1
EXHIBIT 99.B9(A)
FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this ___________________ day of
__________________, 1998, by and between Hotchkis and Wiley Variable Trust
(hereinafter referred to as the "Trust") and Firstar Trust Company, a
corporation organized under the laws of the State of Wisconsin (hereinafter
referred to as "FTC").
WHEREAS, The Trust is an open-ended management investment company/companies
which is/are registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the business of
providing fund administration services for the benefit of its customers;
NOW, THEREFORE, the Trust and FTC do mutually promise and agree as follows:
I. Appointment of Administrator
The Trust hereby appoints FTC as Administrator of the Trust on the terms
and conditions set forth in this Agreement, and FTC hereby accepts such
appointment and agrees to perform the services and duties set forth in
this Agreement in consideration of the compensation provided for herein.
II. Duties and Responsibilities of FTC
A. General Trust Management
1. Act as liaison among all fund service providers
2. Audits
a. Prepare appropriate schedules and assist independent
auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
3. Assist in overall operations of the Trust
4. Coordinate payment of Trust expenses as directed by adviser
2
5. Evaluate Trust expenses vs. Industry and service environment
6. Monitor expense accruals and payments
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with Investment Company
Act of 1940 requirements
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
b. Periodically monitor Trust's compliance with the policies
and investment limitations of the Trust as set forth in its
prospectus and statement of additional information
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings
relating to the registration of the securities of the Trust
so as to enable the Trust to make a continuous offering of
its shares
b. Monitor status and maintain registrations in each state
3. SEC Registration and Reporting
a. Assisting Trust's counsel in updating prospectus and
statement of additional information; and in preparing proxy
statements, and Rule 24f-2 notice,
b. Assist in preparing annual and semiannual reports and
file with SEC
c. Prepare and file Form N-SAR
4. IRS Compliance
a. Periodically monitor Trust's status as a regulated
investment company under Subchapter M through review of the
following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
2
3
C. Financial Reporting
1. Prepare financial reports for shareholders, the Board, the SEC,
and independent auditors
2. Supervise the Trust's Custodian and Fund Accountants in the
maintenance of the Trust's general ledger and in the
preparation of the Trust's financial statements including
oversight of expense accruals and payments, of the
determination of net asset value of the Trust's net assets and
of the Trust's shares, and of the declaration and payment of
dividends and other distributions to shareholders
D. Tax Reporting
1. Prepare state income breakdowns where relevant
2. File 1099 Miscellaneous for payments to directors and other
service providers
3. Monitor wash losses
4. Calculate eligible dividend income for corporate shareholders
III. Compensation
The Trust agrees to pay FTC for performance of the duties listed in this
Agreement and the fees and out-of-pocket expenses as set forth in the
attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Trust and FTC.
The Trust agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
IV. Performance of Service; Limitation of Liability
A. FTC shall exercise reasonable care in the performance of its
duties under this Agreement. FTC shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
resulting from FTC's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence, or willful misconduct on its
part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the Trust shall
indemnify and hold harmless FTC from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be
3
4
asserted against FTC by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in
accordance with the foregoing standards, or (ii) in reliance upon any
written or oral instruction provided to FTC by any duly authorized
officer of the Trust, such duly authorized officer to be included in a
list of authorized officers furnished to FTC and as amended from time to
time in writing by resolution of the Board of Trustees of the Trust.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FTC's control. FTC will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FTC. FTC agrees
that it shall, at all times, have reasonable contingency plans with
appropriate parties, making reasonable provision for emergency use of
electrical data processing equipment to the extent appropriate equipment
is available. Representatives of the Trust shall be entitled to inspect
FTC's premises and operating capabilities at any time during regular
business hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess
and correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Trust may
be asked to indemnify or hold FTC harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that FTC will use all reasonable
care to notify the Trust promptly concerning any situation which
presents or appears likely to present the probability of such a claim
for indemnification against theTrust. The Trust shall have the option to
defend FTC against any claim which may be the subject of this
indemnification. In the event that the Trust so elects, it will so
notify FTC and thereupon the Trust shall take over complete defense of
the claim, and FTC shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
section. FTC shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify FTC except with
the Trust's prior written consent.
C. FTC shall indemnify and hold the Trust harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Trust by
any person arising out of any action taken or omitted to be taken by FTC
as a result of FTC's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
4
5
V. Confidentiality
FTC shall handle, in confidence, all information relating to the Trust's
business which is received by FTC during the course of rendering any
service hereunder.
VI. Data Necessary to Perform Service
The Trust or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in such
form as mutually agreed upon.
VII. Terms of Agreement
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. The Agreement may
be terminated by either party upon giving ninety (90) days prior written
notice to the other party or such shorter period as is mutually agreed
upon by the parties.
VIII. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
FTC's duties or responsibilities hereunder is designated by the Trust by
written notice to FTC, FTC will promptly, upon such termination and at
the expense of the Trust, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by FTC
under this Agreement in a form reasonably acceptable to the Trust (if
such form differs from the form in which FTC has maintained, the Trust
shall pay any expenses associated with transferring the data to such
form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FTC's
personnel in the establishment of books, records, and other data by such
successor.
IX. Choice of Law
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin.
X. Notices
Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows:
Notice to FTC shall be sent to __________________, and notice to Trust
shall be sent to ____________________.
5
6
XI. Records
FTC shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Trust but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the Investment Company Act of 1940 as amended
(the "Investment Company Act"), and the rules thereunder. FTC agrees
that all such records prepared or maintained by FTC relating to the
services to be performed by FTC hereunder are the property of the Trust
and will be preserved, maintained, and made available with such section
and rules of the Investment Company Act and will be promptly surrendered
to the Trust on and in accordance with its request.
XII. Agreement required by Declaration of Trust Binding Only on Trust
Property
FTC understands that the obligations of this Agreement are not binding
upon any shareholder of the Trust personally, but bind only the Trust's
property. FTC 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.
HOTCHKIS AND WILEY VARIABLE TRUST FIRSTAR TRUST COMPANY
By: By:
-------------------------------- -----------------------------------
Attest: Attest:
----------------------------- -------------------------------
6
