Exhibit 2 to XXX Xx. 00 (filed September 2, 1999)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 8th day of March 1999, between Geewax, Terker & Co., a
Pennsylvania partnership ("Portfolio Manager") and THE XXXXXX XXXXXXXXX TRUST, a
Delaware business trust ("Trust").
WHEREAS, the Trust is registered as an open-end, diversified, management series
investment company under the Investment Company Act of 1940, as amended
("Investment Company Act") which currently offers seven series of beneficial
interests ("shares") representing interests in separate investment portfolios,
and may offer additional portfolios in the future; and
WHEREAS, the Trust desires to retain the Portfolio Manager to provide a
continuous program of investment management for The Value Equity Portfolio of
the Trust ("Portfolio") and Portfolio Manager is willing, in accordance with the
terms and conditions hereof, to provide such services to the Trust;
NOW THEREFORE, in consideration of the promises and covenants set forth herein
and intending to be legally bound hereby, it is agreed between the parties as
follows:
1. Appointment of Portfolio Manager.
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(a) The Trust hereby retains Portfolio Manager to provide the investment
services set forth herein and Portfolio Manager agrees to accept such
appointment. In carrying out its responsibilities under this Agreement, the
Portfolio Manager shall at all times act in accordance with the investment
objectives, policies and restrictions applicable to the Portfolio as set forth
in the then current Registration Statement of the Trust, applicable provisions
of the Investment Company Act and the rules and regulations promulgated under
that Act and other applicable federal securities laws.
(b) The Trust further agrees that it will provide to Portfolio Manager a copy of
the agreement between the Trust=s custodian bank and the Trust and will take
such actions as may be necessary to assure that such custodian bank will accept
instruction from the Portfolio Manager with respect to that portion of the
assets of the Portfolio ("Account") that may, from time to time be allocated to
it by the Trust's Board of Trustees.
2. Duties of Portfolio Manager.
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(a) Portfolio Manager shall provide a continuous program of investment
management for the Account. It is understood that the Account may consist of
all, a portion of or none of the assets of the Portfolio, and that the Board of
Trustees has the right to allocate and reallocate such assets to the Account at
any time, and from time to time, upon such notice to the Portfolio Manager as
may be reasonably necessary, in the view of the Trust, to ensure orderly
management of the Account or the Portfolio.
(b) Subject to the general supervision of the Trust's Board of Trustees,
Portfolio Manager shall have sole investment discretion with respect to the
Account, including investment research, selection of the securities to be
purchased and sold and the portion of the Account, if any, that shall be held
uninvested, and the selection of brokers and dealers through which securities
transactions in the Account shall be executed. Specifically, and without
limiting the generality of the foregoing, Portfolio Manager agrees that it will:
(i) promptly advise the Portfolio's designated custodian bank and
administrator or accounting agent of each purchase and sale, as the case may be,
made on behalf of the Account, specifying the name and quantity of the security
purchased or sold, the unit and aggregate purchase or sale price, commission
paid, the market on which the transaction was effected, the trade date, the
settlement date, the identity of the effecting broker or dealer and/or such
other information, and in such manner, as may from time to time be reasonably
requested by the Trust;
(ii) maintain all applicable books and records with respect to the
securities transactions of the Account. Specifically, Portfolio Manager agrees
to maintain with respect to the Account those records required to be maintained
under Rule 31a-1(b)(1), (b)(5) and (b)(6) under the Investment Company Act with
respect to transactions in the Account including, without limitation, records
which reflect securities purchased or sold in the Account, showing for each such
transaction, the name and quantity of securities, the unit and aggregate
purchase or sale price,
commission paid, the market on which the transaction was effected, the trade
date, the settlement date, and the identity of the effecting broker or dealer.
Portfolio Manager will preserve such records in the manner and for the periods
prescribed by Rule 31a-2 under the Investment Company Act. Portfolio Manager
acknowledges and agrees that all records it maintains for the Trust are the
property of the Trust and Portfolio Manager will surrender promptly to the Trust
any such records upon the Trust's request;
(iii) provide, in a timely manner, such information as may be reasonably
requested by the Trust or its designated agents in connection with, among other
things, the daily computation of the Portfolio's net asset value and net income,
preparation of proxy statements or amendments to the Trust's registration
statement and monitoring investments made in the Account to ensure compliance
with the various limitations on investments applicable to the Portfolio and to
ensure that the Portfolio will continue to qualify for the special tax treatment
accorded to regulated investment companies under Subchapter M of the Internal
Revenue Code of 1986, as amended; and
(iv) render regular reports to the Trust concerning the performance of
Portfolio Manager of its responsibilities under this Agreement. In particular,
Portfolio Manager agrees that it will, at the reasonable request of the Board of
Trustees, attend meetings of the Board or its validly constituted committees and
will, in addition, make its officers and employees available to meet with the
officers and employees of the Trust at least quarterly and at other times upon
reasonable notice, to review the investments and investment program of the
Account.
