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EXHIBIT 99.B5.(d)
HOTCHKIS AND WILEY FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 12th day of November, 1996, by and between HOTCHKIS
AND WILEY FUNDS, a Massachusetts business trust (the "Trust"), on behalf of the
Equity Fund for Insurance Companies Series (the "Fund"), and HOTCHKIS AND WILEY,
a division of the Capital Management Group of Xxxxxxx Xxxxx Asset Management,
L.P. (the "Advisor").
WITNESSETH:
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 ("1940 Act") and is
currently comprised of eight series, one of which is the Fund; and each series
engages in the business of investing and reinvesting its assets; and
WHEREAS, the Advisor is a registered investment advisor under the
Investment Advisors Act of 1940 and engages in the business of providing
investment advisory services; and
WHEREAS, the Trust's Board of Trustees, including 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, and the Fund's shareholders have
approved this Agreement;
NOW, THEREFORE, 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 Fund and to supervise and arrange the purchase and sale of
securities held in the portfolio of the Fund.
2. DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO
INVESTMENT OF ASSETS OF THE 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 or other assets shall be
purchased or sold by the Trust with respect to the Fund
and when; and
(ii) Arrange for the purchase and the sale of securities
or other assets held in the portfolio of the Fund by
placing purchase and sale orders for the Trust with
respect to the Fund.
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(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 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 Fund, as reflected in the Trust's
Registration Statement under the 1940 Act, or as amended by
the shareholders of the 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 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
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the expected contribution of the broker-dealer to the investment performance of
the Fund on a continuing basis. Accordingly, the price to the 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 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 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 Fund are hereby
expressly assumed by the Advisor, 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 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 Fund; (ix) expenses of preparing, printing and
mailing reports and notices and proxy materials to shareholders of the Fund; (x)
all other expenses incident to holding meetings of the Fund'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 Fund agree to bear in any distribution agreement
or in any plan adopted by the Trust and/or the Fund pursuant to Rule 12b-1 under
the 1940 Act.
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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 Fund as of the close of business each business day, at the
annual rate of .60 of 1% of the first $10,000,000 of such
average net assets and .50 of 1% of such net assets in excess
of $10 million; provided, however, that no fee will be paid on
any portion of such net assets that are invested in another
investment company for which the Advisor serves as the
investment advisor.
(b) In the event the expenses of the 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 Fund so that at no time will there be
any accrued but unpaid liability under this expense
limitation.
6. DURATION AND TERMINATION
(a) This Agreement shall go into effect on the date hereof and
shall, unless terminated as hereinafter provided, continue in
effect until November 12, 1998, 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 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'
notice 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).
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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 first above written.
HOTCHKIS AND WILEY FUNDS
By /s/ XXXXX X. XXXXXX
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ATTEST:
/s/ XXXXXX XXXXXXXX
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HOTCHKIS AND WILEY, a division of the
Capital Management Group of Xxxxxxx Xxxxx
Asset Management, L.P.
HOTCHKIS AND WILEY FUNDS
By /s/ XXXXX X. XXXXXX
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ATTEST:
/s/ XXXXX XXXXXX
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