Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only (as permitted by
[ ] Definitive Proxy Statement Rule 14a-6(e) (2))
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
THE GKM FUNDS
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-------------------------------------------------------------------------
(Name of person (s) filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filling.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
Please fold and detach card at perforation before mailing.
GKM GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
_________, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints David L. Kahn, John F. Splain and Wade R.
Bridge, and each of them, as Proxies with power of substitution and hereby
authorizes each of them to represent and to vote as provided on the reverse
side, all shares of beneficial interest of the GKM Growth Fund which the
undersigned is entitled to vote at the special meeting of shareholders to be
held on __________, 2009 or at any adjournment thereof, as fully and with the
same force and effect as the undersigned might or could do if personally
present.
The undersigned acknowledges receipt of the Notice of Special Meeting and Proxy
Statement dated ________, 2009.
Date: _____________________________________
Note: Please sign exactly as your name
appears on this Proxy. If signing for
an estate, trust or corporation,
title or capacity should be stated.
If the shares are held jointly, both
signers should sign.
_____________________________________
_____________________________________
Signature(s) PLEASE SIGN IN BOX ABOVE
Please fold and detach card at perforation before mailing.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL DESCRIBED
HEREIN.
Please fill in box(es) as shown using black or blue ink or a number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS [X]
1. With respect to approval of a new investment management agreement with
First Western Investment Management, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
PLEASE MARK YOUR PROXY, DATE AND SIGN IT ON THE REVERSE SIDE, AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
The GKM Funds
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
SPECIAL MEETING OF SHAREHOLDERS
_____________, 2009
Important Voting Information Inside!
TABLE OF CONTENTS
Letter from the President ................................................. 1
Notice of Special Meeting of Shareholders ................................. 2
Proxy Statement ........................................................... 3
Proposal: Approval or Disapproval of New Management Agreement ....... 4
Outstanding Shares and Voting Requirements ........................... 10
First Western Investment Management, Inc. ............................ 12
Information on the Operation of the Fund ............................. 13
Principal Shareholder ................................................ 14
Trustees' Ownership of Fund Shares ................................... 14
Other Matters ........................................................ 15
Exhibit A: New Management Agreement ................................. 16
LETTER FROM THE PRESIDENT
The GKM Funds
11150 Santa Monica Boulevard
Suite 850
Los Angeles, California 90025
_______, 2009
Dear Shareholder,
I am writing to inform you of an upcoming Special Meeting of the
shareholders of the GKM Growth Fund to be held on Friday, _________, 2009. At
this meeting, you are being asked to vote on the approval of a new investment
management agreement with First Western Investment Management, Inc. ("FWIM").
The Board of Trustees of your Fund believes that this proposal is in the Fund's
and your best interest.
On April __, 2009, the principals of GKM Advisers, LLC ("GKM Advisers")
sold all of their outstanding interests of GKM Advisers to FWIM. FWIM is a
Securities and Exchange Commission registered investment adviser with
approximately $1.6 billion under management. FWIM provides investment management
services to institutions, high net worth individuals, government entities and
another mutual fund. FWIM acquired GKM Advisers to further expand its investment
management business. The principals of GKM Advisers, which include me and Mr.
Jed Cohen, are remaining with FWIM and, assuming your approval, will continue to
manage the day-to-day operations of the GKM Growth Fund. As you know Mr. Cohen
and I have been managing the GKM Growth Fund since its inception and will
continue in that role pending your approval. In addition, the change in control
at GKM Advisers will not result in a fee increase for you as a shareholder of
the Fund.
I'm sure that you, like most people, lead a busy life and are tempted to
put this proxy aside for another day. Please don't. When shareholders do not
return their proxies, additional expenses are incurred to pay for follow-up
mailings and telephone calls. PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY
STATEMENT AND VOTE YOUR SHARES TODAY.
The Board of Trustees of the Fund has approved the proposal described
herein and recommends a vote "FOR" the proposal. If you have any questions
regarding the issue to be voted on or need assistance in completing your proxy
card, please contact us toll free at 1-888-456-9518.
I appreciate your consideration of this important proposal. Thank you for
investing with the GKM Growth Fund and for your continued support.
Sincerely,
/s/ Timothy J. Wahl
Timothy J. Wahl
President
1
THE GKM FUNDS
GKM GROWTH FUND
--------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _____________, 2009
--------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of the GKM
Growth Fund, a series of The GKM Funds, will be held at the offices of Ultimus
Fund Solutions, LLC, 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246, on
_________, 2009 at 1:00 p.m., Eastern time, to consider and vote on the
following matters:
1. To approve or disapprove a new investment management agreement with
First Western Investment Management, Inc. NO FEE INCREASE WILL
RESULT FROM APPROVING THIS PROPOSAL, NOR WILL THERE BE A CHANGE IN
THE KEY INVESTMENT PERSONNEL SERVING THE FUND.
2. To transact any other business, not currently contemplated, that may
properly come before the meeting in the discretion of the proxies
and their substitutes.
