliver
such document by law or regulation) and any other information
relating to the Trader, its businesses, principals, and past
performance record (in accordance with paragraph 11(i) below)
that has been requested by the Manager or delivered to the
Manager for use in the Fund's registration statement and other
regulatory filings, sales and advertising materials, Board
materials, and to assist the Fund, the Manager and their
affiliates as part of their compliance programs is current,
accurate and complete in all material respects as at the date it
is provided and is in compliance with all applicable laws, rules
and regulations, including Part 4 of the CFTC regulations, and
the Trader will provide the Manager with updated or amended
copies of any such materials.
(e) The Trader will promptly notify the Trust and the
Manager if there is, or there is expected to be, any assignment
of this Agreement or change of control of the Trader within the
meaning of the 1940 Act, and if there is, or there is expected
to be, any changes in the key personnel who are either the
portfolio manager(s) of the Allocated Portion or senior
management of the Trader. The Trader agrees to bear all
reasonable expenses of the Trust, if any, arising out of an
assignment by, or change in control of, the Trader.
(f) The Trader agrees to maintain a commercially
reasonable level of errors and omissions or professional
liability insurance coverage from an insurance company that has
an A.M. Best rating of at least A (VII) or better.
(g) The Trader agrees to the use of its name,
trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation (collectively,
"Trademarks") thereof in the Trust's and the Fund's disclosure
documents and shareholder communications. The Manager or its
affiliates will not use Trademarks in advertising, sales
literature and similar communications without the Trader's
express consent unless the format of any of the foregoing has
been previously approved by the Trader. The Manager or its
affiliates will not use the name "Xxxxxx Xxxxxx Capital
Management L.P." or "Xxxxxx Xxxxxx group of companies" in
advertising, sales literature, and the Fund's disclosure
documents, shareholder communications and similar communications
without the express consent of the Trader on behalf of itself
and its affiliates unless the format of any of the foregoing has
previously been so approved or unless required to do so by
applicable law or regulation. The Trader agrees that neither
it, nor any of its affiliates, will knowingly in any way refer
directly or indirectly to its relationship with the Trust, the
Fund, the Manager or any of their respective affiliates or
subsidiaries without the express prior written consent of the
Manager or its designee, which consent shall not be unreasonably
withheld, except as required by rule, regulation or upon the
request of a governmental authority. However, the Trader may use
the performance of the Allocated Portion in its track record and
composite performance. The Trader is hereby granted the right
to identify the Trust, Fund and Fund subsidiary as a client in
the Trader's publicly disclosed client lists until this
Agreement is terminated and may disclose the aggregate amount of
assets under management with respect to the Allocated Portion.
Nevertheless, the Trader may not refer to any other sub-adviser
or trading adviser to the Fund without express written
permission.
(h) The Trader shall not use the name or any
tradename, trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation thereof of the Manager,
the name "Xxxx Xxxxx," the Trust, the Fund or any of their
affiliates or subsidiaries ("Fund Parties") in Trader's (or its
affiliate's) marketing materials unless it first receives prior
written approval of the appropriate party. It is understood
that the name of each party to this Agreement, and any
derivatives thereof or logos associated with that name, the name
"Xxxx Xxxxx," the name of the Fund, the name "Xxxxxx Xxxxxx"
("Intellectual Property"), is the exclusive and valuable
property of the party or entity in question and their respective
affiliates, and that each other party has the right to use such
names pursuant to the relationship created by, and in accordance
with the terms of, this Agreement only so long as this Agreement
shall continue in effect. Upon termination of this Agreement,
Fund Parties and the Trader the shall forthwith cease to use the
other parties' Intellectual Property, except for rights of the
Fund Parties to continue to use the Licensed Marks during a
ninety-day adjustment period after such termination, for one
year with respect to the Fund's prospectus and Statement of
Additional Information, as supplemented, and as may be required
by applicable laws, rules and regulations. For the avoidance of
doubt, nothing in this Agreement shall be construed as granting
to any party any right, title or interest in Intellectual
Property, other than the right to use the Intellectual Property
in accordance with this Agreement.
