-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MhEmRuF06wobx4Lw4FS7iqyd0JCPmgDPVf8WNkh29qbgyylw/nzTxC3Wf2CRWudD dfCYfmTtSup2Ol69KIvNYg== 0000928121-96-000011.txt : 19960919 0000928121-96-000011.hdr.sgml : 19960919 ACCESSION NUMBER: 0000928121-96-000011 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960918 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DUCKWALL ALCO STORES INC CENTRAL INDEX KEY: 0000030302 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 480201080 STATE OF INCORPORATION: KS FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43827 FILM NUMBER: 96631610 BUSINESS ADDRESS: STREET 1: 401 COTTAGE STREET CITY: ABILENE STATE: KS ZIP: 67410-0129 BUSINESS PHONE: 9132633350 MAIL ADDRESS: STREET 1: DUCKWALL ALCO STORES INC STREET 2: 401 COTTAGE CITY: ABILENE STATE: KS ZIP: 67410 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PACHOLDER ASSOCIATES INC CENTRAL INDEX KEY: 0000928121 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 311089398 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 8044 MONTGOMERY RD STE 382 CITY: CINCINNATI STATE: OH ZIP: 45236 BUSINESS PHONE: 5139853200 MAIL ADDRESS: STREET 1: 8044 MONTGOMERY RD STE 382 CITY: CINCINNATI STATE: OH ZIP: 45236 SC 13D/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________ SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 Duckwall-Alco Stores, Inc. - ---------------------------------- (NAME OF ISSUER) Common Stock, par value $.01 per share - ---------------------------------- (TITLE OF CLASS OF SECURITIES) 264142100 - ---------------------------------- (CUSIP NUMBER) Mr. Robert L. Woodard Kansas Public Employees Retirement System 400 SW 8th, Suite 200 Topeka, KS 66603-3925 (913) 296-6666 Mr. William J. Morgan Pacholder Associates, Inc. 8044 Montgomery Road, Suite 382 Cincinnati, OH 45236 (513) 985-3200 Mr. Brian P. Murphy Portfolio Advisors, Inc. 2701 Summer Street, Suite 200 Stamford, CT 06905 (203) 363-2270 - ---------------------------------- (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS) August 7, 1996; September 16, 1996 (DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ] . Check the following box if a fee is being paid with this statement [ ] . 1. NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Kansas Public Employees Retirement System; IRS Tax ID #48-0944170 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS* 00 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] Not Applicable 6. CITIZENSHIP OR PLACE OF ORGANIZATION State of Kansas 7. SOLE VOTING POWER None 8. SHARED VOTING POWER 1,171,337 9. SOLE DISPOSITIVE POWER None 10. SHARED DISPOSITIVE POWER 1,171,337 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,171,337 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] Not Applicable 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 29.3% (27.9% on a fully-diluted basis) 14. TYPE OF REPORTING PERSON* EP 1. NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS K.D.F. a Massachusetts Nominee Partnership; IRS Tax ID #48-0930440 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS* 00 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] Not Applicable 6. CITIZENSHIP OR PLACE OF ORGANIZATION State of Massachusetts 7. SOLE VOTING POWER None 8. SHARED VOTING POWER None 9. SOLE DISPOSITIVE POWER None 10. SHARED DISPOSITIVE POWER None 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] Not Applicable 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% 14. TYPE OF REPORTING PERSON* PN 1. NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Pacholder Associates, Inc.; IRS Tax ID #31-1089398 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS* 00 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] Not Applicable 6. CITIZENSHIP OR PLACE OF ORGANIZATION State of Ohio 7. SOLE VOTING POWER None 8. SHARED VOTING POWER 1,171,337 9. SOLE DISPOSITIVE POWER None 10. SHARED DISPOSITIVE POWER 1,171,337 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,171,337 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] Not Applicable 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 29.3% (27.9% on a fully-diluted basis) 14. TYPE OF REPORTING PERSON* IA, CO 1. NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Portfolio Advisors, Inc.; IRS Tax ID #06-1393720 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] 3. SEC USE ONLY 4. SOURCE OF FUNDS* 00 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] Not Applicable 6. CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware 7. SOLE VOTING POWER None 8. SHARED VOTING POWER 1,171,337 9. SOLE DISPOSITIVE POWER None 10. SHARED DISPOSITIVE POWER 1,171,337 