Shareholders of record at the close of business on _______, 2009 are
entitled to notice of and to vote at this meeting or any adjournment thereof.
By order of the Board of Trustees,
/s/ Wade R. Bridge
Wade R. Bridge
Assistant Secretary
__________, 2009
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PLEASE EXECUTE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, THUS AVOIDING UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
2
THE GKM FUNDS
SPECIAL MEETING OF SHAREHOLDERS OF
GKM GROWTH FUND
TO BE HELD ON ______________, 2009
--------------------------------------------------------------------------------
PROXY STATEMENT
--------------------------------------------------------------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Trustees of The GKM Funds ("the Trust") of proxies for use at the
special meeting of shareholders of the GKM Growth Fund (the "Fund") or at any
adjournment thereof. The principal address of the Fund is 225 Pictoria Drive,
Suite 450, Cincinnati, Ohio 45246. This proxy statement was first mailed to
shareholders on or about _________, 2009.
The purpose of the meeting is to consider approval of a new investment
management agreement (the "New Management Agreement") with First Western
Investment Management, Inc. ("FWIM"). FWIM is a full service wealth management
firm that manages approximately $1.6 billion in assets. FWIM acquired GKM
Advisers, LLC ("GKM Advisers") as part of a strategic plan to further expand its
investment management business. FWIM has committed to retaining Mr. Jed M. Cohen
and Mr. Timothy J. Wahl as the individuals primarily responsible for managing
the Fund. As you know, Messrs. Cohen and Wahl have served in that capacity since
the Fund's inception and will continue in that role subject to shareholder
approval of the New Management Agreement. Please keep in mind that approval of
the New Management Agreement with FWIM will not result in a fee increase for
you.
A proxy, if properly executed, duly returned and not revoked, will be
voted in accordance with the specifications therein. A proxy that is properly
executed but has no voting instructions with respect to a proposal will be voted
for that proposal. A shareholder may revoke a proxy at any time prior to use by
filing with the Secretary of the Trust an instrument revoking the proxy, by
submitting a proxy bearing a later date, or by attending and voting at the
meeting.
The cost of the solicitation, including the printing and mailing of the
proxy materials, will be borne by FWIM. In addition to solicitation through the
mail, proxies may be solicited by officers, employees and agents of the Fund
without cost to the Fund. Such solicitation may be by telephone, facsimile or
otherwise. FWIM will reimburse brokers, custodians, nominees and fiduciaries for
the reasonable expenses incurred by them in connection with forwarding
solicitation material to the beneficial owners of shares held of record by such
persons.
3
PROPOSAL
APPROVAL OR DISAPPROVAL OF NEW MANAGEMENT AGREEMENT
Background
----------
On April __, 2009, the principals of GKM Advisers sold all of their
outstanding interests to FWIM (the "Transaction"). GKM Advisers has been merged
into FWIM and FWIM is the surviving firm. The Transaction resulted in a change
of control of GKM Advisers and, pursuant to relevant provisions of the
Investment Company Act of 1940 (the "1940 Act"), effectively terminated the
investment management agreement between the Trust and GKM Advisers. However,
FWIM is currently managing the Fund under an Interim Management Agreement that
was approved by the Board of Trustees of the Trust in anticipation of the
Transaction. The terms of the Interim Management Agreement, including the amount
of compensation payable to FWIM, are substantially identical to those of the
recently terminated investment management agreement except that (i) the Interim
Management Agreement has a maximum term of 150 days, (ii) the Trustees or a
majority of the Fund's outstanding shares may terminate the Interim Management
Agreement at any time, without penalty, on not more than 10 days' written
notice, (iii) a provision that permitted the investment adviser to consider the
sale of Fund shares as a factor in the selection of brokers and dealers to
execute Fund portfolio transactions has been removed, and (iv) compensation
earned by FWIM under the Interim Management Agreement will be held in an escrow
account until Fund shareholders approve the New Management Agreement with FWIM,
after which the amount in the escrow account plus interest will be paid to FWIM.
If Fund shareholders do not approve the New Management Agreement with FWIM, FWIM
will be paid, out of the escrow account, the lesser of: (1) any costs incurred
in performing the Interim Management Agreement (plus interest earned on that
amount while in escrow); or (2) the total amount in the escrow account (plus
interest earned).
Messrs. Cohen and Wahl have served as the co-portfolio managers for the
Fund since its inception. Each of them serves in that capacity under the Interim
Management Agreement and they will continue in that capacity following the
approval of the New Management Agreement by shareholders.
Legal Analysis
--------------
Pursuant to the 1940 Act and in accordance with the terms of the former
investment management agreement with GKM Advisers (the "Former Management
Agreement"), the Transaction and resulting change in control of GKM Advisers
resulted in an assignment and termination of the Former Management Agreement.
Therefore, shareholders of the Fund are being asked to approve the New
Management Agreement in order for FWIM to serve as the Fund's investment
adviser.