(i) The Trader agrees to provide any and all material
composite performance information, records and supporting
documentation (which may exclude the names of individual clients
or accounts of the Trader) about accounts the Trader manages, if
appropriate, which are relevant to the Allocated Portion and
that have investment objectives, policies, and strategies
substantially similar to those employed by the Trader in
managing the Allocated Portion that may be reasonably necessary,
under applicable laws, to allow the Fund or its agent to present
information concerning the Trader's prior performance in the
Prospectus and the SAI of the Fund and any permissible reports
and materials prepared by the Fund or its agent.
12. Representations and Warranties of the Manager. The
Manager represents and warrants that it: (i) is registered as an
investment adviser under the Advisers Act and will continue to
be so registered for so long as this Agreement remains in
effect; (ii) is not prohibited by the 1940 Act, the Advisers Act
or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) the Trust is an
"accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as
amended, and a "qualified eligible person" as that term is
defined in CFTC Regulation 4.7(a); (iv) the Fund is an eligible
contract participant as that term is defined in Section 1(a)(18)
of the CEA; (v) has reviewed the requirements for registration
as a "commodity pool operator" (a "CPO") under the CEA and is
either registered as a CPO and a member of the NFA or is relying
on an exemption or exclusion from registration as a commodity
pool operator or has made a permissible delegation of its duties
and responsibilities as a CPO to another entity; (vi) has the
authority to enter into and perform the services contemplated by
this Agreement; (vii) has taken all necessary corporate action
to authorize the execution, delivery and performance of this
Agreement; (viii) has duly executed and delivered this Agreement
and this Agreement has been approved in accordance with the
requirements of the 1940 Act.
13. Confidentiality. No party to this Agreement will
disclose or use any records or information obtained pursuant to
this Agreement in any manner whatsoever except as expressly
authorized in this Agreement or, with respect to the Trader, as
may reasonably be required to execute transactions on behalf of
the Fund or, with respect to the Manager (or its affiliates), as
may reasonably be required to provide its services to the Fund.
The parties will keep confidential any non-public information
obtained directly as a result of this service relationship;
provided that (a) the Manager may make any disclosure to its
affiliates, the Trust, the Fund, the disinterested Board members
or their legal advisors or auditors or other service providers
to the Fund (including, without limitation, any prospective or
current prime broker, broker-dealer, accounting agent,
compliance services provider, administrator or sub-administrator
and the agents, employees, brokers, dealers or banks selling
Fund shares, service providers, subsidiaries, parents,
affiliates or divisions of the foregoing), as the Manager may
reasonably determine necessary in its sole discretion for the
purposes of the management or operation of the Fund provided
those recipients of information are subject to customary
confidentiality duties or obligations for their respective
relationships to U.S. registered investment companies (which
obligations, without limitation, may be fiduciary or
professional in nature), and (b) the Trader may make disclosures
to its affiliates, Xxxxxx Xxxxxx Asset Management LLP, Xxxxxx
Xxxxxx Investment Holdings Limited, Xxxxxx Xxxxxx (Hong Kong)
Limited any other member of the Xxxxxx Xxxxxx group and London
Diversified Fund Management LLP, as the Trader may reasonably
determine necessary to perform the services contemplated herein
in their sole discretion; provided that no such information may
be used for any trading or investment purpose unrelated to
management of the Fund. Notwithstanding the foregoing, any
party may disclose such non-public information if (a) such
information is or hereafter otherwise is known by the receiving
party or has been disclosed to the receiving party by a third
party not known by the receiving party to be under an obligation
of confidentiality to the party whose information has been
disclosed, or such information has been disclosed publicly
(other than through a breach of this Agreement) or otherwise
becomes ascertainable from public or published information or
trade sources, (b) if such disclosure is required by applicable
federal, state or other law or regulation, (c) if such
disclosure is required or requested by regulatory authorities or
judicial process, (d) to the extent such disclosure is
reasonably required by auditors, compliance consultants or
attorneys of the party (or of the Trust, Fund, the disinterested
Board members or affiliates of the Manager) in connection with
the performance of their professional services, or (e) as may
otherwise be contemplated by this Agreement. The Trader shall
not disclose information regarding characteristics of the Fund
or Allocated Portion, trading history, portfolio holdings,
performance information or any other related information to any
third party, except in compliance with the Trust's policies on
disclosure of portfolio holdings or as required by applicable
law or regulation. Notwithstanding the foregoing, the Manager
shall take all commercially reasonable measures to prevent the
Trust (excluding the disinterested Board members), the Fund and
any subsidiary of the Fund from disclosing any information
regarding the Allocated Portion's portfolio holdings or position
information which is not otherwise publicly available to any
third party except: (a) where such disclosure is reasonably
necessary for the management or operation of the Fund and such
recipients are subject to customary confidentiality duties or
obligations for their respective relationships to U.S.