3. Portfolio Transaction and Brokerage.
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In placing orders for portfolio securities with brokers and dealers, Portfolio
Manager shall use its best efforts to execute securities transactions on behalf
of the Account in such a manner that the total cost or proceeds in each
transaction is the most favorable under the circumstances. Portfolio Manager
may, however, in its discretion, direct orders to brokers that provide to
Portfolio Manager research, analysis, advice and similar services, and Portfolio
Manager may cause the Account to pay to those brokers a higher commission than
may be charged by other brokers for similar transactions, provided that
Portfolio Manager determines in good faith that such commission is reasonable in
terms either of the particular transaction or of the overall responsibility of
the Portfolio Manager to the Account and any other accounts with respect to
which Portfolio Manager exercises investment discretion, and provided further
that the extent and continuation of any such practice is subject to review by
the Trust's Board of Trustees. Portfolio Manager shall not execute any portfolio
transactions for the Trust with a broker or dealer which is an "affiliated
person" of the Trust or Portfolio Manager, including any other investment
advisory organization that may, from time to time act as a portfolio manager for
the Portfolio or any of the Trust's other Portfolios, without prior written
approval of the Trust. The Trust shall provide a list of such affiliated brokers
and dealers to Portfolio Manager and will promptly advise Portfolio Manager of
any changes in such list.
4. Expenses and Compensation.
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Portfolio Manager shall pay all of its expenses incurred in the performance of
its duties under this Agreement and shall not be required to pay any other
expenses of the Trust. For its services under this Agreement, Portfolio Manager
shall be entitled to receive a fee at the annual rate of .30% of the average
daily net asset value of the Account, which fee shall be payable monthly.
5. Limitation of Liability and Indemnification.
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(a) Portfolio Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust in connection with the matters to
which this Agreement relates including, without limitation, losses that may be
sustained in connection with the purchase, holding, redemption or sale of any
security or other investment by the Trust except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of Portfolio Manager in
the performance of its duties or from reckless disregard by it of its duties
under this Agreement.
(b) Notwithstanding the foregoing, Portfolio Manager expressly agrees that the
Trust may rely upon information provided, in writing, by Portfolio Manager to
the Trust (including, without limitation, information contained in Portfolio
Manager's then current Form ADV) in accordance with Section 9 of the Agreement
or otherwise, in preparing the Trust's registration statement and amendments
thereto and certain periodic reports relating to the Trust and its Portfolios
that are required to be furnished to shareholders of the Trust and/or filed with
the Securities and Exchange Commission ("SEC Filings"), provided that a copy of
any such filing is provided to Portfolio Manager (i) at least 10 business days
prior to the date on which it will become effective, in the case of a
registration statement;
(ii) at least 10 business days prior to the date upon which it is filed with the
SEC in the case of the Trust=s semi-annual report on Form N-SAR or any
shareholder report or proxy statement.
(c) Portfolio Manager agrees to indemnify and hold harmless the Trust and each
of its Trustees, officers and employees from any claims, liabilities and
expenses, including reasonable attorneys' fees, (collectively, ALosses@) to the
extent that Losses are incurred as a result of statements contained in an SEC
Filing (ADisputed Statements@) that are misleading either because they are (i)
untrue statements of material fact; or (ii) omitted to state any material fact
necessary in order to make the statements made, in the light of the
circumstances under which they are made, not misleading. For purposes of the
indemnification obligation set forth in this Section 5(c), a Disputed Statement
will be deemed misleading if so declared by a decision of a court or
administrative law judge or in an order of settlement issued by any court or
administrative body.
(d) Portfolio Manager further agrees to indemnify and hold harmless the Trust
and each of its Trustees, from any Losses to the extent that such Losses are
incurred as a result of Disputed Statements that are alleged (i) to be untrue
statements of material fact; or (ii) to have omitted to state any material fact
necessary in order to make the statements made, in the light of the
circumstances under which they are made, provided that the indemnification
obligation set forth in this Section 5(d) is expressly limited to Losses arising
from Disputed Statements that accurately reflect information provided to the
Trust in writing by the Portfolio Manager and that cannot be independently
verified by the Trust. Further, the indemnification set forth in this Section
5(d) will not require reimbursement of fees or expenses other than those
incurred by the Trust's regular counsel in connection with such counsel's
representation of the Trust or its Trustees.