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,171,337 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] Not Applicable 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 29.3% (27.9% on a fully-diluted basis) 14. TYPE OF REPORTING PERSON* IA, CO This Statement on Schedule 13D is a joint filing by the Kansas Public Employees Retirement System ("KPERS"), K.D.F, a Massachusetts Nominee Partnership ("KDF"), Pacholder Associates, Inc. ("PAI") and Portfolio Advisors, Inc. ("Portfolio"). This filing is an amendment to an original joint filing dated August 1, 1992 by KPERS, K.D.F., a Kansas General Partnership ("Former KDF"), PAI and Morris Anderson Investment Advisors, Inc. ("MAIA"). Item 1. Security and Issuer This Schedule 13D relates to the common stock of Duckwall- Alco Stores, Inc. (the "Company"), par value $.01 per share. The address of the Company's principal office is 401 Cottage Street, Abilene, Kansas 67410. Item 2. Identity and Background (a-c,f) This Schedule 13D is filed by KPERS, KDF, PAI and Portfolio. KPERS is an instrumentality of the State of Kansas with a business address of 400 Southwest Eighth Avenue, Suite 200, Topeka, KS 66603-3925. KPERS is an umbrella organization which administers funds for members of participating public employers to provide for their retirement, death or termination of employment. KDF is a nominee partnership, acting by and on behalf of KPERS as its nominee. KDF's address is c/o Boston Safe Deposit & Trust Co., One Cabot Road, Medford, MA 02155. The business address of KDF's partners is the same as that of KDF. PAI is a corporation organized under the laws of the State of Ohio and its business address is Bank One Towers, 8044 Montgomery Road, Suite 382, Cincinnati, OH 45236. PAI is engaged in business as a registered investment advisor. Portfolio is a corporation organized under the laws of the State of Delaware and its business address is 760 Hopmeadow Street, P.O. Box 689, Simsbury CT 06070-0689. Portfolio is engaged in business to render investment advisory services. Pursuant to an Investment Advisory Agreement (the "Agreement") dated August 7, 1996 between KPERS, PAI, and Portfolio (attached as Schedule A), PAI and Portfolio are responsible for managing KPERS' investment in the Company. Under the terms of the Agreement, KPERS, PAI and Portfolio have shared voting and dispositive power over securities beneficially owned by KPERS and held of record by KDF, a nominee without dispositive powers. (d) During the last five years neither KPERS, KDF, PAI and Portfolio, nor any of their officers, partners, directors or trustees have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years neither KPERS, KDF, PAI nor Portfolio, nor any of their officers, partners, directors or trustees were a party to a civil proceeding as a result of which a judgment or final order was entered enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws. Item 3. Source and Amounts of Funds and Other Consideration No funds have been used in the acquisition of beneficial ownership by the parties since the reorganization on May 29, 1991 (see Item 4 below). Item 4. Purpose of Transaction PAI acts as an advisor to KPERS in its voting, acquisition, or sale of securities of the Company. Pursuant to a five-for- two stock split effected on June 9, 1994, KPERS' ownership position was increased to 1,171,337 shares. Pursuant to an initial public offering of the Company's common stock on November 4, 1994, KPERS ownership percentage was reduced to 29.3% (27.9% on a fully-diluted basis). As a result of its significant ownership position, KPERS holds two seats on the Company's Board of Directors. PAI, Portfolio and KPERS are presently contemplating the sale of 171,337 common shares of the Company owned by KPERS in connection with a planned public offering by the Company. Final determination to sell such common shares is subject to general economic and stock market conditions and certain minimum offering price requirements for the Company's common stock. Except as mentioned above, PAI, Portfolio and KPERS have no plans or proposals which relate to or would result in any of the following. (a) The acquisition or disposition of the securities of the Company; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) Any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the Company; (f) Any other material change in the Company's business or corporate structure; (g) Changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition or control of the issues by any person; (h) Causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar to any of those enumerated above. Item 5. Interest in Securities of the Company (a) Pursuant to the Agreement, KPERS, PAI and Portfolio must jointly agree on any voting or dispositive action on securities beneficially owned by KPERS. Currently, KPERS, PAI and Portfolio beneficially own 1,171,337 common shares, or 29.3% of all issued and outstanding common shares. This represents 27.9% ownership on a fully-diluted basis. (b) KPERS, PAI and Portfolio share the power pursuant to the Agreement (i) to cause KDF to dispose of the 1,171,337 common shares; and (ii) to vote any common shares currently owned. (c) None. (d) None. (e) None. