INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this ___ day of _______, 2004 by and among Old
Mutual Capital, Inc. (the "Adviser"), Pilgrim Xxxxxx & Associates, Ltd. (the
"Sub-Adviser"), and Old Mutual Advisor Funds, a Delaware statutory trust (the
"Trust").
WHEREAS, the Trust 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 July 8, 2004
and Schedule A to the Investment Advisory Agreement dated July 8, 2004 between
the Adviser and the Trust, the Adviser acts as investment adviser for the assets
of the portfolios listed on Schedule A to this Agreement (each, a "Portfolio");
and
WHEREAS, the Adviser and the Trust each desire to retain the Sub-Adviser
to provide investment advisory services to the Trust in connection with the
management of all or a portion of the assets of each Portfolio, and the
Sub-Adviser is willing to render such investment advisory services.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. (a) Subject to supervision and oversight by the Adviser and the Trust's Board
of Trustees, the Sub-Adviser shall manage (i) the investment operations for such
portion, if any, of a Portfolio's assets allocated by specific investment style
mandate by the Adviser from time to time (those assets being referred to as the
"Portfolio Account"), and (ii) the composition of such assets, including the
purchase, retention and disposition thereof, in accordance with the Portfolio's
investment objectives, policies and restrictions as stated in such Portfolio's
Prospectus(es) (such Prospectus(es) and Statement(s) 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 Account's
investments and determine from time to time what investments and securities will
be purchased, retained or sold by such Portfolio Account and what portion of
such 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 Trust's Prospectus
and with the instructions and directions of the Adviser and of the Board of
Trustees 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.
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(3) The Sub-Adviser shall determine the securities to be purchased or
sold with respect to the Portfolio Account 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 Portfolio's Registration Statement (as defined
herein) and Prospectus or as the Board of Trustees or the Adviser may direct
from time to time, in conformity with federal securities laws. In providing the
Portfolio Account 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 a Portfolio that the Sub-Adviser have
access to (i) supplemental investment and market research and (ii) security and
economic analysis provided by brokers who may execute brokerage transactions at
a higher cost to the Portfolio 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 on behalf of each Portfolio Account with
brokers, subject to review by the Trust's Board of Trustees 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 at its expense will make available to the Trustees of
the Portfolio and the Adviser at reasonable times its portfolio managers and
other appropriate personnel, either in person or, at the mutual convenience of
the Adviser and the Sub-Adviser, by telephone, in order to review the investment
policies, performance and other investment related information regarding the
Portfolio Account and to consult with the Trustees of the Portfolio and Adviser
regarding the Portfolio's investment affairs, including economic, statistical
and investment matters related to the Sub-Adviser's duties hereunder, and will
provide periodic reports to the Adviser relating to the investment strategies it
employs. The Sub-Adviser and its personnel shall also cooperate fully with
counsel and auditors for, and the Chief Compliance Officers of, the Adviser and
the Trust.
(5) In accordance with procedures adopted by the Trustees of the
Portfolio, as amended from time to time, the Sub-Adviser is responsible for
assisting in the fair valuation of all Portfolio Account securities. The
Sub-Adviser will use its reasonable efforts to provide, based upon its own
expertise, and to arrange with parties independent of the Sub-Adviser such as
broker-dealers for the provision of, valuation information or prices for
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securities for which prices are deemed by the Adviser or Trust's administrator
not to be readily available in the ordinary course of business from an automated
pricing service. In addition, the Sub-Adviser will assist the Portfolio and its
agents in determining whether prices obtained for valuation purposes accurately
reflect market price information relating to the assets of the Portfolio Account
at such times as the Adviser shall reasonably request, including but not limited
to, the hours after the close of a securities market and prior to the daily
determination of a Portfolio's net asset value per share.
(6) The Sub-Adviser at its expense will provide the Adviser and/or the
Trust's Chief Compliance Officer with such compliance reports relating to its
duties under this Agreement as may be requested from time to time.
Notwithstanding the foregoing, the Sub-Adviser will promptly report to the
Adviser any material violations of the federal securities laws (as defined in
Rule 38a-1 of the 0000 Xxx) that it is or should be aware of or of any material
violation of the Sub-Adviser's compliance policies and procedures that pertain
to the Portfolio, as well as any change in portfolio manager(s) of the
Portfolio.
(7) Unless otherwise directed by the Adviser or the Trust's Board of
Trustees, the Sub-Adviser will vote all proxies received in accordance with the
Trust's proxy voting policy or, if the Sub-Adviser has a proxy voting policy
approved by the Trust's Board of Trustees, the Sub-Adviser's proxy voting
policy. The Adviser shall instruct the Portfolio's custodian to forward or cause
to be forwarded to the Sub-Adviser all relevant proxy solicitation materials.
The Sub-Adviser shall maintain and shall forward to the Portfolio or its
designated agent such proxy voting information as is necessary for the Portfolio
to timely file proxy voting results in accordance with Rule 30b1-4 of the 0000
Xxx.
