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Exhibit d (1)
HOTCHKIS AND WILEY VARIABLE TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of February, 1998, by and between HOTCHKIS
AND WILEY VARIABLE TRUST, a Massachusetts business trust (the "Trust"), on
behalf of the Equity Income VIP Series (the "Portfolio"), 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 intends to operate as an
investment company registered under the Investment Company Act of 1940 ("1940
Act") and is currently comprised of four series, one of which is the Portfolio;
and each series will engage 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 Portfolio's initial
shareholder 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 Portfolio and to supervise and arrange the purchase and sale of
securities held in the portfolio of the Portfolio.
2. DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO
INVESTMENT OF ASSETS OF THE PORTFOLIO
(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
Portfolio and when; and
(ii) Arrange for the purchase and the sale of
securities or other assets held in the portfolio of
the Portfolio by placing purchase and sale orders for
the Trust with respect to the Portfolio.
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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 Portfolio, as reflected in the
Trust's Registration Statement under the 1940 Act, or as
amended by the shareholders of the Portfolio.
(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 Portfolio, 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 Portfolio on a continuing basis. Accordingly, the price to the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio not
expressly assumed by the Advisor under this Agreement shall be paid by the Trust
from the assets of the Portfolio, 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
Portfolio'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 Portfolio; (ix)
expenses of preparing, printing and mailing reports and notices and proxy
materials to shareholders of the Portfolio; (x) all other expenses incident to
holding meetings of the Portfolio'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
Portfolio agree to bear in any distribution agreement or in any plan adopted by
the Trust and/or the Portfolio pursuant to Rule 12b-1 under the 1940 Act.
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5. COMPENSATION OF THE ADVISOR
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 Portfolio as of the close of business each business day, at the
annual rate of .75%.
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 February 1, 2000, 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 Portfolio 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. USE OF ADVISOR'S NAME
The Trust may use the name "Hotchkis and Wiley Variable Trust" or any
name including the words "Hotchkis and Wiley" only for so long as this Agreement
or any other advisory agreement relating to the Trust is in effect. If the
Agreement or any other advisory agreement relating to the Trust is no longer in
effect, the Trust will (to the extent that it lawfully can) cease to use such a
name or any other name indicating that it is advised by or otherwise connected
with the Advisor, or any organization that shall have succeeded to the Advisor's
business. In no event shall the Trust use the name "Hotchkis and Wiley Variable
Trust" or any name including the words "Hotchkis and Wiley" if the Advisor's
function is transferred or assigned to a company over which Xxxxxxx Xxxxx & Co.,
Inc. does not have control.
8. AGREEMENT BINDING ONLY ON TRUST 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
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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 VARIABLE TRUST
By /s/ Xxxxx X. Xxxxxx
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ATTEST:
/s/ Xxxx Xxxxx Xxxxx
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HOTCHKIS AND WILEY, a
division of the Capital
Management Group of Xxxxxxx
Xxxxx Asset Management, L.P.
By /s/ Xxxxx X. Xxxxxx
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ATTEST:
/s/ Xxxx Xxxxx Xxxxx
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