EXHIBIT B --NEW INVESTMENT SUB-ADVISORY AGREEMENT
(VALUE INVESTORS)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this _____ day of _______, by and among Pilgrim
Xxxxxx & Associates, Ltd. (the "Adviser"), Pilgrim Xxxxxx Value Investors, Inc.
(the "Sub-Adviser"), and PBHG Insurance Series Fund, Inc., a Maryland
corporation (the "Company").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, pursuant to the Investment Advisory Agreement dated
_______________ and Schedule A dated _______________ (as such Schedule may be
amended from time to time to add or delete new portfolios) between the Adviser
and the Company, the Adviser will act as investment adviser to the separate
portfolios of the Company (the "Portfolios") specified in Schedule A; and
WHEREAS, the Adviser and the Company each desire to retain the
Sub-Adviser to provide investment advisory services to the Company in connection
with the management of the Portfolios, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. (a) Subject to supervision by the Adviser and the Company's Board of
Directors, the Sub-Adviser shall manage the investment operations of the
Portfolios and the composition of the Portfolios' investment portfolios,
including the purchase, retention and disposition thereof, in accordance with
the Portfolios' investment objectives, policies and restrictions as stated in
such Portfolios' Prospectus (such Prospectus and Statement of Additional
Information as currently in effect and as amended or supplemented from time to
time, being herein called the "Prospectus"), and subject to the following
understandings:
(1) The Sub-Adviser shall provide supervision of the
Portfolios' investments and determine from time to time what investments and
securities will be purchased, retained or sold by the Portfolios, and what
portion of the assets will be invested or held uninvested in cash.
(2) In the performance of its duties and obligations under
this Agreement, the Sub-Adviser shall act in conformity with the Company's
Articles of Incorporation and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Directors and will conform and
comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986,
as amended, and all other applicable federal and state laws and regulations, as
each is amended from time to time.
(3) The Sub-Adviser shall determine the securities to be
purchased or sold by the Portfolios and will place orders with or through such
persons, brokers or dealers to carry out the policy with respect to brokerage
set forth in such Portfolios' Registration Statement (as defined herein) and
Prospectus or as the Board of Directors or the Adviser may direct from time to
time, in conformity with federal securities laws. In providing the Portfolios
with investment supervision, the Sub-Adviser will give primary consideration to
securing the most favorable price and efficient execution. Within the framework
of this policy, the Sub-Adviser may consider the financial responsibility,
research and investment information and other services provided by brokers or
dealers who may effect or be a party to any such transaction or other
transactions to which the Sub-Adviser's other clients may be a party. It is
understood that it is desirable for the Portfolios that the Sub-Advisor have
access to supplemental investment and market research and security and economic
analysis provided by brokers who may execute brokerage transactions at a higher
cost to the Portfolios than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Portfolios with brokers, subject to
review by the Company's Board of Directors from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Sub-Adviser in connection with the
Sub-Adviser's services to other clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of a Portfolio as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be so purchased or sold in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the
Portfolio in question and to such other clients.
(4) The Sub-Adviser shall maintain all books and records with
respect to the Portfolios' portfolio transactions required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act and shall render to the Company's Board of Directors such periodic and
special reports as the Company's Board of Directors may reasonably request.
(5) The Sub-Adviser shall provide the Portfolios' Custodian on each
business day with information relating to all transactions concerning the
Portfolios' assets and shall provide the Adviser with such information upon
request of the Adviser.
(6) (a) The investment management services provided by the
Sub-Adviser under this Agreement are not to be deemed exclusive and the
Sub-Adviser shall be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the Company.
(b) Services to be furnished by the Sub-Adviser under this
Agreement may be furnished through the medium of any of the Sub-Adviser's
officers or employees. It is understood that the Sub-Adviser may obtain certain
administrative services, including, without limitation, services relating to
trade reconciliation and the production of client reports, from its parent
company in carrying out its obligations under this Agreement.
2
(c) The Sub-Adviser shall keep the Portfolios' books and
records required to be maintained by the Sub-Adviser pursuant to paragraph 1(a)
of this Agreement and shall timely furnish to the Adviser all information
relating to the Sub-Adviser's services under this Agreement needed by the
Adviser to keep the other books and records of the Portfolios required by Rule
31a-1 under the 1940 Act. The Sub-Adviser agrees that all records that it
maintains on behalf of the Portfolios are property of the Portfolios and the
Sub-Adviser will surrender promptly to a Portfolio any of such records upon that
Portfolio's request; provided, however, that the Sub-Adviser may retain a copy
of such records. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are required to
be maintained by it pursuant to paragraph 1(a) of this Agreement.
