INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement is made as of the 28th day of April,
2006, between WILSHIRE VARIABLE INSURANCE TRUST, a Delaware statutory trust
(herein called the "Company"), and WILSHIRE ASSOCIATES INCORPORATED, a
California corporation (herein called the "Advisor").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Advisor provides investment advisory services to other
portfolios of the Company pursuant to an Amended Investment Advisory Agreement
dated September 30, 2004; and
WHEREAS, the Company wishes to retain the Advisor under this Agreement to
render investment advisory services to the portfolios of the Company known as
the 2010 Aggressive Fund, 2010 Moderate Fund, 2010 Conservative Fund, 2015
Moderate Fund, 2025 Moderate Fund, 2035 Moderate Fund and 2045 Moderate Fund
(together with any other Company portfolios which may be established later and
served by the Advisor hereunder, being herein referred to collectively as the
"Funds" and each individually as a "Fund"), and Advisor wishes to render such
services;
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:
1. Appointment of Advisor.
(A) The Company hereby appoints the Advisor as the investment adviser of
each Fund on the terms and for the period set forth in this Agreement and the
Advisor hereby accepts such appointment and agrees to perform the services and
duties set forth herein on the terms herein provided. The Advisor may, in its
discretion, provide such services through its own employees or the employees of
one or more affiliated companies that are qualified to provide such services to
the Trust under applicable law and are under common control with the Advisor
provided (i) that all persons, when providing services hereunder, are
functioning as part of an organized group of persons, and (ii) that such
organized group of persons is managed at all times by authorized officers of
the Advisor.
(B) In the event that the Company establishes one or more portfolios
other than the Fund(s) with respect to which it desires to retain the Advisor
to render investment advisory services hereunder, it shall notify the Advisor
in writing. If the Advisor is willing to render such services, it shall notify
the Company in writing whereupon such portfolio or portfolios shall become a
Fund or Funds hereunder.
2. Investment Services and Duties. At the direction of the Board of
Trustees, the Advisor shall provide one of the following investment advisory
programs to a Fund under this Agreement: (A) the Advisor shall determine
underlying portfolios to be purchased, retained or sold by the Fund, or (B) the
Advisor shall provide a continuous investment program for the Fund
by recommending one or more investment advisers to the Board of Trustees or
directly managing the assets of the Fund or a portion thereof.
(A) To the extent the Board of Trustees has directed the Advisor to
determine underlying portfolios to be purchased, retained or sold by a Fund,
the Advisor shall provide such services to the Fund in accordance with the
Fund's investment objectives, policies and restrictions as stated in the Fund's
then current registration statement and resolutions of the Company's Board of
Trustees.
(B) To the extent the Board of Trustees has directed the Advisor to
provide a continuous investment program for a Fund by recommending one or more
investment advisers to the Board or directly managing the assets of the Fund,
the Advisor shall recommend to the Board of Trustees one or more investment
advisers who are not affiliated with the Advisor (herein referred to
collectively as the "Sub-Advisors" and each individually as a "Sub-Advisor) to
provide a continuous investment program for each Fund or a portion thereof
designated from time to time by the Advisor, including investment, research,
and management with respect to all securities and investments and cash
equivalents for the Fund or designated portion thereof. Upon approval of a
Sub-Advisor by the Board of Trustees, the Advisor shall enter into an agreement
with such Sub-Advisor, in a form approved by the Board of Trustees, for the
provision of such services, subject to the supervision of the Board of Trustees
and the Advisor.
(i) The Advisor shall review, monitor and report to the Board of
Trustees regarding the performance and investment procedures of each
Sub-Advisor and shall assist and consult with each Sub-Advisor in connection
with the Fund's continuous investment program. The Advisor shall provide its
services under this Section 2 in accordance with the Funds' investment
objectives, policies and restrictions as stated in the Funds' then current
registration statement and resolutions of the Company's Board of Trustees.
The Advisor shall also review, monitor and report to the Board of
Trustees regarding each Sub-Advisor's compliance with Fund policies and
legal requirements as directed by the Board of Trustees from time to time.
(ii) Each Sub-Advisor shall determine from time to time what
securities and other investments will be purchased, retained or sold by the
Company with respect to the Fund or portion thereof served by such
Sub-Advisor. The Company acknowledges and agrees that, subject to the
provisions of paragraph (B)(i) hereof, the Advisor shall not be responsible
for any such determinations by any Sub-Advisor. Each Sub-Advisor shall
provide services to the Funds in accordance with the Funds' investment
objectives, policies and restrictions as stated in the Funds' then current
registration statement and resolutions of the Company's Board of Trustees.
