HOTCHKIS AND WILEY FUNDS
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 7th day of May, 1993, 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, two series of the Trust having separate assets and
liabilities have been created entitled the "Low Duration Series"
(hereafter the "Low Duration Fund") and the "Short-Term
Investment Series" (hereafter the "Short-Term Investment Fund"),
collectively referred to herein as the "Fixed-Income Funds"; and
Whereas, it is desirable to have a new investment advisory
agreement (i.e., this Agreement) relating to the Fixed-Income
Funds that supersedes the former agreement and contains the new
fee schedule applicable to the Low Duration Fund, as approved by
its shareholders 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 adviser to the Trust with respect to
the investment of the assets of the Fixed-Income Funds and to
supervise and arrange the purchase and sale of securities held
in the portfolios of the Fixed-Income Funds.
2. Duties and Obligations of the Advisor with respect to
Investment of Assets of the Fixed-Income Funds
(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 Fixed-Income Funds and when; and
(ii) Arrange for the purchase and the sale of securities held
in the portfolio of the Fixed-Income Funds by placing purchase
and sale orders for the Trust with respect to the Fixed-Income
Funds.
(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
Fixed-Income Funds, as reflected in the Trust's registration
statement under the 1940 Act, or as amended by the shareholders
of the Fixed-Income Funds.
(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 Fixed-Income Funds, 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
theFixed-Income Funds on a continuing basis. Accordingly, the
price to the Fixed-Income Funds 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 Fixed-Income Funds 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 Fixed-Income Funds 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 Fixed-Income Funds not expressly assumed by the Advisor
under this Agreement shall be paid by the Trust from the assets
of either the Low Duration Fund or the Short-Term Investment
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) custodian,
shareholder servicing or transfer agent and accounting services
agent; (vii) expenses incident to the issuance of the
Fixed-Income Funds' 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 Fixed-Income Funds; (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
Fixed-Income Funds agree to bear in any distribution agreement
or in any plan adopted by the Trust and/or a 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 net assets of the Low Duration Fund
as of the close of business each business day at the annual rate
of .46 of 1% of the Fund's average daily net assets and for the
Short-Term Investment Fund at the annual rates set forth below:
Advisory Fees
(expressed as a percentage of average daily net assets)
Under $100,000,000 .40 of 1%
$100,000,000 to $249,999,999 .35 of 1%
$250,000,000 to $499,999,999 .30 of 1%
$500,000,000 or more .25 of 1%
(b) In the event the expenses of either of the Fixed-Income
Funds (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 each of the Fixed-Income Funds so that at no
time will there be any accrued but unpaid liability under this
expense limitation.
6. Duration and Termination
(a) This Agreement as amended and restated shall go into 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 Fixed-Income Funds 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 amajority (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 _________________________________
President
ATTEST:
_______________________________
HOTCHKIS AND WILEY
By _________________________________
ATTEST:
______________________________
