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Exhibit (d)(12)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 21st day of July, 1998, by and among HOTCHKIS AND
WILEY, a division of Xxxxxxx Xxxxx Asset Management, L.P., a Delaware limited
partnership ("HOTCHKIS AND WILEY"), MERCURY ASSET MANAGEMENT INTERNATIONAL
LIMITED, a corporation organized under the laws of England and Wales
("MERCURY"), and XXXXXXX XXXXX ASSET MANAGEMENT U.K. LIMITED, a corporation
organized under the laws of England and Wales ("MLAM U.K."). (MERCURY and MLAM
U.K. are collectively referred to herein as the "SUB-ADVISORS.")
W I T N E S S E T H:
WHEREAS, HOTCHKIS AND WILEY and the SUB-ADVISORS are engaged principally
in rendering investment advisory services and are registered as investment
advisers under the U.S. Investment Advisers Act of 1940, as amended; and
WHEREAS, HOTCHKIS AND WILEY renders investment advisory services under
an investment advisory agreement ("Advisory Agreement") with the Hotchkis and
Wiley Global Equity Fund (the "Fund"), a portfolio of Hotchkis and Wiley Funds,
a registered investment company (the "Company") under the U.S. Investment
Company Act of 1940, as amended ("Investment Company Act"); and
WHEREAS, the SUB-ADVISORS are regulated by the Investment Management
Regulatory Organization ("IMRO"), a self-regulating organization recognized
under the Financial Services Act of 1986 of the United Kingdom, and the conduct
of their investment business is regulated by IMRO; and
WHEREAS, the SUB-ADVISORS are willing to provide investment advisory
services to HOTCHKIS AND WILEY in connection with the Fund's operations on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, HOTCHKIS AND WILEY and the SUB-ADVISORS hereby agree as
follows:
ARTICLE I
Duties of the SUB-ADVISORS
HOTCHKIS AND WILEY hereby engages each SUB-ADVISOR to act as investment
adviser to HOTCHKIS AND WILEY and to furnish, or arrange for affiliates to
furnish, the investment advisory services described below, subject to the broad
supervision of HOTCHKIS AND WILEY and the Fund, for the period and on the terms
and conditions set forth in this Agreement. Each SUB-ADVISOR hereby accepts such
engagement and agrees during such period to render, or arrange for the rendering
of, such services and to assume the obligations herein set forth for the
compensation provided for herein. HOTCHKIS AND WILEY and the Fund shall for
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all purposes herein be deemed Non Private Customers as defined under the rules
promulgated by IMRO (the "IMRO Rules"). The SUB-ADVISORS and their affiliates
shall for all purposes herein be deemed to be independent contractors and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Fund in any way or otherwise be deemed agents of the Fund.
Each SUB-ADVISOR shall have the right to make unsolicited calls on
HOTCHKIS AND WILEY and shall provide HOTCHKIS AND WILEY with such investment
research, advice and supervision as the latter may from time to time consider
necessary for the proper supervision of the assets of the Fund; shall make
recommendations from time to time as to which securities shall be purchased or
sold and what portion of the assets of the Fund shall be held in various
investments, including options, futures, options on futures or cash; shall make
recommendations and effect transactions with respect to foreign currency
matters, including foreign exchange contracts, foreign currency options, foreign
currency futures and related options on foreign currency futures and forward
foreign currency transactions; and shall also make recommendations or take
action as to the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio securities of the Fund
shall be exercised; all of the foregoing subject always to the restrictions of
the Declaration of Trust and By-Laws of the Company, as they may be amended
and/or restated from time to time, the provisions of the Investment Company Act
and the statements relating to the Fund's investment objective, investment
policies and investment restrictions as the same are set forth in the currently
effective Prospectus and Statement of Additional Information relating to the
shares of the Fund under the U.S. Securities Act of 1933, as amended.
The SUB-ADVISORS will not hold money on behalf of HOTCHKIS AND WILEY or
the Fund, nor will the SUB-ADVISORS be the registered holders of the registered
investments of HOTCHKIS AND WILEY or the Fund or be the custodian of documents
or other evidence of title.
ARTICLE II
Allocation of Charges and Expenses
Each SUB-ADVISOR assumes and shall pay the expenses of maintaining the
staff and personnel necessary to perform its obligations under this Agreement
and shall at its own expense provide the office space, equipment and facilities
necessary in connection with the services which it is obligated to provide under
Article I hereof.