(8) The Sub-Adviser represents and warrants that it has adopted a code of
ethics meeting the requirements of Rule 17j-1 under the 1940 Act and the
requirements of Rule 204A-1 under the Investment Advisers Act of 1940 and has
provided the Adviser and the Trustees of the Fund a copy of such code of ethics,
together with evidence of its adoption, and will promptly provide copies of any
changes thereto, together with evidence of their adoption. Upon request of the
Adviser, but in any event no less frequently than annually, the Sub-Adviser will
supply the Adviser a written report that (A) describes any issues arising under
the code of ethics or procedures since the Sub-Adviser's last report, including
but not limited to material violations of the code of ethics or procedures and
sanctions imposed in response to the material violations; and (B) certifies that
the procedures contained in the Sub-Adviser's code of ethics are reasonably
designed to prevent "access persons" from violating the code of ethics.
(9) The Sub-Adviser will review draft reports to shareholders and other
documents provided or available to it and provide comments on a timely basis. In
addition, the Sub-Adviser and each officer and portfolio manager thereof
designated by the Adviser will provide on a timely basis such certifications or
sub-certifications as the Adviser may reasonably request in order to support and
facilitate certifications required to be provided by the Trust's Principal
Executive Officer and Principal Accounting Officer.
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(10) 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 Trust's Board of Trustees such periodic and special reports
as the Trust's Board of Trustees may reasonably request.
(11) The Sub-Adviser shall provide the Portfolios' custodian on each
business day with information relating to all transactions concerning the assets
of the Portfolio Account and shall provide the Adviser with such information
upon request of the Adviser.
(12) (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 Trust.
(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.
(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 a Portfolio required by Rule 31a-1 under the 1940
Act. The Sub-Adviser agrees that all records that it maintains on behalf of a
Portfolio are property of the Portfolio 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 each Portfolio 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) Certified resolutions of the Trust's Board of Trustees authorizing
the appointment of the Sub-Adviser and approving the form of this Agreement;
(b) 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; and
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(c) Prospectus(es) of the Portfolios.
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 equal to a percentage of the portion of each
Portfolio's average daily net assets managed by the Sub-Adviser pursuant to each
specified investment style mandate, as set forth on Schedule A. This fee will be
paid to the Sub-Adviser from the Adviser's advisory fee for such Portfolio. This
fee will be computed daily and paid to the Sub-Adviser monthly.
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 Trustees of the Trust 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 partners, 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 Trust 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
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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 mail, electronic mail or overnight delivery service,
facsimile transmission equipment or hand delivery.
9. No Trustee or Shareholder of the Trust shall be personally liable for any
debts, liabilities, obligations or expenses incurred by, or contracted for under
this Agreement.
10. 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 each Portfolio.
11. This Agreement shall be governed by the laws of the state of Delaware;
provided, however, that nothing herein shall be construed as being inconsistent
with the 1940 Act.
12. 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; all such
counterparts shall, together, constitute only one instrument.
13. 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.
14. Any notice, advice or report to be given pursuant to this Agreement shall be
delivered or mailed:
To the Adviser at:
Old Mutual Capital, Inc.
[ADDRESS]
Attention: General Counsel
To the Sub-Adviser at:
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: General Counsel
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To the Trust or a Portfolio at:
Old Mutual Advisor Funds
[ADDRESS]
Attention: General Counsel
15. 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.
OLD MUTUAL CAPITAL, INC. OLD MUTUAL ADVISOR FUNDS
By: _______________________________ By: ______________________________
Name: ______________________________ Name: ____________________________
Title: _____________________________ Title: ___________________________
PILGRIM XXXXXX & ASSOCIATES, LTD.
By: _______________________________
Name: ______________________________
Title: _____________________________
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SCHEDULE A
DATED ___________, 2004
TO
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
PILGRIM XXXXXX & ASSOCIATES, LTD.
AND
OLD MUTUAL CAPITAL, INC.
DATED ___________, 2004
PORTFOLIO MANDATE FEE
--------- ------- ---
OM Asset Allocation Conservative Portfolio U.S. Large Cap Growth 0.35%
U.S. Large Cap Blend 0.35%
All Cap Blend 0.40%
U.S. Mid Cap Equity 0.45%
U.S. Mid Cap Growth 0.45%
U.S. Small Cap Growth 0.50%
U.S. Small Cap Blend 0.50%
OM Asset Allocation Balanced Portfolio U.S. Large Cap Growth 0.35%
U.S. Large Cap Blend 0.35%
All Cap Blend 0.40%
U.S. Mid Cap Equity 0.45%
U.S. Mid Cap Growth 0.45%
U.S. Small Cap Growth 0.50%
U.S. Small Cap Blend 0.50%
OM Asset Allocation Moderate Portfolio U.S. Large Cap Growth 0.35%
U.S. Large Cap Blend 0.35%
All Cap Blend 0.40%
U.S. Mid Cap Equity 0.45%
U.S. Mid Cap Growth 0.45%
U.S. Small Cap Growth 0.50%
U.S. Small Cap Blend 0.50%
OM Asset Allocation Growth Portfolio U.S. Large Cap Growth 0.35%
U.S. Large Cap Blend 0.35%
All Cap Blend 0.40%
U.S. Mid Cap Equity 0.45%
U.S. Mid Cap Growth 0.45%
U.S. Small Cap Growth 0.50%
U.S. Small Cap Blend 0.50%
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