(iii) Each Sub-Advisor shall select brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund or
portion thereof managed by such Sub-Advisor. In making such selection, each
Sub-Advisor shall use its best efforts to obtain best execution, which
includes most favorable net results and execution of such Sub-Advisor's
orders, taking into account all appropriate factors, including price, dealer
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spread or commission, size and difficulty of the transaction and research or
other services provided. It is understood that no Sub-Advisor will be deemed
to have acted unlawfully, or to have breached a fiduciary duty to the Fund
or in respect of Fund assets, solely by reason of its having caused the Fund
to pay a member of a securities exchange, a broker or a dealer a commission
for effecting a securities transaction of the Fund in excess of the amount
of commission another member of an exchange, broker or dealer would have
charged, if such Sub-Advisor determined in good faith that the commission
paid was reasonable in relation to the brokerage and research services
provided by such member, broker or dealer, viewed in terms of that
particular transaction or the Sub-Advisor's overall responsibilities with
respect to its accounts, including the Fund, as to which it exercises
investment discretion.
Each Sub-Advisor is authorized to consider for investment by the Fund
or portion thereof managed by such Sub-Advisor securities that may also be
appropriate for other funds and/or clients serviced by such Sub-Advisor. To
assure fair treatment of the Funds and all other clients of a Sub-Advisor in
situations in which two or more clients' accounts participate simultaneously
in a buy or sell program involving the same security, such transactions
shall be allocated among the Fund and other clients in a manner deemed
equitable by the Sub-Advisor.
Notwithstanding the previous paragraphs, to the extent directed by
management of the Fund in writing, the Advisor shall direct one or more of
the Sub-Advisors to execute purchases and sales of portfolio securities for
the Fund through brokers or dealers designated by management of the Fund to
Advisor for the purpose of providing direct benefits to the Fund, provided
that such Sub-Advisor determines that such brokers or dealers will provide
reasonable execution in view of such other benefits. The Fund understands
that the brokerage commissions or transaction costs in such transactions may
be higher, and that the Fund may receive less favorable prices, than those
which any such Sub-Advisor could obtain from another broker or dealer, in
order to obtain such benefits for the Fund. The Advisor is responsible for
overseeing any such directed brokerage arrangements.
(iv) With respect to any assets of a Fund that are not being managed
by a Sub-Advisor, the Advisor shall determine from time to time what
securities and other investments will be purchased, retained or sold by the
Company with respect to the Fund or portion thereof not served by such
Sub-Advisor. The Advisor shall provide services to the Fund in accordance
with the Fund's investment objectives, policies and restrictions as stated
in the Fund's then current registration statement and resolutions of the
Company's Board of Trustees. This shall be subject to paragraph (B)(iii)
hereof in the same manner as a Sub-Advisor.
(v) The Advisor shall maintain books and records with respect to its
services hereunder and furnish the Company's Board of Trustees such periodic
special reports as the Board may request. The Company acknowledges and
agrees that the Sub-Advisors will be responsible for maintenance of books
and records with respect to the securities transactions of the Funds.
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(vi) Subject to the supervision and control of the Company's Board of
Trustees, the Advisor shall provide certain administrative services in
connection with the investment of Company assets, as directed by the Board
of Trustees from time to time.
3. Administrative Services and Duties. Subject to the supervision and
control of the Company's Board of Trustees, the Advisor shall provide to the
Company facilities, equipment and personnel to carry out all management
services required for operation of the business and affairs of the Funds other
than those services to be performed by a distributor of the Funds' shares
pursuant to an Underwriting Agreement, those services to be performed by the
Funds' custodian pursuant to the Company's Custodian Contract, those services
to be performed by the Funds' transfer agent pursuant to the Company's Transfer
Agency Agreement, those accounting services to be provided pursuant to an
accounting agreement or custody agreement, those administrative services to be
performed by the Funds' administrator pursuant to an administration agreement
and those services normally performed by the Company's counsel and auditors.
(A) The Advisor's oversight responsibilities shall include overseeing
the performance of the Funds' third party service providers, including, but not
limited to, the Custodian, Transfer Agent, distributor and administrator.