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer Information respective to Item 6 is set forth in Item 2 above. Item 7. Material to be Filed as Schedules Schedule Number Title of Document A. Investment Advisory Agreement SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM September 17, 1996 Date /s/Robert L. Woodard Signature Chief Investment Officer Title KDF, A MASSACHUSETTS NOMINEE PARTNERSHIP September 17, 1996 Date /s/Maria Serra Signature General Partner Title PACHOLDER ASSOCIATES, INC. September 17, 1996 Date /s/William J. Morgan Signature President Title PORTFOLIO ADVISORS, INC. September 17, 1996 Date /s/Brian P. Murphy Signature Director Title EX-99 2 SCHEDULE A Kansas Public Employees Retirement System Capitol Tower . Suite 2OO . 400 S.W. Eighth Ave. Topeka, Kansas 66603-3925 . Phone (913) 296-6666 KPERS Telephone Facsimile (913) 296-2422 Call Toll Free 1-800-228-0366 August 7,1996 INVESTMENT ADVISORY AGREEMENT Pacholder Associates, Inc. Portfolio Advisors, Inc. Towers of Kenwood 760 Hopmeadow Street 8044 Montgomery Road,Ste 382 Post Office Box 689 Cincinnati, Ohio 45236 Simsbury, Connecticut 06070-0689 Gentlemen: This confirms our agreement, effective August 7, 1996, pursuant to which the Kansas Public Employees Retirement System, an instrumentality of the State of Kansas ("Client"), will retain Pacholder Associates, Inc., an Ohio Corporation, and Portfolio Advisors, Inc., a Delaware Corporation (collectively "Advisors"), to provide an investment advisory service. 1. Retention. On the terms and conditions hereinafter set forth, Client hereby retains Advisors to act as investment advisors for any assets held in Client's account with Advisors and all additions, earnings, proceeds and substitutions credited thereto and not withdrawn (collectively, such assets are hereinafter referred to as "the Portfolio"). These assets exclude all investments in limited partnerships, with the exceptions of Northrac Partners, L.P., Research Capital Management Group I and II, Forbes Industrial Park, L.P., Fountain C.B.O. Partners, L.P., CommTech Technology Partners IV, CommTech International Partners, and CTP-lV Annex Partners. Each Advisor hereby accepts such appointment and agrees to provide such services on the terms and conditions hereinafter set forth. 2. Authority. It is agreed by the parties that all substantive actions involving an investment in the portfolio including, without limitation, follow-on or add-on investments, sales, restructuring, U.C.C. filings or releases, exchange, and proxy voting must be approved in writing by an authorized representative of the Client and each Advisor (the "Three Party Approval Process"). Advisors' actions in managing the portfolio shall be governed, where applicable, by the guidelines contained in Client's current Statement of Investment Policy, Objectives and Guidelines which by this reference is incorporated herein and made a part hereof. Advisors are authorized to issue instructions to Client's Custodian and other parties relating to the Portfolio and to execute any documents which they deem appropriate in the management of the Portfolio. Advisors are authorized to retain attorneys, accountants, consultants, brokers, dealers and other persons ("Professionals") as they deem appropriate in the management of the Portfolio; provided, however, that Advisor receives prior written approval from Client for the terms of such retention, including the specific professionals involved in the project, the nature and extent of services to be provided and the compensation arrangements. In addition, at any time and from time to time, Client may direct Advisors to purchase or sell specific assets in the Portfolio. The Advisors are authorized to meet with officers and representatives of the companies in which the Portfolio holds investments and to accept appointment to the board of directors (or other governing body) of such companies, it being Client's intention that the Advisors will actively manage the assets in the Portfolio. 