Section 15(f) of the 1940 Act provides that, when a change in the control
of an investment adviser occurs, the investment adviser and any of its
affiliated persons may receive any amount or benefit in connection therewith if
the following two conditions are satisfied:
4
(1) An "unfair burden" must not be imposed on the investment company as a
result of the transaction causing the change of control, or any express or
implied terms, conditions or understandings applicable thereto. The term "unfair
burden" includes any arrangement during the two-year period after the change in
control whereby the investment adviser (or predecessor or successor adviser), or
an interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). No such
compensation arrangements are contemplated; and
(2) During the three-year period immediately following consummation of the
transaction causing the change in control, at least 75% of the members of the
investment company's board must not be "interested persons" of the investment
adviser or predecessor investment adviser within the meaning of the 1940 Act.
Currently, 75% of the Trustees of the Trust are not interested persons, as
defined by the 1940 Act, of either GKM Advisers or FWIM, and the Trust
contemplates that it will maintain this composition for a period of at least
three years from the date of the Transaction.
While adherence to the conditions of Section 15(f) is voluntary, the Trust
has determined to do so because the Trustees believe that adhering to those
conditions is in the best interests of shareholders.
The New Management Agreement
----------------------------
The New Management Agreement, if approved by shareholders, will replace
the Interim Management Agreement. Under the New Management Agreement, FWIM will
be responsible for selecting portfolio securities for investment by the Fund,
purchasing and selling securities for the Fund and placing orders for the
execution of such portfolio transactions, all in accordance with the 1940 Act
and any rules thereunder, the supervision and control of the Board of Trustees,
and the investment objective, policies and restrictions of the Fund. FWIM will
pay all of the expenses of the Fund except brokerage fees and commissions,
taxes, borrowing costs (such as interest and dividend expense on securities sold
short), fees and expenses of the Trustees who are not interested persons of the
Trust (the "Independent Trustees"), acquired fund fees and expenses, Rule 12b-1
expenses, if any, and extraordinary expenses. The terms of the New Management
Agreement are substantially identical to those of the Former Management
Agreement, except that the New Management Agreement has a different effective
date, termination date, and no longer permits the adviser to consider sales of
shares of the Fund as a factor in the selection of brokers and dealers to
execute Fund portfolio transactions.
Fees under the New Management Agreement will be calculated at the same
rate as those previously charged under the Former Management Agreement and those
presently charged under
5
the Interim Management Agreement. The annual rate paid by the Fund is equal to
1.40% of its average daily net assets.
The New Management Agreement, if approved by shareholders, will continue
in effect for an initial period of two years and from year to year thereafter,
provided that its continuance is specifically approved (1) by the Board of
Trustees or (2) by a vote of a majority (as defined in the 1940 Act) of the
outstanding shares of the Fund. In either event the continuance of the New
Management Agreement must also be approved by a majority of the Independent
Trustees, by a vote cast in person at a meeting called for the purpose of voting
on such continuance.
The New Management Agreement may be terminated at any time upon 60 days'
written notice, without payment of any penalty (1) by the Board of Trustees, (2)
by a vote of the majority of the outstanding voting securities of the Fund, or
(3) by FWIM. The New Management Agreement will automatically terminate in the
event of its assignment.
The New Management Agreement, like the Interim Management Agreement and
the Former Management Agreement, provides that FWIM will not be liable for any
act or omission in connection with the services that it provides to the Fund or
for any losses that may be sustained, absent FWIM's willful misfeasance, bad
faith or gross negligence, or its reckless disregard of its obligations and
duties under the Agreement.
The description of the New Management Agreement in this Proxy Statement is
only a summary. The form of the New Management Agreement is attached hereto as
Exhibit A. You should read the New Management Agreement.
Interim Management Agreement
----------------------------
As a result of the Transaction occurring prior to shareholder approval of
the New Management Agreement, the Trust does not have an investment advisory
agreement in place for the Fund that has been approved by shareholders in
accordance with the 1940 Act. In order for FWIM to continue as the Fund's
investment manager, the Board of Trustees, including those Independent Trustees
present at the meeting, by vote cast in person on March 17, 2009, unanimously
approved the Interim Management Agreement with FWIM pursuant to Rule 15a-4 under
the 1940 Act. The Interim Management Agreement is dated April __, 2009, the date
of the Transaction, and replaced the Former Management Agreement as of such
date. The Interim Management Agreement terminates upon shareholder approval of
the New Management Agreement, unless it sooner terminates according to its
terms, as described below.
The Interim Management Agreement is substantially identical to the Former
Management Agreement and the New Management Agreement in all material respects,
except that it includes certain provisions required by Rule 15a-4 under the 1940
Act and it no longer permits the investment adviser to consider the sale of Fund
shares in its selection of brokers and dealers to execute portfolio transactions
of the Fund. Accordingly, the Interim Management Agreement has a maximum term of
150 days. Further, the Interim Management Agreement provides that the Trustees
or a majority of the Fund's outstanding voting securities may terminate the
Interim Management Agreement at any time without penalty on not more than 10
days' written notice, and that the compensation earned by FWIM under the Interim
6
Management Agreement is being held in an escrow account until Fund shareholders
approve the New Management Agreement, after which the amount in the escrow
account, plus any interest, will be paid to FWIM. If shareholders do not approve
the New Management Agreement, FWIM will be paid the lesser of the costs
incurred, plus any interest earned on such amount, in performing its obligations
under the Interim Management Agreement or the total amount in the escrow
account, plus any interest.