registered investment companies (which obligations, without
limitation, may be fiduciary or professional in nature provided
that, for purposes of this paragraph, the disinterested Board
members shall be considered "recipients" under this clause (a));
or (b) with respect to: (i) brokers, dealers, futures commission
merchants and prime brokers providing clearing, securities
lending, execution or similar services to the Fund, (ii) banks,
brokers, dealers and other intermediaries selling Fund shares,
and (iii) fund ratings organizations, proxy voting services and
fund publication services, provided that for each of (b)(i),
(ii) or (iii) the Trader has given its prior written consent,
such consent not to be unreasonably withheld; or (c) as required
by applicable law, regulation or court order. For the avoidance
of doubt, any Delegatee shall be subject to the same
confidentiality obligations as the Trader.
14. Indemnification. (a) Except as may otherwise be
provided by the 1940 Act, any other federal securities law or
the CEA, neither the Trader nor any of its officers, members or
employees (its "Affiliates") shall be liable for any losses,
claims, damages, liabilities or litigation (including reasonable
legal and other expenses) ("Losses") incurred or suffered by the
Manager or the Trust as a result of any act or omission of the
Trader or its Affiliates with respect to the Fund, except that
nothing in this Agreement shall operate or purport to operate in
any way to exculpate, waive or limit the liability of the Trader
or its Affiliates for, and the Trader shall indemnify and hold
harmless the Trust, the Manager, all affiliated persons thereof
(within the meaning of Section 2(a)(3) of the 1940 Act, other
than persons or other entities who are affiliates solely by
reason of ownership of shares of the Fund) and all controlling
persons (as described in Section 15 of the Securities Act of
1933, as amended ("1933 Act")) (collectively, "Manager
Indemnitees") against, any and all Losses to which any of the
Manager Indemnitees may become subject under the CEA, the 1933
Act, the 1940 Act, the Advisers Act, or under any other statute,
or common law or otherwise arising out of or based on (i) any
willful misconduct, bad faith, reckless disregard or gross
negligence of the Trader in the performance of any of its duties
or obligations hereunder, (ii) any Losses accruing to the
extent, if any, caused by or based upon the Trader's
misrepresentations, omissions or breach of any representation or
warranty in this Agreement or (iii) any untrue statement of a
material fact contained in the Prospectus and/or SAI, proxy
materials, reports, advertisements, sales literature, or other
materials pertaining to the Fund or the omission to state
therein a material fact known to the Trader which was required
to be stated therein or necessary to make the statements therein
not misleading, if such statement or omission was made in
reliance upon information furnished to the Manager Indemnitees
by the Trader Indemnitees (as defined below) for use therein
through the Trader or its officers, employees or other persons
designated by the Trader. Notwithstanding the foregoing, the
Trader shall not indemnify the Manager Indemnitees pursuant to
(ii) above for any breach by the Trader of any representation or
warranty that it will comply with the policies and procedures of
the Manager, Trust and the Fund with respect to the Allocated
Portion in so far as such policies and procedures relate to
trade errors unless otherwise separately expressly agreed to by
the Trader in writing. For the avoidance of doubt, the
foregoing sentence shall not limit any other remedies that the
Manager, the Trust or the Fund may have at law or equity for
such breach.