(B) The Advisor shall participate in the periodic updating of the Funds'
prospectuses and statements of additional information and in the preparation of
reports to the Funds' shareholders and the Securities and Exchange Commission
(the "Commission"), including but not limited to annual reports and semi-annual
reports, notices pursuant to Rule 24f-2 and proxy materials pertaining to the
Funds.
(C) The Advisor shall pay all costs and expenses of maintaining the
offices of the Company, wherever located.
(D) The Advisor shall assist the Custodian, Transfer Agent, distributor,
administrator, counsel and auditors as required to carry out the business and
operations of the Funds.
4. Compliance with Governing Instruments and Laws. In performing its duties
as Advisor for the Funds, the Advisor shall act in conformity with the
Company's Declaration of Trust, By-Laws, prospectuses and statements of
additional information, and the instructions and directions of the Board of
Trustees of the Company. In addition, the Advisor shall conform to and comply
with the requirements of the 1940 Act, the Rules and Regulations of the
Commission, the requirements of subchapter M and Section 817(h) of the Internal
Revenue Code of 1986, as amended (with respect to assets not managed by a
Sub-Advisor), and all other applicable federal or state laws and regulations.
5. Services Not Exclusive. The Advisor shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees from time to time, have
no authority to act for or represent the Company in any way or otherwise be
deemed its agent. The services furnished by the Advisor hereunder are not
deemed exclusive, and the Advisor shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
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6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any such records upon the Company's request.
The Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by it in connection
with its services hereunder by Rule 31a-1 under the 1940 Act.
7. Expenses Assumed as Advisor. Except as otherwise stated in this
Agreement, the Advisor shall pay all expenses incurred by it in performing its
services and duties hereunder as Advisor (including without limitation all
compensation of Sub-Advisors to the Funds pursuant to its agreements with such
Sub-Advisors). The Company shall bear all other expenses incurred in the
operation of the Funds, including without limitation taxes, interest, brokerage
fees and commissions, if any, fees of trustees who are not officers, directors,
partners, employees or holders of 5 percent or more of the outstanding voting
securities of the Advisor or any Sub-Advisor or any of their affiliates,
Commission fees and state blue sky registration and qualification fees, charges
of custodians, transfer and dividend disbursing agents' fees, certain insurance
premiums, outside auditing and legal expenses, costs of maintaining trust
existence, costs of preparing and printing prospectuses or any supplements or
amendments thereto necessary for the continued effective registration of the
Funds' shares ("Shares") under federal or state securities laws, costs of
printing and distributing any prospectus, supplement or amendment thereto for
existing shareholders of the Funds, costs of shareholders' reports and
meetings, and any extraordinary expenses. It is understood that certain
advertising, marketing, shareholder servicing, administration and/or
distribution expenses to be incurred in connection with the Shares may be paid
by the Company as provided in any plan which may in the sole discretion of the
Company be adopted in accordance with Rule 12b-1 under the 1940 Act, and that
such expenses shall be paid apart from any fees paid under this Agreement.
8. Compensation. For the services provided and the expenses assumed pursuant
to this Agreement, the Company shall pay the Advisor a fee, computed daily and
payable monthly, at the annual rate as set forth in the attached fee schedule
based on the average daily net assets of each Fund determined as set forth in
the current prospectus and statement of additional information of the Company
with respect to the Fund as amended from time to time. Such fee as is
attributable to each Fund shall be a separate (and not joint or joint and
several) obligation of each such Fund.
9. Affiliated Broker. The Advisor or an affiliated person of the Advisor may
act as broker for the Funds or any portion thereof in connection with the
purchase or sale of securities or other investments for the Funds or any
portion thereof, subject to: (a) the requirement that the Advisor seek to
obtain best execution as set forth above; (b) the provisions of the Investment
Advisers Act of 1940, as amended (the "Advisers Act"); (c) the provisions of
the Securities Exchange Act of 1934, as amended; and (d) other applicable
provisions of law. Subject to the requirements of applicable law and any
procedures adopted by the Company's Board of Trustees, the Advisor or its
affiliated persons may receive brokerage commissions, fees or other
remuneration from the Funds for such services in addition to the Advisor's fees
for services under this Agreement.