3. Brokerage Services. Advisors may place orders for the execution of transactions with or through such brokers, dealers, banks or other agents as Advisors may select and, complying with Section 28(e) of the Securities Exchange Act of 1934, may pay a commission on transactions in excess of the amount of commission another broker or dealer would have charged. However, in all cases, Advisors will make a reasonable attempt to execute each transaction at the best available price and execution in consideration of services made available for the benefit of the Client. 4. Representations. By Advisors. Each Advisor represents that it has complied with all requirements under state and federal laws to enable it to undertake the responsibilities described in this Agreement. Advisors will furnish, at Client's request, true copies of all governing documents. By Client. Client represents and warrants that the employment of Advisors pursuant to this Agreement is authorized, that the terms hereof do not violate any instrument or obligation by which Client is bound, that this Agreement has been duly authorized by appropriate action, and that when executed and delivered this Agreement will be binding upon Client in accordance with its terms. 5. Transaction Procedures. All transactions will be consummated by payment to, or delivery to, Client or such other party as Client may designate in writing (the "Custodian"). of all cash and/or securities due to or from the Portfolio. Advisors will not act as Custodian for the Portfolio, but will issue such instructions to Client and/or the Custodian as may be appropriate in connection with the settlement of transactions initiated by Advisors pursuant to Section 1 hereof. Instructions of Advisors to Client and/or the Custodian shall be made in writing sent by first-class mail, or, at the option of Advisors, orally and confirmed in writing as soon as practical thereafter, and Advisors will instruct all brokers, dealers and issuers executing orders on behalf of the Portfolio to forward to Client and/or the Custodian copies of all confirmations. Advisors will not be responsible for any loss incurred by reason of any act or omission of any broker, dealer or issuer or the Custodian; provided, however, that Advisors will make reasonable efforts to require that brokers, dealers and issuers selected by Advisors perform their obligations with respect to the Portfolio. In addition, Client will be responsible for brokerage commissions, taxes and any other normal and customary transaction related fees. 6. Reports. Advisors shall provide to Client at least monthly a written inventory of the Portfolio, based on information provided to Advisors by the Custodian, and a summary of all transactions in the portfolio, and shall provide such other reports and data and shall attend such meetings as Client reasonably may request. Advisors shall provide Client with timely notice of changes in professional staff involved in the management of the Portfolio. In the event of the resignation or other departure of a professional staff member, Advisors shall provide Client with a proposed reassignment of staff portfolio responsibilities. Client will provide, or instruct the Custodian to provide, Advisors with such information concerning security transactions and the status of the Portfolio as Advisors reasonably may request. 7. Inside Information. Advisors will have no obligation to seek or obtain any material non-public ("inside") information about any issuer of securities, or to purchase or sell, or to recommend for purchase or sale, for the Portfolio, the securities of any issuer on the basis of any such information as may come into its possession. 8. Fees. Client shall pay each Advisor a monthly fee of $56.000.00. Client shall pay such fee to each Advisor monthly in arrears by the fifth tenth business day after the receipt of an invoice from the Advisor. The parties understand and agree that the fees provided in this paragraph are subject to appropriation limits as enacted by the Kansas legislature. 9. Out-of-Pocket Expenses. Client shall have no obligation to reimburse Advisors for expenses incurred in connection with this Agreement other than the fees and expenses of Professionals and Litigation Counsel retained by Advisors pursuant to Sections 2 and 18 of this Agreement. Upon receipt of a detailed invoice from Advisors, Client shall reimburse Advisors promptly for such fees and expenses which have received prior approval and have been paid by Advisors or shall pay directly to such Professionals or Litigation Counsel such fees and expenses which have not been paid by Advisors. 