(b) Except as may otherwise be provided by the 1940
Act, any other federal securities law or the CEA, the Manager
Indemnitees and the Trust shall not be liable for any Losses
incurred or suffered by the Trader as a result of any act or
omission of the Manager with respect to the Fund, except that
nothing in this Agreement shall operate or purport to operate in
any way to exculpate, waive or limit the liability of the
Manager (or the Manager Indemnitees) for, and the Manager shall
indemnify and hold harmless the Trader, all affiliated persons
thereof (within the meaning of Section 2(a)(3) of the 1940 Act,
other than persons or other entities who are affiliates solely
by reason of ownership of shares of the Fund) and all
controlling persons (as described in Section 15 of the 1933 Act)
(collectively, "Trader Indemnitees") against, any and all Losses
to which any of the Trader Indemnitees may become subject under
the CEA, the 1933 Act, the 1940 Act, the Advisers Act, or under
any other statute, at common law or otherwise arising out of or
based on (i) any willful misconduct, bad faith, reckless
disregard or gross negligence of the Manager in the performance
of any of its duties or obligations hereunder, (ii) any Losses
accruing to the extent, if any, caused by or based upon the
Manager's misrepresentations, omissions or breach of any
representation or warranty in this Agreement or (iii) any untrue
statement of a material fact contained in the Prospectus and/or
SAI, proxy materials, reports, advertisements, sales literature,
or other materials pertaining to the Fund or the omission to
state therein a material fact known to the Manager that was
required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or
omission was made in reliance upon information furnished to the
Manager Indemnitees by the Trader Indemnitees.
(c) Promptly after receipt of notice of any action,
arbitration, claim, demand, dispute, investigation, lawsuit or
other proceeding (each a "Proceeding") by a party seeking to be
indemnified under Section 14(a) or 14(b) (the "Indemnified
Party"), the Indemnified Party will, if a claim in respect
thereof is to be made against a party against whom
indemnification is sought under Section 14(a) or 14(b) (the
"Indemnifying Party") notify the Indemnifying Party in writing
of the commencement of such Proceeding; provided that, the
failure to so notify the Indemnifying Party in the absence of a
showing of actual prejudice shall not relieve the Indemnifying
Party from any indemnification liability which it may have to
the Indemnified Party. The Indemnifying Party shall have the
right to assume control of the defense of the Proceeding by
giving written notice to the Indemnified Party within 10 days of
receiving notice of the Proceeding (or such shorter period as is
required to respond to the Proceeding), and the Indemnified
Party shall cooperate fully in the defense of the Proceeding.
No Indemnifying Party shall be liable under this section for any
settlement of any Proceeding entered into without its consent
with respect to which indemnity may be sought hereunder, nor
shall any Indemnifying Party enter into any settlement (other
than a purely monetary "no admission" settlement) without the
consent of the Indemnified Party.
15. Other Business. Nothing in this Agreement shall limit
or restrict the right of any member, partner (whether limited or
general), manager, director, officer, employee or Delegatee of
the Trader to engage in any other business or to devote his time
and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of the Trader (or
Delegatee) to engage in any other business or to render services
of any kind, including investment advisory and management
services, to any other fund, firm, individual or association.
The Trader may give advice or take action with respect to other
investment entities that it manages that differs from the advice
given with respect to the Allocated Portion.
16. Certain Definitions. For the purposes of this
Agreement, the Fund's "net assets" shall be determined as
provided in the Fund's then-current Prospectus and SAI and the
terms "assignment," "interested person," and "majority of the
outstanding voting securities" shall have the meanings given to
them by Section 2(a) of the 1940 Act, subject to such
exemptions, modifications and interpretations as may be granted
by the SEC by any rule, regulation or order.
17. Term. This Agreement will become effective with
respect to the Fund on the date set forth opposite the Fund's
name on Schedule A annexed hereto, provided that it shall have
been approved by the Trust's Board and, if so required by the
1940 Act, by the shareholders of the Fund in accordance with the
requirements of the 1940 Act and, unless sooner terminated as
provided herein, will continue in effect through the second
anniversary of the date of effectiveness. Thereafter, if not
terminated, this Agreement shall continue in effect with respect
to the Fund, so long as such continuance is specifically
approved at least annually (i) by the Board or (ii) by a vote of
a majority of the outstanding voting securities of the Fund,
provided that in either event the continuance is also approved
by a majority of the Board members who are not interested
persons of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval.
