HOTCHKIS AND WILEY FUNDS
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 6th day of December, 1994, and amended and
restated as of October 31, 1995, by and between HOTCHKIS AND
WILEY FUNDS (the "Trust"), a Massachusetts business trust, and
HOTCHKIS AND WILEY (the "Advisor").
WITNESSETH:
Whereas, one series of the Trust having separate assets and
liabilities has been created entitled the "Total Return Bond
Series" (hereafter the "Total Return Fund"); and
Whereas, it is desirable to have a new investment advisory
agreement (i.e., this Agreement) relating to the Total Return
Fund that supersedes the former agreement and contains the new
fee schedule that was approved by shareholders of the Total
Return Fund at a meeting duly called and held on October 13,
1995.
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt
of which is hereby acknowledged, it is hereby agreed by and
between the parties hereto as follows:
1. In General
The Advisor agrees, all as more fully set forth herein, to act
as managerial investment advisor to the Trust with respect to
the investment of the assets of the Total Return Fund and to
supervise and arrange the purchase and sale of securities held
in the portfolio of the Total Return Fund.
2. Duties and Obligations of the Advisor with respect to
Investment of Assets of the Total Return Fund
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees
of the Trust, the Advisor shall:
(i) Decide what securities shall be purchased or sold by the
Trust with respect to the Total Return Fund and when; and
(ii) Arrange for the purchase and the sale of securities held
in the portfolio of the Total Return Fund by placing purchase
and sale orders for the Trust with respect to the Total
Return Fund.
(b) Any investment purchases or sales made by the Advisor
shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Investment
Company Act of 1940 ("1940 Act") and of any rules or
regulations in force thereunder; (2) any other applicable
provisions of law; (3) the provisions of the Declaration of
Trust and By-Laws of the Trust as amended from time to time;
(4) any policies and determinations of the Board of Trustees
of the Trust; and (5) the fundamental policies of the Trust
relating to the Total Return Bond Fund, as reflected in the Trust's
Registration Statement under the 1940 Act, or as amended by
the shareholders of the Total Return Fund.
(c) The Advisor shall give the Trust the benefit of its best
judgment and effort in rendering services hereunder, but the
Advisor shall not be liable for any loss sustained by reason
of the purchase, sale or retention of any security whether or
not such purchase, sale or retention shall have been based on
its own investigation and research or upon investigation and
research made by any other individual, firm or corporation, if
such purchase, sale or retention shall have been made and such
other individual, firm or corporation shall have been selected
in good faith. Nothing herein contained shall, however, be
construed to protect the Advisor against any liability to the
Trust or its security holders by reason of willful
misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of its reckless disregard of
obligations and duties under this Agreement.
(d) Nothing in this Agreement shall prevent the Advisor or any
affiliated person (as defined in the 0000 Xxx) of the Advisor
from acting as investment advisor or manager and/or principal
underwriter for any other person, firm or corporation and
shall not in any way limit or restrict the Advisor or any such
affiliated person from buying, selling or trading any
securities for its or their own accounts or the accounts of
others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this
Agreement.
(e) It is agreed that the Advisor shall have no responsibility
or liability for the accuracy or completeness of the Trust's
Registration Statement under the 1940 Act or the Securities
Act of 1933 except for information supplied by the Advisor for
inclusion therein. The Trust may indemnify the Advisor to the
full extent permitted by the Trust's Declaration of Trust.
3. Broker-Dealer Relationships
The Advisor is responsible for decisions to buy and sell
securities for the Total Return Fund, broker-dealer selection,
and negotiation of brokerage commission rates. The Advisor's
primary consideration in effecting a securities transaction will
be execution at the most favorable price. In selecting a
broker-dealer to execute each particular transaction, the
Advisor will take the following into consideration: the best
net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution
of the broker-dealer to the investment performance of the Total
Return Fund on a continuing basis. Accordingly, the price to
the Total Return Fund in any transaction may be less favorable
than that available from another broker-dealer if the difference
is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the
Board of Trustees of the Trust may determine, the Advisor shall
not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of
its having caused the Total Return Fund to pay a broker or
dealer that provides brokerage or research services to the
Advisor an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such
amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or
dealer, viewed in terms of either that particular transaction
or the Advisor's overall responsibilities with respect to
the Trust. The Advisor is further authorized to allocate the
orders placed by it on behalf of the Total Return Fund to such
brokers or dealers who also provide research or statistical
material, or other services, to the Trust, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts
and proportions as the Advisor shall determine, and the Advisor
shall report on such allocations regularly to the Trust,
indicating the broker-dealers to whom such allocations have been
made and the basis therefor. The Advisor is also authorized to
consider sales of shares as a factor in the selection of
brokers or dealers to execute portfolio transactions, subject to
the requirements of best execution, i.e., that such brokers or
dealers are able to execute the order promptly and at the best
obtainable securities price.
