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Exhibit 99.B5(a)
HOTCHKIS AND WILEY VARIABLE TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this______ day of______, 1997, 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 three 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
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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 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 _________, 1999, 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.
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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 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___________________________
ATTEST:
______________________________
HOTCHKIS AND WILEY, a division of the
Capital Management Group of Xxxxxxx
Xxxxx Asset Management, L.P.
By___________________________
ATTEST:
_______________________________
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