Exhibit 5(b)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 1st day of April 1997, by and among Pilgrim
Xxxxxx & Associates, Ltd. (the "Adviser"), Xxxxxxx'x Asset Management, 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");
and
WHEREAS, pursuant to the Investment Advisory Agreement dated April 1,
1997 and Schedule A dated April 1, 1997 between the Adviser and the Company, the
Adviser will act as investment adviser to certain series of the Company as set
forth in Schedule A attached hereto ("Portfolios"); 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 each Portfolio and the composition of each Portfolio's
portfolio, including the purchase, retention and disposition
thereof, in accordance with each Portfolio's investment
objectives, policies and restrictions as stated in the 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 each Portfolio's
investments and determine from time to time what investments and
securities will be purchased, retained or sold by each Portfolio,
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 purchase or
sold by each Portfolio and will place orders with or through such
persons, brokers or dealers to carry out the policy with respect
to brokerage set forth in the 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 each Portfolio 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 each Portfolio
that the Sub-Adviser 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 each
Portfolio with such 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 each Portfolio's 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.
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(5) The Sub-Adviser shall provide the Portfolios' Custodian on each
business day with information relating to all transactions
concerning each Portfolio's assets and shall provide the Adviser
with such information upon request of the Adviser.
(6) 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 of
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.
(c) The Sub-Adviser shall keep each Portfolio's 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 each Portfolio are property of the Portfolios and the
Sub-Adviser will surrender promptly to the 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 each 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");
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(c) Certified resolutions of the Company's Board of Directors
authorizing the appointment of the Adviser and 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.
4. For the services to be provided by the Sub-Adviser pursuant to this
Agreement for each of the Portfolios set forth in Schedule A, the
Adviser will pay to the Sub-Adviser as full compensation therefor a fee
at an annual rate as specified in Schedule A. Each such fee will be
paid to the Sub-Adviser from the Adviser's advisory fee for such
Portfolio.
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
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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) 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.
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
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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:
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
To the Sub-Adviser at:
000 Xxxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
To the Company or the Portfolio at:
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: General Counsel
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: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
----------------------------- ----------------------------
Title: Chief Investment Officer Title: Vice President
XXXXXXX'X ASSET MANAGEMENT, INC.
By: /s/
-----------------------------
Title: Chief Investment Officer
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SCHEDULE A dated April 1, 1997
Pursuant to Section 4 of this Agreement, the Sub-Adviser for each Portfolio
listed below shall be entitled to compensation, to be paid by the Adviser, which
shall be computed daily and paid monthly at the annual rate specified below with
respect to each Portfolio's average daily net assets:
Portfolio Fee
--------- ---
Small Cap Value Portfolio 0.65%
Large Cap Value Portfolio 0.40%
less 50% of any fee waivers borne by the Adviser.