4. Allocation of Expenses
The Advisor agrees that it will furnish the Trust, at the
Advisor's expense, with all office space and facilities, and
equipment and clerical personnel necessary for carrying out its
duties under this Agreement. The Advisor (or an affiliate
thereof) will also pay all compensation of all Trustees,
officers and employees of the Trust who are affiliated persons
of the Advisor. All operating costs and expenses relating to
the Total Return Fund not expressly assumed by the Advisor
under this Agreement shall be paid by the Trust from the assets
of the Total Return Fund, as applicable, including, but not
limited to (i) interest and taxes; (ii) brokerage commissions;
(iii) insurance premiums; (iv) compensation and expenses of the
Trust's Trustees other than those affiliated with the Advisor;
(v) legal and audit expenses; (vi) fees and expenses of the
Trust's custodian, shareholder servicing or transfer agent and
accounting services agent; (vii) expenses incident to the
issuance of the Total Return Fund's shares, including issuance
on the payment of, or reinvestment of, dividends; (viii) fees
and expenses incident to the registration under Federal or
state securities laws of the Trust or the shares of the
Total Return Fund; (ix) expenses of preparing, printing and
mailing reports and notices and proxy material to shareholders
of the Trust; (x) all other expenses incidental to holding
meetings of the Trust's shareholders; (xi) dues or assessments
of or contributions to the Investment Company Institute or any
successor; (xii) such non-recurring expenses as may arise,
including litigation affecting the Trust and the legal
obligations which the Trust may have to indemnify its officers
and Trustees with respect thereto; and (xiii) all expenses
which the Trust or the Total Return Fund agree to bear in any
distribution agreement or in any plan adopted by the Trust
and/or the Total Return Fund pursuant to Rule 12b-1 under the
1940 Act.
5. Compensation of the Advisor
(a) The Trust agrees to pay the Advisor and the Advisor
agrees to accept as full compensation for all services
rendered by the Advisor hereunder, an annual management fee,
payable monthly and computed on the value of the average net
assets of the Total Return Fund as of the close of business
each business day, at the annual rate of .55%.
(b) In the event the expenses of the Total Return Fund
(including the fees of the Advisor and amortization of
organization expenses but excluding interest, taxes, brokerage
commissions, extraordinary expenses and sales charges and any
distribution fees) for any fiscal year exceed the limits set
by applicable regulations of state securities commissions, the
Advisor will reduce its fee by the amount of such excess. Any
such reductions are subject to readjustment during the year.
The payment of the management fee at the end of any month will
be reduced or postponed or, if necessary, a refund will be
made to the Trust as to the Total Return Fund so that at no
time will there be any accrued but unpaid liability under this
expense limitation.
6. Duration and Termination
(a) effect on October 31, 1995 and shall, unless terminated as
hereinafter provided, continue in effect until October 31,
1997, and thereafter from year to year, but only so long as such
continuance is specifically approved at least annually by the
Trust's Board of Trustees, including the vote of a majority of
the Trustees who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any such
party cast in person at a meeting called for the purpose of
voting on such approval, or by the vote of the holders of a
"majority" (as so defined) of the outstanding voting
securities of the Total Return Fund and by such a vote of the
Trustees.
(b) This Agreement may be terminated by the Advisor at any
time without penalty upon giving the Trust sixty (60) days'
written notice (which notice may be waived by the Trust) and
may be terminated by the Trust at any time without penalty
upon giving the Advisor sixty (60) days' written notice (which
notice may be waived by the Advisor), provided that such
termination by the Trust shall be directed or approved by the
vote of a majority of all of its Trustees in office at the
time or by the vote of the holders of a majority (as defined in
the 0000 Xxx) of the voting securities of the Trust at the
time outstanding and entitled to vote. This Agreement shall
automatically terminate in the event of its assignment (as so
defined).
7. Agreement Binding Only on Fund Property
The Advisor understands that the obligations of this Agreement
are not binding upon any shareholder of the Trust personally,
but bind only the Trust's property; the Advisor represents that
it has notice of the provisions of the Trust's Declaration of
Trust disclaiming shareholder liability for acts or obligations
of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused the
foregoing instrument to be executed by duly authorized persons
and their seals to be hereunto affixed, all as of the day and
year above written.
HOTCHKIS AND WILEY FUNDS
By
ATTEST: President
HOTCHKIS AND WILEY
By
ATTEST: Managing Director