If the shareholders of the Fund do not approve the New Management
Agreement within 150 days of the effective date of the Interim Management
Agreement, the Trustees will consider other appropriate arrangements subject to
approval in accordance with the 1940 Act.
Evaluation by the Board of Trustees
-----------------------------------
The Board of Trustees, including the Independent Trustees voting
separately, have reviewed and approved the New Management Agreement. Approval
took place at an in-person meeting, held on March 17, 2009, at which all of the
Trustees were present.
The Trustees were advised by independent counsel of their fiduciary
obligations in approving the New Management Agreement and the Trustees requested
such information from FWIM as they deemed reasonably necessary to evaluate the
terms of the New Management Agreement and whether the New Management Agreement
is in the best interests of the Fund and its shareholders. The Trustees
reviewed: (i) the nature, extent and quality of the services to be provided by
FWIM; (ii) the investment performance of the Fund; (iii) the costs of the
services provided and the potential profits to be realized by FWIM from its
relationship with the Fund; (iv) the extent to which economies of scale would be
realized as the Fund grows; and (v) whether fee levels reflect these economies
of scale for the benefit of the Fund's shareholders. The Trustees reviewed the
background, qualifications, education and experience of FWIM's investment,
compliance and operational personnel. The Trustees also considered Messrs.
Cohen's and Wahl's decision to remain with FWIM and continue serving as the
Fund's portfolio managers. The Trustees further considered Mr. David Kahn's
decision to remain as Chief Compliance Officer of the Trust and oversee the
Trust's relationships with the other service providers. They considered the
strong financial condition of FWIM and its affiliated companies. The Trustees
also discussed the marketing plans of FWIM on behalf of the Fund. The
Independent Trustees were advised by experienced independent counsel throughout
the process. Prior to voting, the Independent Trustees reviewed the New
Management Agreement with representatives of FWIM and also met in a private
session with counsel at which no representatives of FWIM were present.
NATURE, EXTENT AND QUALITY OF SERVICES
The Trustees considered the responsibilities of FWIM under the New Management
Agreement, noting that FWIM will be responsible for providing the Fund with
investment research and advice, and determining the securities to be purchased
and sold in accordance with the investment objective and policies of the Fund.
The Trustees reviewed biographical information
7
on each of FWIM's key personnel from its investment management and compliance
teams. Members of FWIM's investment management and compliance teams' backgrounds
and experience in the financial industry were reviewed. The Trustees also
considered FWIM's compliance procedures and its apparent commitment to
compliance.
The Trustees also discussed FWIM's responsibilities with regards to brokerage
selection. The Trustees were informed that FWIM has discontinued GKM Advisers'
practice of directing Fund brokerage to an affiliated broker-dealer. FWIM
further informed the Trustees that, following the two year period from the
termination date of the Former Management Agreement, FWIM may begin the practice
of directing Fund brokerage to an affiliated broker-dealer.
INVESTMENT RESULTS
In reviewing the Fund's investment results, the Trustees reviewed the Fund's
performance for various periods ended December 31, 2008 and compared it to the
Standard & Poor's 500 Index ("S&P 500 Index") and other large capitalization
indices. The Trustees noted that from the date of inception through December 31,
2008 the Fund underperformed the S&P 500 Index, the Fund's primary benchmark. It
was further noted by the Trustees that the Fund underperformed the average and
median performance of large growth funds (the Fund's peer group as assigned by
Morningstar) for the one-year, three year and five year periods ended December
31, 2008. The Trustees reviewed the Fund's Morningstar ratings, noting that, as
of December 31, 2008, the Fund was rated two-stars over all the relevant
periods. The Trustees also considered the market environment for large cap
growth stocks since the Fund's inception. It was further noted by the Trustees
that two of the better performing areas of the market (i.e. utilities and
energy) were not held by the Fund due to the adviser's belief that these sectors
do not represent long-term "growth" opportunities. The Trustees also discussed
the Fund's low portfolio turnover ratio in achieving this performance and
positive attributes of low portfolio turnover. It was noted by the Trustees that
the Fund has been extremely tax efficient in that the Fund has paid only two
small income distributions since inception. The Trustees considered the
adviser's disciplined approach to managing the Fund's assets, noting its
consistency in management style since the Fund's inception.