10. Conflicts of Interest. Neither the Advisors nor any of its affiliates shall acquire any direct or indirect interest in or receive any compensation from any of the entities whose nonpublicly traded securities are held in the Portfolio. In addition, each Advisor has agreed that it will provide Client with written disclosure of contacts it may have or have had with the companies represented in the Portfolio or with other parties affiliated with or involved with such issuers, as and to the extent that the officers of the Advisors who are directly involved with managing the Portfolio become aware of such contacts. 11. Liability of Advisor. Advisors acknowledge that they act in a Fiduciary capacity toward the Client in performing their duties under this Agreement. Neither Advisor shall be subject to liability for any act, omission, or mistake of judgment in connection with providing the investment advisory services described in this Agreement unless such act, omission, or mistake of judgment is the result of Advisor's failure to act with the judgment, care, skill, prudence and diligence under the circumstances then prevailing which persons of prudence, discretion and intelligence acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims (the "Prudent Expert Standard"). An Advisor will be deemed to have acted in accordance with the Prudent Expert Standard if, in acting or omitting to act, it is following specific written instructions from the Client. The duties and obligations of each Advisor hereunder are several and not joint, and neither Advisor shall have any responsibility for or be subject to liability as the result of any act or omission of the other Advisor. Each Advisor also will obtain such insurance and fidelity coverage as may be required by Kansas law or as Client reasonably may designate. 12. Nonexclusivity of Services. Except as expressly provided in Section 10 hereof, nothing in this Agreement shall be construed to prohibit or restrict either or both the Advisors and their affiliates from engaging in other business activities related to other investments or from providing to others or for their own account services of the type contemplated under this Agreement. 13. Amendments. This Agreement may be amended only by written agreement executed by Client and both Advisors. 14. Severability. If any one or more of the provisions of this Agreement shall be illegal or unenforceable in any respect, all other provisions shall continue in full force and effect, and the parties hereto shall endeavor in good faith negotiations to replace the illegal or unenforceable provisions with enforceable provisions the economic effect of which comes as close as possible to that of the illegal or unenforceable provisions. 15. Term and Assignment. This Agreement shall run from August 7, 1996 through June 30, 1997. This Agreement may be terminated by any party to this Agreement by providing the other parties written notice of the termination, which shall become effective 30 days after such notification is received. On July 1 each year, provided there has been no written notification of termination, the Agreement shall automatically be renewed for an additional one year term. Client guarantees Advisors that during the initial term of this agreement (that is, through June 30,1997) Client shall not provide notice of termination for the purpose of renegotiating fees. Neither Advisor shall assign this Agreement, in whole or in part, without the Client's prior written consent; any such assignment, whether voluntary, involuntary, or by operation of law, without Client's prior consent shall terminate this Agreement on the day before the date of such assignment. In the event that this Agreement shall be in effect for any period which is less than a calendar month, the monthly fee shall be prorated on the basis of the number of days the Agreement was effective for such period and shall be paid within ten business days of the effective date of the termination of this Agreement. 