(e) The indemnification obligations set forth in Sections 5(c) and (d) shall not
apply unless (i) Disputed Statements accurately reflect information provided to
the Trust in writing by the Portfolio Manager; (ii) Disputed Statements were
included in an SEC Filing in reliance upon written information provided to the
Trust by the Portfolio Manager; (iii) the Portfolio Manager was afforded the
opportunity to review Disputed Statements in connection with the 10 business day
review requirement set forth in Section 5(b) above; and (iv) upon receipt by the
Trust of any notice of the commencement of any action or the assertion of any
claim to which the indemnification obligations set forth in Section 5(c) and (d)
may apply, the Trust notifies the Portfolio Manager, within 30 days and in
writing, of such receipt and provides to Portfolio Manager the opportunity to
participate in the defense and/or settlement of any such action or claim.
Further, Portfolio Manager will not be required to indemnify any person under
this Section 5 to the extent that Portfolio Manager relied upon statements or
information furnished to the Portfolio Manager, in writing, by any officer,
employee or Trustee of the Trust, or by the Trust's Custodian, Administrator or
Accounting Agent or any other agent of the Trust, in preparing written
information provided to the Trust and upon which the Trust relied in preparing
any Disputed Statement.
6. Permissible Interest.
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Subject to and in accordance with the Trust's Declaration of Trust and By-laws
and corresponding governing documents of Portfolio Manager, Trustees , officers,
agents and shareholders of the Trust may have an interest in the Portfolio
Manager as officers, directors, agents and/or shareholders or otherwise.
Portfolio Manager may have similar interests in the Trust. The effect of any
such interrelationships shall be governed by said governing documents and the
provisions of the Investment Company Act.
7. Duration, Termination and Amendments.
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This Agreement shall become effective as of the date on which that certain
agreement between Hotchkis & Wiley and the Trust is terminated ("Effective
Date") and shall continue in effect thereafter, unless sooner terminated, for
two years provided that this Agreement is approved by the shareholders of the
Portfolio on or before the 120th day after such Effective Date. Thereafter, this
Agreement shall continue in effect, unless sooner terminated, from year to year
for so long as its continuance is specifically approved, at least annually, by
(i) a majority of the Board of Trustees or the vote of the holders of a majority
of the Portfolio's outstanding voting securities; and (ii) the affirmative vote,
cast in person at a meeting called for the purpose of voting on such
continuance, of a majority of those members of the Board of Trustees
("Independent Trustees ") who are not "interested persons" of the Trust or any
investment adviser to the Trust.
This Agreement may be terminated by the Trust or by Portfolio Manager at any
time and without penalty upon sixty days written notice to the other party,
which notice may be waived by the party entitled to it. This Agreement may not
be amended except by an instrument in writing and signed by the party to be
bound thereby provided that if the Investment Company Act requires that such
amendment be approved by the vote of the Board, the Independent Trustees and/or
the holders of the Trust's or the Portfolio's outstanding shareholders, such
approval must be obtained before any such amendment may become effective. This
Agreement shall terminate automatically upon its assignment.
For purposes of this Agreement, the terms "majority of the outstanding voting
securities," "assignment, " "affiliated person" and "interested person" shall
have the meanings set forth in the Investment Company Act.
8. Confidentiality; Use of Name.
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Portfolio Manager and the Trust acknowledge and agree that during the term of
this Agreement the parties may have access to certain information that is
proprietary to the Trust or Portfolio Manager, respectively (or to their
affiliates and/or service providers). The parties agree that their respective
officers and employees shall treat all such proprietary information as
confidential and will not use or disclose information contained in, or derived
from such material for any purpose other than in connection with the carrying
out of their responsibilities under this Agreement and the management of the
Trust's assets, provided, however, that this shall not apply in the case of (i)
information that is publicly available; and (ii) disclosures required by law or
requested by any regulatory authority that may have jurisdiction over Portfolio
Manager or the Trust, as the case may be, in which case such party shall request
such confidential treatment of such information as may be reasonably available.
In addition, each party shall use its best efforts to ensure that its agents or
affiliates who may gain access to such proprietary information shall be made
aware of the proprietary nature and shall likewise treat such materials as
confidential.
It is acknowledged and agreed that the names "Xxxxxx Xxxxxxxxx," "Xxxxxx
Xxxxxxxxx Chief Investment Officers" (which is a registered trademark of Xxxxxx
Xxxxxxxxx & Co., Inc. ("HCCI")), and derivative of either, as well as any logo
that is now or shall later become associated with either name ("Marks") are
valuable property of HCCI and that the use of the Marks, or any one of them, by
the Trust or its agents is subject to the license granted to the Trust by HCCI.