ADVISORY FEES AND TOTAL EXPENSES
In reviewing the advisory fee and total expense ratio of the Fund, the Trustees
considered comparative expense and advisory fee information for equity funds
classified by Morningstar as large growth funds. The Trustees considered the
Fund's fee arrangement in which FWIM is responsible for paying most of the
Fund's ordinary operating expenses out of its own resources and noted that
comparisons with the Fund's overall expense ratio may be more relevant than
comparisons of advisory fees only. In considering the comparative expense
information, the Trustees specifically noted that the Fund's total expense ratio
of 1.41% (which excludes borrowing costs of 0.42% that were incurred by the Fund
during the most recent fiscal year), while higher than the average of all funds
classified by Morningstar as large growth (1.35%), is less than the average
expense ratio of such funds having less than $50 million in assets (1.55%). The
Trustees further noted that many of the funds having less than $50 million in
net assets were
8
members of a larger fund complex which would benefit from economies of scale
that would likely lower their expense ratios.
The Trustees also reviewed information regarding the advisory fees paid by
institutional and other private clients of FWIM with similar investment
mandates. They noted, however, that there were significant investment,
operational and regulatory differences between advising a mutual fund and
institutional or private clients. The Trustees also considered FWIM's
sub-advisory relationship with another mutual fund, noting that, due to the
other fund investing primarily in fixed-income securities, this relationship did
not provide a meaningful comparison.
The Trustees reviewed the December 31, 2008 income statement and balance sheet
of FWIM's parent company (i.e. First Western Financial Inc.), noting that FWIM
has sufficient capital available to it to satisfy its commitments to the Fund.
FWIM represented that its parent company will make available the necessary
capital to FWIM to assist FWIM in satisfying its commitments to the Fund. FWIM
reviewed it plans for marketing and distributing the Fund. The Trustees remarked
that an increase in the Funds' assets could benefit the Fund's shareholders
through enhanced portfolio management opportunities and potential economies of
scale.
The Trustees also considered a profitability analysis of GKM Advisers' revenues
and expenses with respect to the Former Management Agreement over the past four
fiscal years. It was noted that, after a reasonable allocation of GKM Advisers'
overall operating expenses, GKM Advisers incurred an operating loss of slightly
more than $309,000 with respect to the Former Management Agreement during the
fiscal year ended July 31, 2008. The Trustees further noted that GKM Advisers
incurred significant operating losses for the three previous fiscal years as
well. The Trustees took into account that, based on the Fund's current net
assets, it is unlikely that FWIM will realize a profit from the New Management
Agreement in the near term.
ANCILLARY BENEFITS
The Board discussed the potential benefits to FWIM from the Fund being offered
to clients of its affiliated companies. However, the Trustees concluded that, in
light of the amounts involved, this is only a secondary factor in connection
with the evaluation of the reasonableness of the advisory fees paid by the Fund.
ECONOMIES OF SCALE
The Trustees considered economies of scale, noting that at the present time the
Fund has not realized any significant economies of scale. The Board observed
that if the Fund grows significantly in assets, this factor will become more
relevant to their consideration process.
CONCLUSION
Based on their review, including their consideration of each of the factors
referred to above, the Trustees concluded that: (i) the decision by Messrs.
Cohen and Wahl to remain with FWIM and continue managing the Fund's investments,
along with the decision by Mr. Kahn to remain with
9
FWIM and oversee the compliance functions of the Fund, ensures that the Fund
will continue to receive high quality services; (ii) the Fund's investment
results indicate a commitment to "growth" investing and the consistent
application of the Fund's investment strategies despite market sentiment; (iii)
the Fund's overall expense ratio of 1.41% (excluding borrowing costs) is less
than the average for comparably managed funds with assets of $50 million or less
(1.55%), as derived from statistics published by Morningstar; and (iv)
comparisons between the advisory fees paid by the Fund with the advisory fees
paid by other comparably managed funds and to the other investment company and
non-investment company accounts managed by FWIM are not particularly meaningful
due to FWIM's commitment to the Fund to pay most of its ordinary operating
expenses out of its own resources. The Trustees also discussed economies of
scale, deciding that at the present time it would not be relevant to consider
the extent to which economies of scale would be realized as the Fund grows and
whether fee levels reflect these economies of scale. The Trustees did note that
as the Fund grows in assets it may become necessary for FWIM to consider adding
fee breakpoints to the New Management Agreement. The Trustees also considered
the "fallout benefits" to FWIM, concluding that this is a secondary factor when
evaluating the reasonableness of advisory fees to be paid by the Fund. The
Trustees also considered the historical profitability, or lack there of, of GKM
Advisers, concluding that this is a secondary factor in connection with the
evaluation of the reasonableness of the advisory fees paid by the Fund.
No single factor was considered in isolation or to be determinative to the
decision of the Trustees to approve the New Management Agreement. Rather, the
Trustees concluded, in light of a weighing and balancing of all factors
considered that it would be in the best interests of the Fund and its
shareholders to approve the New Management Agreement with FWIM.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW MANAGEMENT
AGREEMENT.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees has fixed the close of business on _____________,
2009 (the "Record Date") as the record date for the determination of
shareholders entitled to notice of and to vote at the special meeting of
shareholders of any adjournment thereof. As of the Record Date, there were
_____________ shares of beneficial interest, no par value, of the Fund
outstanding. All full shares of the Fund are entitled to one vote, with
proportionate voting for fractional shares.