16. Valuation. From time to time Client may request that Advisors provide valuations of securities held in the Portfolio. In computing the market value of any security held in the Portfolio which is listed on a national securities exchange, such security shall be valued at the closing bid price on the valuation date on the principal exchange on which such security is traded subject to appropriate discounts applied in some instances to properly reflect value if not freely transferable. Any other security or asset shall be valued in a manner determined in good faith by Advisors to reflect its fair market value, and in the case of securities for which bid and asked quotes are available, the bid quote shall be used. 17. Notices. Unless otherwise specified herein, all notices and instructions with respect to transactions or any other matters contemplated by this Agreement shall be deemed duly given to a party to this Agreement when received in writing by that party, whether via telephone facsimile, United States mail or other form of delivery, at the address of its principal place of business or at such other address or addresses as shall be specified in writing. Advisors may rely upon any notice (written or oral) from any person whom Client has authorized to provide such notice. Client shall notify Advisors from time to time of the persons who are authorized to provide such notice. 18. Indemnification. The Advisors will indemnify and agree to hold harmless the Client from and against any loss, cost, claim, action, cause of action, liability or expense arising out of or relating to any (a) breach of Section 11 of this agreement, (b) bad faith, fraud, willful misconduct or gross negligence of Advisors or their agents or employees, (c) selfdealing with the assets of the Client, or (d) violation of any applicable law or regulation by Advisors or their agents and employees. Advisors shall not become obligated to indemnify the Client until such time as the Client's losses are either determined in a final judgment entered by a court or admitted in a settlement document to have resulted primarily from acts or omissions as set forth in subparts (a) through (d) above. The Client will indemnify and agree to hold harmless Advisors, any affiliate of either of them, their officers, directors, employees and controlling persons (each of the foregoing is an "Indemnified Person") from and against any loss, cost, claim, action, cause of action, liability and reasonable expense, joint or several (including all reasonable fees of counsel pursuant to contract; expenses in connection with the defense of any claim, action or proceeding; and reasonable compensation for any Indemnified Person's time and expenses while involved in discovery proceedings or testimony) caused by or arising out of an Indemnified Person's actions pursuant to the Agreement, except such losses, claims, damages, liabilities or expenses as are found in a final judgment of a court or admitted in a settlement document to have resulted primarily from acts or omissions of an Indemnified Person as set forth in (a) through (d) above. An Indemnified Person shall promptly notify the Client of the assertion against said Indemnified Person or any other person of any claim, or the commencement of any action or proceeding, relating to transactions contemplated by this Agreement. Advisors are authorized to retain attorneys ("Litigation Counsel") to represent Advisors, either together or singly, or any Indemnified Person, in any litigation (other than any litigation brought against Advisors by Client) relating to Advisors' provision of services under the Agreement. All fees of the Litigation Counsel shall be paid as incurred within a reasonable time after receipt of a detailed invoice for such fees. Provided, however, that Advisor shall receive prior written approval from Client for the terms of such retention, including approval of specific attorneys involved and the compensation arrangements, which approval the Client shall not unreasonably withhold. The parties understand and agree that the Client's expenditures for indemnification hereunder shall be subject to the appropriation limits imposed by the Kansas legislature as provided and set forth in L. 1996, ch. 191, sec.75, effective July 1,1996, and, in succeeding years in which this agreement may be in effect, to such appropriation limits as may be imposed by the Kansas legislature in the session laws of such years. The "total value of the assets being managed" discussed in L. 1996, ch. 191, sec.75 shall be defined as the cost basis of the assets held in KPERS' Direct Placement Portfolio as of June 30, 1991. The limit on expenditures for indemnification provided by this paragraph is deemed to be an annual limitation, not cumulative for the life of the portfolio. This indemnification shall not be affected by any termination of the Agreement, may not be modified, amended or waived without the written consent of all parties hereto and shall be governed by and construed with the laws of the State of Kansas without regard to principles of conflicts of laws. 19. Professionals. Each investment advisor agrees to the following commitment of professional staff: Pacholder Associates. Inc.: Name Title William J. Morgan President/ Managing Director James P. Shanahan, Jr. Managing