SUBSTITUTION AGREEMENT
Agreement, made this 11th day of February, 1998, by and among Palladian
Advisors, Inc. ("PAI"), a Delaware corporation; Allmerica Investment Management
Company, Inc. ("AIMCO"), a Massachusetts corporation; Stonehill Capital
Management, Inc., a Delaware corporation (the "Portfolio Manager"); and The
Palladian Trust (the "Trust"), a Massachusetts business trust.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended ("Act"), and the Trust issues shares in several
different classes, each of which is known as a "Portfolio"; and
WHEREAS, PAI has served as Manager to the Trust pursuant to a Management
Agreement between the Trust and PAI dated October 12, 1995; and
WHEREAS, the Trust and PAI entered into a Portfolio Management Agreement
with the Portfolio Manager, dated October 12, 1995 (the "Portfolio Management
Agreement"), under which the Portfolio Manager currently serves as the Portfolio
Manager for The Growth Portfolio of the Trust; and
WHEREAS, the Trust and PAI have terminated the Management Agreement with
PAI, effective at the close of business on February 11, 1998; and
WHEREAS, commencing February 12, 1998, AIMCO has agreed to serve as
Manager to the Trust pursuant to a new Management Agreement between the Trust
and AIMCO dated February 12, 1998; and
WHEREAS, the Management Agreement between AIMCO and the Trust is subject
to approval by the vote of a majority of the outstanding voting securities of
each Portfolio of the Trust, and a special meeting of shareholders must be held
within a 120-day period after February 11, 1998 for purposes of obtaining such
approval; and
WHEREAS, PAI, the Portfolio Manager, and the Trust desire to substitute
AIMCO as a party to the Portfolio Management Agreement in the place of PAI and
AIMCO desires to be substituted as a party to the Portfolio Management Agreement
in the place of PAI.
Therefore, the parties agree as follows:
1. Substitution of Party. Effective as of February 12, 1998, AIMCO is
hereby substituted as a party to the Portfolio Management Agreement in the place
of PAI. The substitution shall be effective for a period of 120 days after
February 11, 1998,
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and shall be effective thereafter subject to approval of the Management
Agreement between AIMCO and the Trust by the vote of a majority of the
outstanding voting securities of The Growth Portfolio of the Trust at a meeting
of shareholders, which will be held within a 120-day period after February 11,
1998. In the event that shareholders of The Growth Portfolio do not approve the
Management Agreement as provided above, the Portfolio Management Agreement shall
terminate as of the close of business on the 120th day after February 11, 1998.
2. Performance of Duties. As of the effectiveness of the substitution as
described above, AIMCO hereby assumes and agrees to perform all of PAI's duties
and obligations under the Portfolio Management Agreement and be subject to all
of the terms and conditions of said Agreement as if they applied to PAI. AIMCO
shall not be responsible for any claim or demand arising under the Portfolio
Management Agreement from services rendered prior to the effective date of this
Substitution Agreement unless otherwise agreed by AIMCO, and PAI shall not be
responsible for any claim or demand arising under the Portfolio Management
Agreement from services rendered after the effective date of this Substitution
Agreement unless otherwise agreed by PAI.
3. Representation of AIMCO. AIMCO represents and warrants that it is
registered as an investment adviser under the Investment Advisers Act of 1940.
4. Consent. The Trust and the Portfolio Manager hereby consent to this
substitution of AIMCO as a party to the Portfolio Management Agreement in the
place of PAI and the assumption by AIMCO of PAI's interest in such Agreement and
the duties and obligations thereunder, and agree, subject to the terms and
conditions of said Agreement, to look to AIMCO for the performance of the
Manager's duties and obligations under said Agreement after the effective date
as described above.
5. Indemnification By AIMCO. Notwithstanding any limitation of liability
in the Portfolio Management Agreement, AIMCO shall indemnify and hold harmless
the Portfolio Manager, its affiliates and the directors, officers, agents and
employees of the foregoing (each an "Indemnified Person") from all cost, damage
and expense, including reasonable expenses for legal counsel, incurred by an
Indemnified Person as a result of the AIMCO's actions or omissions in performing
its duties under the Portfolio Management Agreement that constitute negligence,
bad faith, breach of trust or fiduciary duty, a material violation of one or
more of the Portfolio Management Agreement, fraud, reckless or intentional
misconduct, or violation of law or regulation. In the event an Indemnified
Person receives a demand, claim or lawsuit relating to the Trust, its shares,
and/or the Agreements, the Indemnified Person shall promptly notify AIMCO and
the Portfolio Manager.
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6. Indemnification By Portfolio Manager. Notwithstanding any limitation of
liability in the Portfolio Management Agreement, the Portfolio Manager shall
indemnify and hold harmless AIMCO, its affiliates and the directors, officers,
agents and employees of the foregoing (each an "Indemnified Person") from all
cost, damage and expense, including reasonable expenses for legal counsel,
incurred by an Indemnified Person as a result of the Portfolio Manager's actions
or omissions in performing its duties under the Portfolio Management Agreement
that constitute negligence, bad faith, breach of trust or fiduciary duty, a
material violation of the Portfolio Management Agreement, fraud, reckless or
intentional misconduct, or violation of law or regulation. In the event an
Indemnified Person receives a demand, claim or lawsuit relating to the Trust,
its shares, and/or the Agreements, the Indemnified Person shall promptly notify
AIMCO and the Portfolio Manager.
7. Notice. Notices shall be in writing and shall be duly given if sent by
first class mail or delivered to the following addresses or to such other
address as shall be specified by a party with proper notice to the other
parties:
If as to AIMCO:
Allmerica Investment Management
Company, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
If as to the Trust:
The Palladian Trust
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
If as to PAI:
Palladian Advisors, Inc.
000 Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: President
If as to the Portfolio Manager:
Stonehill Capital Management, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
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8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
9. Captions. The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Substitution
Agreement to be executed by their duly authorized officers as of the date and
year first written above.
Palladian Advisors, Inc.
/s/ Xxxxx Xxxx By: /s/ H. Xxxxxxx Xxxxxxxx
---------------------------- ----------------------------------
Witness H. Xxxxxxx Xxxxxxxx
President
Allmerica Investment Management
Company, Inc.
/s/ Xxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------- ----------------------------------
Witness
Vice President
----------------------------------
Title
Stonehill Capital Management, Inc.
/s/ By: /s/ Xxxxxx X. Xxxxxxx
---------------------------- ----------------------------------
Witness President
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Title
The Palladian Trust
/s/ Xxxxxxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------------- ----------------------------------
Witness Xxxxxxx X. Xxxxxx
Trustee