The vote of a majority of the outstanding shares of the Fund is required
for approval of the New Management Agreement. The vote of a majority of the
outstanding shares means the vote of the lesser of (1) 67% or more of the shares
present or represented by proxy at the meeting, if the holders of more than 50%
of the outstanding shares of the Fund are present or represented by proxy, or
(2) more than 50% of the outstanding shares of the Fund.
10
A quorum is the number of shares legally required to be at a meeting in
order to conduct business. The presence, in person or by proxy, of more than 50%
of the Fund's outstanding shares is necessary to constitute a quorum at the
meeting. If the meeting is called to order but a quorum is not represented at
the meeting, the persons named as proxies may vote those proxies that have been
received to adjourn the meeting to a later date. If a quorum is present at the
meeting but sufficient votes to approve the proposal described herein are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
meeting in person or by proxy. The persons named as proxies will vote those
proxies received that voted in favor of a proposal in favor of such adjournment
and will vote those proxies received which voted against a proposal against any
such adjournment.
Abstentions and "broker non-voters" are counted for purposes of
determining whether a quorum is present but do not represent votes cast with
respect to a proposal. "Broker non-votes" are shares held by a broker or nominee
for which an executed proxy is received by the Fund, but are not voted as to one
or more proposals because instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power. Accordingly, "broker non-votes" and abstentions
on the Proposal effectively will be a vote against the Proposal.
The Trustees of the Fund intend to vote all of their shares in favor of
the proposal described herein. All Trustees and officers as a group owned of
record or beneficially ___% of the Fund's outstanding shares on the Record Date.
11
FIRST WESTERN INVESTMENT MANAGEMENT, INC.
First Western Investment Management, Inc., 1200 Seventh Street, Denver,
Colorado 80202, is a corporation organized under the laws of Colorado. In
addition to serving as investment adviser to the Fund, FWIM provides investment
advisory services to institutions, high net worth individuals, another
registered investment company and to governmental entities. As of December 31,
2008, FWIM managed approximately $1.6 billion in assets.
FWIM is a subsidiary of First Western Financial, Inc. First Western
Financial, Inc., is a privately held financial services company that owns 100%
of the outstanding shares of FWIM. The address and principal occupation of each
principal executive officer of FWIM are set forth in the table below. None of
the principal executive officers of FWIM serve as a Trustee or officer of the
Fund.
NAME AND ADDRESS PRINCIPAL OCCUPATION
--------------------------------------------------------------------------------
Scott C. Wylie Vice Chairman of FWIM
1200 Seventh Street, Suite 2650
Denver, Colorado 80202
Warren J. Olsen Chairman, Chief Executive Officer and
1200 Seventh Street, Suite 2650 Treasurer of FWIM
Denver, Colorado 80202
Karen S. Post Vice President and Secretary of FWIM
1200 Seventh Street, Suite 2650
Denver, Colorado 80202
Karen L. Garcia Chief Compliance Officer of FWIM
1200 Seventh Street, Suite 2650
Denver, Colorado 80202
Each of the following persons is both a Trustee or officer of the Trust and an
employee of FWIM:
Position with
Employee Name the Trust
------------------ ---------------------
Timothy J. Wahl Trustee and President
David L. Kahn Secretary and Chief
Compliance Officer
12
During the fiscal year ended July 31, 2008, the Fund paid management fees
of $653,033 to GKM Advisers, the Fund's previous investment adviser. The Former
Management Agreement, dated August 20, 2003, was last approved by shareholders
of the Fund at a meeting on August 20, 2003. At that meeting of shareholders,
GKM Advisers was approved as investment manager for the Fund and served as such
until April __, 2009 when GKM Advisers underwent a change of control and was
acquired by FWIM.
INFORMATION ON THE OPERATION OF THE FUND
DISTRIBUTION OF SHARES. Ultimus Fund Distributors LLC (the "Distributor"),
225 Pictoria Drive, Suite 450, Cincinnati Ohio 45246, serves as the Fund's
principal underwriter. The Distributor is a wholly-owned subsidiary of Ultimus
Fund Solutions, LLC, the Fund's administrator, transfer agent and fund
accountant.
BROKERAGE COMMISSIONS. During the fiscal year ended July 31, 2008, the
Fund paid brokerage commissions of $5,597 to Samuels Chase & Co., Inc., an
affiliated broker-dealer. During the fiscal year ended July 31, 2008, Samuels
Chase & Co., Inc. received 96.8% of the Fund's aggregate brokerage commissions
for effecting 96.0% of the dollar amount of transactions involving brokerage
commissions. Samuels Chase & Co., Inc. is considered an affiliated broker-dealer
because certain employees of FWIM maintain their securities licenses with the
firm. FWIM has discontinued the practice of directing Fund brokerage to an
affiliated broker-dealer.