Director and General Counsel Thomas M. Barnhart II Senior Vice President & Associate General Counsel Robert C. Amenta Senior Vice President Melissa L. Donovan Operations Analyst Portfolio Advisors. Inc.: Name Title Jonathan F. Murphy Managing Director Brian P. Murphy Director William J. Indelicato Director Jill A. Albrechta Associate New Hire Associate 20. Access to Records and Documents - Confidentiality and Retention. Advisors shall maintain the strictest confidence regarding the business affairs of the Portfolio. All information furnished by Advisors to Client or Client to Advisors shall be treated by Advisors and Client as confidential and for the exclusive use and benefit of Client, except: A. As disclosure may be required by applicable law; B. As disclosure may be required to perform the services described in this Agreement; or C. Advisors may from time to time, in the normal course of their business activities, request permission from the Client to disclose certain information with respect to the Advisors' performance managing the Portfolio. Notwithstanding the foregoing, all records and documents relating to the Portfolio shall be made available for inspection or audit by Client or by a qualified public accountant authorized in writing to act on Client's behalf, at Advisors' business offices at any time during normal business hours. Provided further that all records and documents relating to the Portfolio shall be retained by Advisors and, subsequent to the end of the contractual relationship, should Advisors or either of them wish to dispose of all or any part of such records and documents, they shall first make them available to Client, who, in such event, shall have the right to claim such records and documents. 21. Form DA-146a Incorporated. The provisions found in the Contractual Provisions Attachment (Form DA-146a, rev. 9/93), which is attached hereto, are hereby incorporated and made a part of this Agreement. 22. Multiple Counterparts. This agreement shall be executed in three or more counterparts, any one of which shall be an original without reference to the others. 23. Integration. The Agreement between the parties consists of this document, the Contractual Provisions Attachment, and the Statement of Investment Policy, Objectives and Guidelines, which together constitute the entire agreement and supersede in their entirety all prior agreements between the parties relating to the subject matter hereof. Very truly yours. Kansas Public Employees Retirement System (client) By: /s/Meredith Williams Date: August 9, 1996 Meredith Williams Executive Secretary Date: Pacholder Associates, Inc. By: /s/William J. Morgan Date: August 7, 1996 William J. Morgan President / Managing Director Portfolio Advisors, Inc. By: /s/Jonathan F. Murphy Date: August 5, 1996 Jonathan F. Murphy Managing Director CONTRACTUAL PROVISIONS ATTACHMENT Important: This form contains mandatory contract provisions and must be attached to or incorporated in all copies of any contractual agreement. If it is attached to the vendor/contractor's standard contract form, then that form must be altered to contain the following provision; "The provisions found in Contractual Provisions Attachment (form DA-146a), which it attached hereto, are hereby incorporated in this contract and made a part hereof". The parties agree that the following provisions are hereby incorporated into the contract to which it is attached and made a part thereof, said contract being the day of 1996. 1. TERMS HEREIN CONTROLLING PROVISIONS It is expressly agreed that the terms of each and every provision in this attachment shall prevail and control over the terms of any other conflicting provision in any other document relating to and a part of the contract in which this attachment is incorporated. 2. AGREEMENT WITH KANSAS LAW All contractual agreements shall be subject to, governed by, and construed according to the laws of the State of Kansas. 3. TERMINATION DUE TO LACK OF FUNDING APPROPRIATION If, in the judgment of the Director of Accounts and Reports, Department of Administration, sufficient funds are not appropriated to continue the function performed in this agreement and for the payment of the charges hereunder, State may terminate this agreement at the end of its current fiscal year. State agrees to give written notice of termination to contractor at least 30 days prior to the end of its current fiscal year, and shall give such notice for a greater period prior to the end of such fiscal year as may be provided in this contract, except that such notice shall not be required prior to 90 days before the end of such fiscal year. Contractor shall have the right, at the end of such fiscal year, to take possession of any equipment provided State under the contract. State will pay to the contractor all regular contractual payments incurred through the end of such fiscal year, plus contractual charges incidental to the return of any such equipment. Upon termination of the agreement by State, title to any such equipment shall revert to contractor at the end of State's current fiscal year. The termination of the contract pursuant to this paragraph shall not cause any penalty to be charged to the agency or the contractor. 