Portfolio Manager agrees that it will not use any Xxxx without the prior written
consent of the Trust. Portfolio Manager consents to use of its name, performance
data, biographical data and other pertinent data by the Trust for use in
marketing and sales literature, provided that any such marketing and sales
literature shall not be used by the Trust without the prior written consent of
Portfolio Manager, which consent shall not be unreasonably withheld. The
provisions of this Section 8 shall survive termination of this Agreement.
9. Representation, Warranties and Agreements of Portfolio Manager.
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Portfolio Manager represents and warrants that:
(a) It is registered as an investment adviser under the Investment Advisers Act
of 1940 ("Investment Advisers Act"), it will maintain such registration in full
force and effect and will promptly report to the Trust the commencement of any
formal proceeding that could render the Portfolio Manager ineligible to serve as
an investment adviser to a registered investment company under Section 9 of the
Investment Company Act.
(b) It understands that, as a result of its services hereunder, certain of its
employees and officers may be deemed "access persons" of the Trust within the
meaning of Rule 17j-1 under the Investment Company Act and that each such access
person is subject to the provisions of the code of ethics ("Trust's Code")
adopted by the Trust in compliance with such rule. Portfolio Manager further
represents that it is subject to a written code of ethics ("Portfolio Manager's
Code") complying with the requirements of Rule 204-2(a)(12) under the Investment
Advisers Act and will provide the Trust with a copy of such code of ethics.
During the period that this Agreement is in effect, an officer or director of
Portfolio Manager shall certify to the Trust, on a quarterly basis, that
Portfolio Manager has complied with the requirements of the Portfolio Manager's
Code during the prior year; and that either (i) that no violation of such code
occurred or (ii) if such a violation occurred, that appropriate action was taken
in response to such violation. In addition, Portfolio Manager acknowledges that
the Trust may, in response to regulations or recommendations issued by the
Securities and Exchange Commission or other regulatory agencies, from time to
time, request additional information regarding the personal securities trading
of its directors, partners, officers and
employees and the policies of Portfolio Manager with regard to such trading.
Portfolio Manager agrees that it make every effort to respond to the Trust's
reasonable requests in this area.
(c) Upon request of the Trust, Portfolio Manager shall promptly supply the Trust
with any information concerning Portfolio Manager and its stockholders,
employees and affiliates that the Trust may reasonably require in connection
with the preparation of its registration statements, proxy materials, reports
and other documents required, under applicable state or Federal laws, to be
filed with state or Federal agencies or to be provided to shareholders of the
Trust.
(d) The Portfolio Manager shall promptly notify the Trust, in writing, of any
material change in the senior management or the identity of the Portfolio
Manager=s partners and of any change in the identity of those individuals within
the Portfolio Manager=s organization who are responsible for making investment
decisions on behalf of the Account. Portfolio Manager shall also promptly notify
the Trust of any material change in the nature of Portfolio Manager=s principal
business activities.
10. Status of Portfolio Manager.
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The Trust and Portfolio Manager acknowledge and agree that the relationship
between Portfolio Manager and the Trust is that of an independent contractor and
under no circumstances shall any employee of Portfolio Manager be deemed an
employee of the Trust or any other organization that the Trust may, from time to
time, engage to provide services to the Trust, its Portfolios or its
shareholders. The parties also acknowledge and agree that nothing in this
Agreement shall be construed to restrict the right of Portfolio Manager or its
affiliates to perform investment management or other services to any person or
entity, including without limitation, other investment companies and persons who
may retain Portfolio Manager to provide investment management services and the
performance of such services shall not be deemed to violate or give rise to any
duty or obligations to the Trust.
11. Counterparts and Notice.
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This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original. Any notice required to be given under this
Agreement shall be deemed given when received, in writing addressed and
delivered, by certified mail, by hand or via overnight delivery service as
follows:
If to the Trust:
Xx. Xxxxxx X. Xxxxxxxxx, President
The Xxxxxx Xxxxxxxxx Trust
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
If to Portfolio Manager:
Xxxx Xxxxxx
Geewax Terker & Co.
00 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
12. Miscellaneous.
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The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by the law of the state of Delaware provided
that nothing herein shall be construed as inconsistent with the Investment
Company Act or the Investment Advisers Act.
Portfolio Manager is hereby expressly put on notice of the limitations of
shareholder and Trustee liability set forth in the Declaration of Trust of the
Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the assets of The Limited Duration
Municipal Bond Portfolio. Portfolio Manager further agrees that it will not seek
satisfaction of any such obligations from the shareholders or any individual
shareholder of the Trust, or from the Trustees of the Trust or any individual
Trustee of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers thereunto duly authorized as of the day and year first written
above.
Geewax, Terker & Co.
The Xxxxxx Xxxxxxxxx Trust
(on behalf of The Value Equity Portfolio)