18. Termination. This Agreement may be terminated at any
time, without the payment of any penalty, by (i) the Board of
Trustees, including a majority of the Independent Trustees, by
the vote of a majority of the outstanding voting securities of
the Fund, on sixty (60) days' prior written notice to the
Manager and the Trader, (ii) the Manager on sixty (60) days'
prior written notice to the Trader, or (iii) the Trader on
ninety (90) days' prior written notice to the Manager and the
Trust. This Agreement will automatically terminate, without the
payment of any penalty, (i) in the event of its assignment, (ii)
in the event the Management Agreement between the Manager and
the Trust is assigned or terminates for any other reason, or
(iii) if the Trader ceases to be authorized and regulated by the
UK Financial Conduct Authority (or any successor body thereto)
and is otherwise legally ineligible to serve as Trader, provided
that the Trader has taken all necessary steps to inform the
Manager at the earliest possible date and Trader has used best
efforts to make provisions for transition services as legally
permitted. This Agreement will also terminate upon written
notice to the other party that the other party is in material
breach of this Agreement, unless the other party in material
breach of this Agreement cures such breach to the reasonable
satisfaction of the party alleging the breach within thirty (30)
days after written notice. Upon termination in accordance with
this clause 18, the rights and obligations of the parties under
this Agreement shall terminate and be of no future effect,
except that paragraphs 13 and 14 and obligations that have
accrued and are outstanding as of the termination shall remain
in full force and effect.
19. Statutory Trust Matters. The Trader agrees that for
any claim by it against the Fund in connection with this
Agreement or the services rendered under this Agreement, it
shall look only to assets of the Fund for satisfaction and that
it shall have no claim against the assets of any other series of
the Trust.
20. Amendment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of the Agreement shall be
effective until approved, if so required by the 1940 Act, by
vote of the holders of a majority of the Fund's outstanding
voting securities.
21. Miscellaneous. This Agreement, and any supplemental
terms contained on Annex I hereto, if applicable, embodies the
entire agreement and understanding between the parties hereto,
and supersedes all prior agreements and understandings relating
to the subject matter hereof. Should any part of this Agreement
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 on and shall inure to
the benefit of the parties hereto and their respective
successors. Paragraph headings herein are for convenience only
and are not a part of this Agreement. This Agreement may be
executed simultaneously in counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
22. Choice of Law. This Agreement shall be construed and
the provisions thereof interpreted under and in accordance with
the laws of the State of New York.
23. Third Party Beneficiary. The Trust on behalf of the
Fund is expressly made a third party beneficiary of this
Agreement with respect to the obligations of the Trader provided
in this Agreement to the same extent as if the Trust had been a
party hereto.
24. Notices. Notices and other communications required or
permitted under this Agreement shall be in writing, shall be
deemed to be effectively delivered when actually received, and
may be delivered by US mail (first class, postage prepaid), by
facsimile transmission, electronic mail, by hand or by
commercial overnight delivery service, addressed as follows:
MANAGER:
Xxxxxxxxxxx Xxxxxxxxxxx
SVP, Deputy Chief Investment Officer
Permal Group
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxx
SVP, Deputy General Counsel
Permal Group
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
TRADER:
Xxxxxx Xxxxxx
Head of Operations
XX-XX Systematic Trading LLP
3rd Floor, 00 Xxxxxxxxx Xxxxxx
Xxxxxx, X0X 0XX
Xxxxxx Xxxxxxx
Tel: 0000 000 0000
With a copy to:
Legal and Compliance
at the same address as above
TRUST:
Xxxxxx X. Xxxxxxx
c/o Legg Xxxxx & Co., LLC
000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
[signature page to follow]
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING
COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE
PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED TO
BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY
FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF
PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR
ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY,
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR
APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT
DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers thereunto duly
authorized.
ENTRUSTPERMAL MANAGEMENT
LLC
By:
Name:
Title:
For and on behalf of XX-
XX SYSTEMATIC TRADING LLP
By:
Name:
Title:
The foregoing is acknowledged:
The undersigned officer of the Trust has executed this
Agreement not individually but in his/her capacity as an officer
of the Trust. The Trust does not hereby undertake, on behalf of
the Fund or otherwise, any obligation to the Trader.
XXXX XXXXX PARTNERS
VARIABLE EQUITY TRUST
By:
Name:
Title:
SCHEDULE A
Permal Alternative Select VIT Portfolio
Date:
May 20, 2016
Fee per annum:
The following percentage of the average daily net assets
allocated to the Trader:
1.00%
16238133.4
- 23 -
EXECUTION VERSION