ADMINISTRATION AND OTHER SERVICES. The Fund has entered into agreements
with Ultimus Fund Solutions, LLC ("Ultimus"), 225 Pictoria Drive, Suite 450,
Cincinnati Ohio 45246, whereby Ultimus is responsible for the provision of
administration, fund accounting and transfer agent and shareholder services to
the Fund. For providing administration services to the Fund, the Adviser (not
the Fund) pays Ultimus a fee at the annual rate of .15% of the average value of
its daily net assets up to $50 million, .125% of such assets from $50 million to
$100 million, .1% of such assets from $100 million to $250 million, .075% of
such assets from $250 million to $500 million, and .05% of such assets in excess
of $500 million, provided, however, that the minimum fee is $2,000 per month.
For providing fund accounting services to the Fund, the Adviser (not the Fund)
pays Ultimus a base fee of $2,500 per month plus an asset-based fee computed as
a percentage of the Fund's average net assets.
ANNUAL REPORT. THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST
RECENT ANNUAL REPORT UPON REQUEST. TO REQUEST THE ANNUAL REPORT, PLEASE CALL US
TOLL FREE AT 1-888-456-9518, OR WRITE WADE BRIDGE, ASSISTANT SECRETARY, THE GKM
FUNDS, P.O. BOX 46707, CINCINNATI, OHIO 45246-0707.
13
PRINCIPAL SHAREHOLDER
As of the Record Date, Charles Schwab & Co., Inc., 101 Montgomery Street,
San Francisco, California 94104, owned of record ____% of the outstanding shares
of the Fund. Since Schwab's ownership is in record form it is not considered a
"control" shareholder for purposes of this shareholder meeting. The Fund is not
aware of a shareholder that owns beneficially more than 5% of the Fund's
outstanding shares.
TRUSTEES' OWNERSHIP OF FUND SHARES
The following table shows the number of shares beneficially owned by each
Trustee of the Fund as of the Record Date.
PERCENTAGE
NAME AND ADDRESS AMOUNT AND NATURE* OWNERSHIP OF
OF TRUSTEE OF BENEFICIAL OWNERSHIP FUND SHARES
---------- ----------------------- -----------
Timothy J. Wahl
11150 Santa Monica Blvd
Los Angeles, CA 90025 shares **
Darrin F. DelConte
11150 Santa Monica Blvd
Los Angeles, CA 90025 shares **
Brian Horner
11150 Santa Monica Blvd
Los Angeles, CA 90025 shares **
Nicholas G. Tonsich
11150 Santa Monica Blvd
Los Angeles, CA 90025 shares **
* Each Trustee owning shares has sole beneficial ownership of such
shares.
** Trustee owns less than 1% of the outstanding shares of the Fund.
14
OTHER MATTERS
The proxy holders have no present intention of bringing any other matter
before the meeting other than those specifically referred to above or matters in
connection with or for the purpose of effecting the same. Neither the proxy
holders nor the Board of Trustees are aware of any matters which may be
presented by others. If any other business shall properly come before the
meeting, the proxy holders intend to vote thereon in accordance with their best
judgment.
The Trust has not received any shareholder proposals to be considered for
presentation at the meeting. Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals may, under certain conditions, be
included in the Trust's proxy statement and proxy for a particular meeting.
Under these rules, proposals submitted for inclusion in the Trust's proxy
materials must be received by the Trust within a reasonable time before the
solicitation is made. The fact that the Trust receives a shareholder proposal in
a timely manner does not insure its inclusion in its proxy materials, because
there are other requirements in the proxy rules relating to such inclusion. You
should be aware that annual meetings of shareholders are not required as long as
there is no particular requirement under the 1940 Act, which must be met by
convening such a shareholder meeting. Any shareholder proposal should be sent to
David L. Kahn, Secretary of The GKM Funds, 11150 Santa Monica Boulevard, Suite
850, Los Angeles, California 90025.
By Order of the Board of Trustees,
/s/ Wade R. Bridge
Wade R. Bridge
Assistant Secretary
Date: _______, 2009
Please complete, date and sign the enclosed Proxy and return it promptly in the
enclosed reply envelope. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
15
EXHIBIT A
---------
MANAGEMENT AGREEMENT
TO: First Western Investment Management, Inc.
11150 Santa Monica Boulevard
Los Angeles, CA 90025
Dear Sirs:
The GKM Funds (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers one series of shares to investors, the GKM
Growth Fund (the "Fund").