ARTICLE III
Compensation of the SUB-ADVISORS
For the services rendered, the facilities furnished and expenses assumed
by the SUB-ADVISORS, HOTCHKIS AND WILEY shall pay to each SUB-ADVISOR a fee in
an amount to be determined from time to time by HOTCHKIS AND WILEY and such
SUB-ADVISOR, but in no event shall such fee be in excess of the amount that
HOTCHKIS AND WILEY actually receives for providing services to the Fund pursuant
to the Advisory Agreement.
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ARTICLE IV
Limitation of Liability of the SUB-ADVISORS
Neither SUB-ADVISOR shall be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
in the performance of sub-advisory services rendered by such SUB-ADVISOR with
respect to the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Article IV, SUB-ADVISOR
shall include any affiliates of the SUB-ADVISOR performing services for HOTCHKIS
AND WILEY contemplated hereby and directors, officers and employees of the
SUB-ADVISOR and such affiliates.
ARTICLE V
Activities of the SUB-ADVISORS
The services of the SUB-ADVISORS to the Fund are not to be deemed to be
exclusive, the SUB-ADVISORS and any person controlled by or under common control
with the SUB-ADVISORS (for purposes of this Article V referred to as
"affiliates") being free to render services to others. It is understood that
Trustees, officers, employees and shareholders of the Company are or may become
interested in the SUB-ADVISORS and their affiliates, as directors, officers,
employees and shareholders or otherwise, and that directors, officers, employees
and shareholders of the SUB-ADVISORS and their affiliates are or may become
similarly interested in the Fund as shareholders or otherwise.
ARTICLE VI
SUB-ADVISOR Statements Pursuant to IMRO Rules
Any complaints concerning a SUB-ADVISOR should be in writing addressed
to the attention of the Managing Director of such SUB-ADVISOR. HOTCHKIS AND
WILEY has the right to obtain from each SUB-ADVISOR a copy of the IMRO
complaints procedure and to approach IMRO and the Investment Ombudsman directly.
Each SUB-ADVISOR may make recommendations, subject to the investment
restrictions referred to in Article I herein, regarding Investments Not Readily
Realisable (as that term is used in the IMRO Rules) or investments denominated
in a currency other than British pound sterling. There can be no certainty that
market makers will be prepared to deal in unlisted or thinly traded securities
and an accurate valuation may be hard to obtain. The value of investments
recommended by each SUB-ADVISOR may be subject to exchange rate fluctuations
which may have favorable or unfavorable effects on investments.
Each SUB-ADVISOR may make recommendations, subject to the investment
restrictions referred to in Article I herein, regarding options, futures or
swaps (but not contracts for differences). Markets can be highly volatile and
such investments carry a high degree of risk of loss exceeding the original
investment and any margin on deposit.
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ARTICLE VII
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above written
and shall remain in force until July 21, 2000, and thereafter, but only so long
as such continuance is specifically approved at least annually by (i) the
Trustees of the Company or by the vote of a majority of the outstanding voting
securities of the Fund and (ii) a majority of those Trustees who are not parties
to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
This Agreement may be terminated with respect to a SUB-ADVISOR at any
time, without the payment of any penalty, by HOTCHKIS AND WILEY or by vote of a
majority of the outstanding voting securities of the Fund, or with respect to a
particular SUB-ADVISOR by the SUB-ADVISOR, on not more than sixty days' written
notice to HOTCHKIS AND WILEY. This Agreement shall automatically terminate with
respect to a SUB-ADVISOR in the event of its assignment by such SUB-ADVISOR or
in the event of the termination of the Advisory Agreement. Any termination shall
be without prejudice to the completion of transactions already initiated.
ARTICLE VIII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Trustees of the Company or by the vote of a
majority of outstanding voting securities of the Fund and (ii) a majority of
those Trustees who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
ARTICLE IX
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE X
Governing Law
This Agreement shall be construed in accordance with the laws of the
State of California and the applicable provisions of the Investment Company Act.
To the extent that the applicable laws of the State of California, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
HOTCHKIS AND WILEY
a division of Xxxxxxx Xxxxx Asset
Management, L.P.
By: /s/ Xxxxx X. Xxxxxx
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Title: CAO
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MERCURY ASSET MANAGEMENT INTERNATIONAL LIMITED
By: /s/ Xxxxx Xxxxxxxxx /s/ Xxxxx X. Xxxxx
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Title: Compliance Officer
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XXXXXXX XXXXX ASSET MANAGEMENT U.K. LIMITED
By: /s/ Xxxx Xxxxxx
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Title: Senior Managing Director
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