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10. Confidentiality. The Advisor shall treat confidentially and as
proprietary information of the Company all records and other information
relative to the Company and prior or present shareholders or those persons or
entities who respond to the Distributor's inquiries concerning investment in
the Company, as applicable, and shall not use such records and information for
any purpose other than performance of its responsibilities and duties hereunder
or under any other agreement with the Company except after prior notification
to and approval in writing by the Company, which approval shall not be
unreasonably withheld and may not be withheld where the Advisor may be exposed
to civil or criminal contempt proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, or when so
requested by the Company. Nothing contained herein, however, shall prohibit the
Advisor from advertising to or soliciting the public generally with respect to
other products or services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement or solicitation may
coincidentally include prior or present Company shareholders or those persons
or entities who have responded to inquiries with respect to the Funds.
11. Limitations of Liability; Indemnification.
(A) The Advisor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Company or by any Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
a breach of the Advisor's fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from the Advisor's willful
misfeasance, bad faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement. Any person, even though also an officer, director, employee or
agent of the Advisor, who may be or become an officer, director, employee or
agent of the Company, shall be deemed when rendering services to the Company or
to any Fund, or acting on any business of the Company or of any Fund (other
than services or business in connection with the Advisor's duties as Advisor
hereunder or under any other agreement with the Company), to be rendering such
services to or acting solely for the Company or Fund and not as an officer,
director, employee or agent or one under the control or direction of the
Advisor even though paid by the Advisor.
(B) The Company shall indemnify and hold harmless the Advisor from and
against all liabilities, damages, costs and expenses that the Advisor may incur
in connection with any action, suit, investigation or proceeding arising out of
or otherwise based on any action actually or allegedly taken or omitted to be
taken by the Advisor with respect to the performance of its duties or
obligations hereunder or otherwise as an investment adviser of the Company and
the Funds; provided, however, that the Advisor will not be entitled to
indemnification with respect to any liability to the Company or its
shareholders by reason of the Advisor's breach of fiduciary duty with respect
to the receipt of compensation for services or the willful misfeasance, bad
faith or gross negligence on the part of the Advisor in the performance of its
duties, or by reason of the Advisor's reckless disregard of its obligations and
duties under this Agreement.
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(C) The Advisor acknowledges and agrees that the Declaration of Trust of
the Company provides that the Trustees of the Company and the officers of the
Company executing this Agreement on behalf of the Company shall not be
personally bound hereby or liable hereunder, nor shall resort be had to their
private property or the private property of the shareholders of the Company for
the satisfaction of any claim or obligation under this Agreement.
12. Duration or Termination. This Agreement shall become effective as of the
date first written above and, unless sooner terminated as provided herein,
shall continue until February 28, 2008. Thereafter, this Agreement will be
extended with respect to each Fund for successive one-year periods ending on
February 28th of each year provided each such extension is specifically
approved at least annually (a) by vote of a majority of those members of the
Company's Board of Trustees who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Company's Board of Trustees or by vote of a majority
of the outstanding voting securities of such Fund. This Agreement may be
terminated by the Company at any time with respect to any Fund, without the
payment of any penalty, by vote of a majority of the entire Board of Trustees
of the Company or by a vote of a majority of the outstanding voting securities
of such Fund on 60 days' written notice to the Advisor, or by the Advisor at
any time, without payment of penalty, on 60 days' written notice to the
Company. This Agreement will immediately terminate in the event of its
assignment. As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the same
meanings as such terms have in the 1940 Act.
13. Representations and Warranties.
(A) The Company represents and warrants to the Advisor that: (i) it is a
statutory trust duly organized and existing and in good standing under the laws
of the State of Delaware and is duly qualified to conduct its business in the
State of Delaware and in such other jurisdictions wherein the nature of its
activities or its properties owned or leased makes such qualification
necessary; (ii) it is a registered open-end management investment company under
the 1940 Act; (iii) a registration statement on Form N-1A under the Securities
Act of 1933, as amended, on behalf of the Funds is currently effective and will
remain effective, and appropriate state securities law filings have been made
and will continue to be made, with respect to all shares of the Funds being
offered for sale; (iv) it is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this Agreement; and
(iv) all requisite trust proceedings have been taken to authorize it to enter
into and perform this Agreement.