You have been selected to act as the sole investment adviser of the Fund
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows effective upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Fund with such investment advice as
you in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with the Fund's investment objectives and
policies. You will determine the securities to be purchased for the Fund, the
portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay all operating expenses of the Fund not specifically
assumed by the Fund, including the compensation and expenses of any employees of
the Fund and of any other persons rendering any services to the Fund; clerical
and shareholder service staff salaries; office space and other office expenses;
fees and expenses incurred by the Fund in connection with membership in
investment company organizations; legal, auditing and accounting expenses;
expenses of registering shares under federal and state securities laws,
including expenses incurred by the Fund in connection with the organization and
initial registration of shares of the Fund; insurance expenses; fees and
expenses of the custodian, transfer agent, dividend disbursing agent,
shareholder service agent, plan agent, administrator, accounting and pricing
services agent and underwriter of the Fund; expenses, including clerical
expenses, of issue, sale, redemption or repurchase of shares of the Fund; the
cost of preparing and distributing reports and notices to shareholders, the cost
of printing or preparing prospectuses and statements of additional information
for delivery to shareholders; the cost of printing or preparing stock
certificates or any other documents, statements or reports to shareholders;
expenses of shareholders' meetings and proxy solicitations; and all other
operating expenses not specifically assumed by the Fund. For purposes of this
Agreement, "operating expenses of the Fund" shall not include advertising,
promotion and other expenses incurred directly or indirectly in connection with
the sale or distribution of the Fund's shares (including expenses which the Fund
is authorized to pay pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act").
16
The Fund will pay all brokerage fees and commissions, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. You may obtain
reimbursement from the Fund, at such time or times as you may determine in your
sole discretion, for any of the expenses advanced by you, which the Fund is
obligated to pay, and such reimbursement shall not be considered to be part of
your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments to be made by
you as provided in this Agreement, as of the last business day of each month,
the Fund will pay you a fee at the annual rate of 1.40% of the average value of
its daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities for
the account of the Fund, it is understood that you will arrange for the placing
of all orders for the purchase and sale of portfolio securities for the account
with brokers or dealers selected by you, subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and the
allocation of principal business and portfolio brokerage. In the selection of
such brokers or dealers and the placing of such orders, you are directed at all
times to seek for the Fund the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer.
You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services to the Fund and/or the other accounts over which
you exercise investment discretion. You are authorized to pay a broker or dealer
who provides such brokerage and research services a commission for executing a
Fund portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you exercise investment discretion. The Fund and you
understand and acknowledge that, although the information may be useful to the
Fund and you, it is not possible to place a dollar value on such information.
The Board shall periodically review the commissions paid by the Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Fund.
Subject to the provisions of the 1940 Act, and other applicable law,
you, any of your affiliates or any affiliates of your affiliates may retain
compensation in connection with effecting the Fund's portfolio transactions,
including transactions effected through others. If any occasion should arise in
which you give any advice to clients of yours concerning the shares of the Fund,
you will act solely as investment counsel for such client and not in any way on
behalf of the Fund. Your services to the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you may render investment
advice, management and other services to others, including other registered
investment companies.
17
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee, member,
shareholder or agent of you, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee, member,
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall take effect on the date of its execution, and
shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event continuance is also approved by a
majority of the trustees who are not interested persons of you or the Trust, by
a vote cast in person at a meeting called for the purpose of voting such
approval.
This Agreement may, on sixty days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment.
7. USE OF NAME
-----------
The Trust and you acknowledge that, as between such parties, all
rights to the name "GKM" or any variation thereof belong to you, and that the
Trust has been granted a limited right to use such name in its Fund name. In the
event you cease to be the adviser to the Fund, the Trust's right to the use of
the name "GKM" shall automatically cease upon termination of this Agreement. The
right to the name may also be withdrawn by you during the term of this Agreement
upon ninety (90) days' written notice by you to the Trust. Nothing contained
herein shall impair or diminish in any respect, your right to use the name "GKM"
in the name of, or in connection with, any other business enterprises with which
you are or may become associated. There is no charge to the Trust for the right
to use this name.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under
interpretations of the 1940 Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the series to which the amendment relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
-----------------------------------------
The term "The GKM Funds" means and refers to the Trustees from time
to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization
18
by such trustees and shareholders nor such execution and delivery by such
officers shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in its Declaration of Trust. A copy of the
Agreement and Declaration of Trust of the Trust is on file with the Secretary of
the State of Ohio.
10. SEVERABILITY
------------
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
---------------------------
(a) This Agreement shall be governed by the laws of the State of
Ohio.
(b) For the purpose of this Agreement, the terms "majority of the
outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretation thereof, if any, by the United States courts or
in the absence of any controlling decision of any such court, by the Securities
and Exchange Commission or its staff. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation, order or interpretation of the Securities and
Exchange Commission or its staff, such provision shall be deemed to incorporate
the effect of such rule, regulation, order or interpretation.
12. NOTICES
-------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 11150 Santa
Monica Boulevard, Los Angeles, CA 90025, and your address for this purpose shall
be 11150 Santa Monica Boulevard, Los Angeles, CA 90025.
13. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14. BINDING EFFECT
--------------
Each of the undersigned expressly warrants and represents that he
has the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
--------
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.
19
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
THE GKM FUNDS
By: _______________________________
Print Name: Timothy J. Wahl
Title: President
Date: _______________, 2009
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
FIRST WESTERN INVESTMENT MANAGEMENT, INC.
By: _______________________________
Print Name: Warren J. Olsen
Title: Chairman
Date: ______________, 2009