4. DISCLAIMER OF LIABILITY See Sec. 18 of the Investment Advisory Agreement. 5. ANTI-DISCRIMINATION CLAUSE The contractor agrees; (a) to comply with the Kansas Act Against Discrimination (K.S.A. 44-1001 et seq.) and the Kansas Age Discrimination in Employment Act (K.S.A. 44-1111 et seq.) and the applicable provisions of the Americans With Disabilities Act (42 U.S.C. 12101 fl seq.) (ADA) and to not discriminate against any person because of race, religion, color, sex, disability, national origin or ancestry, or age in the admission or access to, or treatment or employment in. its programs or activities; (0) to include in all solicitations or advertisements for employees. the phrase "equal opportunity employer"; (c) to comply with the reporting requirements set out at K.S.A. 44-1031 and K.S.A. 44-1116; (d) to include those provisions in every subcontract or purchase order so that they are binding upon such subcontractor or vendor; (e) that a failure to comply with the reporting requirements of (c) above or if the contractor is found guilty of any violation of such acts by the Kansas Human Rights Commission such violation shall constitute a breach of contract and the contract may be canceled, terminated or suspended, in whole or in part, by the contracting state agency or the Kansas Department of Administration; (f) if it is determined that the contractor has violated applicable provisions of the ADA, such violation shall constitute a breach of contract and the contract may be canceled, terminated or suspended, in whole or in part, by the contracting state agency or the Kansas Department of Administration. Parties to this contract understand that the provisions of this paragraph number 5 (with the exception of those provisions relating to the ADA) are not applicable to a contractor who employs fewer than four employees during the term of such contract or whose contracts with the contracting state agency cumulatively total $5,000 or less during the fiscal year of such agency. 6. ACCEPTANCE OF CONTRACT This contract shall not be considered accepted, approved or otherwise effective until the statutorily required approvals and certifications have been given. 7. ARBITRATION. DAMAGES. WARRANTIES Notwithstanding any language to the contrary, no interpretation shall be allowed to find the State or any agency thereof has agreed to binding arbitration, or the payment of damages or penalties upon the occurrence of a contingency. Further, the State of Kansas shall not agree to pay attorney fees and late payment charges beyond those available under the Kansas Prompt Payment Act (K.S.A. 75- 6403), and no provision will be given effect which attempts to exclude, modify, disclaim or otherwise attempt to limit implied warranties of merchantability and fitness for a particular purpose. 8. REPRESENTATIVE'S AUTHORITY TO CONTRACT By signing this document, the representative of the contractor thereby represents that such person is duly authorized by the contractor to execute this document on behalf of the contractor and that the contractor agrees to be bound by the provisions thereof. 9. RESPONSIBILITY FOR TAXES The State of Kansas shall not be responsible for, nor indemnify a contractor for, any federal, state or local taxes which may be imposed or levied upon the subject matter of this contract. 10. INSURANCE The State of Kansas shall not be required to purchase, any insurance against loss or damage to any personal property to which this contract relates, nor shall this contract require the State to establish a "self-insurance" fund to protect against any such loss or damage. Subject to the provisions of the Kansas Tort Claims Act (K.S.A. 75-6101 et seq.), the vendor or lessor shall bear the risk of any loss or damage to any personal property in which vendor or lessor holds title. 11. INFORMATION No provisions of this contract shall be construed as limiting the Legislative Division of Post Audit from having access to information pursuant to K.S.A. 46-1101 et seq. -----END PRIVACY-ENHANCED MESSAGE-----