(B) The Advisor represents and warrants to the Company that: (i) it is a
corporation duly organized and existing and in good standing under the laws of
the State of California and is duly qualified to conduct its business in the
State of California and in such other jurisdictions wherein the nature of its
activities or its properties owned or leased makes such qualification
necessary; (ii) it is a registered investment adviser under the Advisers Act;
(iii) it is empowered under applicable laws to enter into and perform this
Agreement; and (iv) all requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
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14. Arbitration of Disputes. Any claim or controversy arising out of or
relating to this Agreement which is not settled by agreement of the parties
shall be settled by arbitration in Santa Monica, California before a panel of
three arbitrators in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The parties agree that such
arbitration shall be the exclusive remedy hereunder, and each party expressly
waives any right it may have to seek redress in any other forum. Any arbitrator
acting hereunder shall be empowered to assess no remedy other than payment of
fees and out-of-pocket damages. Each party shall bear its own expenses of
arbitration, and the expenses of the arbitrators and of a transcript of any
arbitration proceeding shall be divided equally between the parties. Any
decision and award of the arbitrators shall be binding upon the parties, and
judgment thereon may be entered in the Superior Court of the State of
California or any other court having jurisdiction. If litigation is commenced
to enforce any such award, the prevailing party will be entitled to recover
reasonable attorneys' fees and costs.
15. Names. The name "Wilshire Variable Insurance Trust" refers to the trust
created and the trustees, as trustees but not individually or personally,
acting from time to time under a Declaration of Trust dated November 7, 1996,
as amended, which is hereby referred to and a copy of which is on file at the
principal office of the Company. The trustees, officers, employees and agents
of the Company shall not personally be bound by or liable under any written
obligation, contract, instrument, certificate or other interest or undertaking
of the Company made by the trustees or by any officer, employee or agent of the
Company, in his or her capacity as such, nor shall resort be had to their
private property for the satisfaction of any obligation or claim thereunder.
All persons dealing with any series or class of shares of the Company may
enforce claims against the Company only against the assets belonging to such
series or class.
16. Notices. Notices of any kind to be given to the Company hereunder by the
Advisor shall be in writing and shall be duly given if mailed or delivered to
the Company at the following:
With a copy to:
Xxxxx X. X'Xxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz, P.C.
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
or at such other address or to such individual as shall be so specified by the
Company to the Advisor. Notices of any kind to be given to the Advisor
hereunder by the Company shall be in writing and shall be duly given if mailed
or delivered to the Advisor at:
Wilshire Associates Incorporated
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Funds Management
or at such other address or to the attention of such other individual as shall
be so specified by the Advisor to the Company.
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17. Miscellaneous. This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof and may be amended only by
written consent of both parties. 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. Subject to the provisions of Section 11 hereof, 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 Delaware law
(without regard to principles of conflicts of law); provided, however, that
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation of the Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
WILSHIRE VARIABLE INSURANCE TRUST
/s/ Xxxxxxxx Xxxxxxx
By: --------------------------------
(name) Xxxxxxxx Xxxxxxx
(title) President
Attest: /s/ Xxxxx Boroczi
-----------------
(name). Xxxxx Boroczi
(title) Vice President
WILSHIRE ASSOCIATES INCORPORATED
By:
/s/ Xxxxxxxx Xxxxxxx
--------------------------------
(name) Xxxxxxxx Xxxxxxx
(title) Managing Director
Attest: /s/ Xxxxx Boroczi
-----------------
(name). Xxxxx Boroczi
(title) Vice President
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FEE SCHEDULE
The Company shall pay Advisor, with respect to each Fund each calendar month
during the term of this Agreement, a fee based on the average daily net assets
of each Fund, at the following annual rate:
2010 AGGRESSIVE FUND.. 0.35% OF NET ASSETS
2010 MODERATE FUND....
0.35% OF NET ASSETS
2010 CONSERVATIVE FUND
0.35% OF NET ASSETS
2015 MODERATE FUND....
0.35% OF NET ASSETS
2025 MODERATE FUND....
0.35% OF NET ASSETS
2035 MODERATE FUND....
0.35% OF NET ASSETS
2045 MODERATE FUND....
0.35% OF NET ASSETS
Advisor's fee shall be accrued daily at 1/365th of the annual rate set forth
above. For the purpose of accruing compensation, the net assets of each Fund
will be determined in the manner and on the dates set forth in the current
prospectus of the Fund with respect to each Fund and, on days on which the net
assets are not so determined, the net asset value computation to be used will
be as determined on the immediately preceding day on which the net assets were
determined. Upon the termination of this Agreement, all compensation due
through the date of termination will be calculated on a pro-rata basis through
the date of termination and paid within thirty business days of the date of
termination.
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