2. The Adviser shall continue to have responsibility for all services to be
provided to the Portfolios pursuant to the Advisory Agreement and shall oversee
and review the Sub-Adviser's performance of its duties under this Agreement.
3. The Adviser has delivered to the Sub-Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Articles of Incorporation, as filed with the Secretary of State of
Maryland (such Articles of Incorporation as in effect on the date of this
Agreement, and as amended from time to time, are herein called the "Articles of
Incorporation");
(b) By-Laws of the Company (such By-Laws, as in effect on the date of
this Agreement, and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Company's Board of Directors
authorizing the appointment of the Sub-Adviser and approving the form of this
Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as filed with the
Securities and Exchange Commission (the "Commission") relating to the Portfolios
and shares of the Portfolios' beneficial shares, and all amendments thereto;
(e) Notification of Registration of the Portfolios under the 1940 Act
on Form N-8A as filed with the Commission, and all amendments thereto; and
(f) Prospectus of the Portfolios.
3
4. For the services to be provided by the Sub-Adviser pursuant to this Agreement
for the Portfolios, the Adviser will pay to the Sub-Adviser as full compensation
therefor a fee at an annual rate specified in Schedule A. This fee will be paid
to the Sub-Adviser from the Adviser's advisory fee for such Portfolios.
5. The Sub-Adviser shall not be liable for any error of judgment or for any loss
suffered by a Portfolio or the Adviser in connection with performance of its
obligations under this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act), or a loss resulting from willful
misfeasance, bad faith or gross negligence on the Sub-Adviser's part in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement, except as may otherwise be provided under
provisions of applicable state law which cannot be waived or modified hereby.
6. This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved at
least annually in conformance with the 1940 Act provided, however, that this
Agreement may be terminated (a) by a Portfolio at any time, without the payment
of any penalty, by the vote of a majority of Directors of the Company or by the
vote of a majority of the outstanding voting securities of a Portfolio, (b) by
the Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the other parties, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days' written
notice to the other parties. This Agreement shall terminate automatically and
immediately in the event of its assignment. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exceptions as may be granted by the
Commission under the 1940 Act.
7. Nothing in this Agreement shall limit or restrict the right of any of the
Sub-Adviser's directors, officers, or employees to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any business, whether of a similar or dissimilar nature, nor limit or
restrict the Sub-Adviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
8. During the term of this Agreement, the Adviser agrees to furnish the
Sub-Adviser at its principal office all prospectuses, proxy statements, reports
to shareholders, sales literature or other materials prepared for distribution
to shareholders of the Portfolios, the Company or the public that refers to the
Sub-Adviser or its clients in any way prior to use thereof and not to use
material if the Sub-Adviser reasonably objects in writing within five business
days (or such other period as may be mutually agreed upon) after receipt
thereof. The Sub-Adviser's right to object to such materials is limited to the
portions of such materials that expressly relate to the Sub-Adviser, its
services and its clients. The Adviser agrees to use its reasonable best efforts
to ensure that materials prepared by its employees or agents or its affiliates
that refer to the Sub-Adviser or its clients in any way are consistent with
those materials previously approved by the Sub-Adviser as referenced in the
first sentence of this paragraph. Sales literature may be furnished to the
Sub-Adviser by first-class or overnight mail, facsimile transmission equipment
or hand delivery.
9. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
the vote of the majority of the outstanding voting securities of a Portfolio.
10. This Agreement shall be governed by the laws of the state of Maryland;
provided, however that nothing herein shall be construed as being inconsistent
with the 1940 Act.
4
11. This Agreement embodies the entire agreement and understanding among the
parties hereto, and supersedes all prior agreements and understandings relating
to this Agreement's subject matter. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
12. Should any part of this Agreement be held invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
13. Any notice, advice or report to be given pursuant to this Agreement shall be
delivered or mailed:
To the Adviser at:
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
To the Sub-Adviser at:
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
To the Company or a Portfolio at:
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
14. Where the effect of a requirement of the 1940 Act reflected in any provision
of this Agreement is altered by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
PILGRIM XXXXXX & ASSOCIATES, LTD. PBHG INSURANCE SERIES FUND, INC.
By: ________________________________ By: _______________________________
Title: _______________________________ Title: _____________________________
PILGRIM XXXXXX VALUE INVESTORS, INC.
By: ________________________________
Title: _______________________________
5
SCHEDULE A
SUB-ADVISED PORTFOLIOS
PBHG INSURANCE SERIES FUND, INC. FEE
-------------------------------- ---
PBHG Mid-Cap Value Portfolio 0.50%
PBHG Small Cap Value Portfolio 0.65%
PBHG Select Value Portfolio 0.40%
