Exhibit (d)(9)
FORM OF
SUB-ADVISORY AGREEMENT
AGREEMENT made this 30th day of January, 2002 between ING Pilgrim
Investments, LLC, a Delaware limited liability company (the "Manager"), and
Xxxxxxx Investment Partners, L.P., a California limited partnership (the
"Sub-Adviser").
WHEREAS, Pilgrim Equity Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Fund is authorized to issue separate series, each series
having its own investment objective or objectives, policies, and limitations;
WHEREAS, the Fund may offer shares of additional series in the future;
WHEREAS, pursuant to an Investment Management Agreement, dated September 1,
2000, as amended on November 2, 2001 (the "Management Agreement"), a copy of
which has been provided to the Sub-Adviser, the Fund has retained the Manager to
render advisory and management services with respect to certain of the Fund's
series; and
WHEREAS, pursuant to authority granted to the Manager in the Management
Agreement, the Manager wishes to retain the Sub-Adviser to furnish investment
advisory services to one or more of the series of the Fund, and the Sub-Adviser
is willing to furnish such services to the Fund and the Manager.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Manager and the Sub-Adviser as
follows:
1. APPOINTMENT. The Manager hereby appoints the Sub-Adviser to act as the
investment adviser and manager to the series of the Fund set forth on Schedule A
hereto (the "Series") for the periods and on the terms set forth in this
Agreement. The Sub-Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
In the event the Fund designates one or more series (other than the Series)
with respect to which the Manager wishes to retain the Sub-Adviser to render
investment advisory services hereunder, it shall notify the Sub-Adviser in
writing. If the Sub-Adviser is willing to render such services, it shall notify
the Manager in writing, whereupon such series shall become a Series hereunder,
and be subject to this Agreement.
2. SUB-ADVISER'S AUTHORITY. In connection with the management of the assets
of each Series' portfolio, the Sub-Adviser has the discretionary authority to
buy, sell, exchange, convert and otherwise trade in any and all stocks, bonds
and other securities as the Sub-Adviser selects in accordance with the Series'
current and effective prospectus, statement of additional information and any
applicable provisions of the 1940 Act.
3. SUB-ADVISER'S DUTIES. Subject to the supervision of the Fund's Board of
Trustees and the Manager, the Sub-Adviser will provide a continuous investment
program for each Series' portfolio and determine in its discretion the
composition of the assets of each Series' portfolio, including determination of
the purchase, retention, or sale of the securities, cash, and other investments
contained in the portfolio. The Sub-Adviser will provide investment research and
conduct a continuous program of evaluation, investment, sales, and reinvestment
of each Series' assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for the Series;
when these transactions should be executed; and what portion of the assets of
the Series should be held in the various securities and other investments in
which it may invest. To the extent permitted by the investment policies of each
Series, the Sub-Adviser shall make decisions for the Series as to foreign
currency matters and make determinations as to and execute and perform foreign
currency exchange contracts on behalf of the Series. The Sub-Adviser will
provide the services under this Agreement in accordance with each Series'
investment objective or objectives, policies, and restrictions as stated in the
Fund's Registration Statement filed with the U.S. Securities and Exchange
Commission ("SEC"), as amended, copies of which shall be sent to the Sub-Adviser
by the Manager prior to the commencement of this Agreement and promptly
following any such amendment. The Sub-Adviser further agrees as follows:
(a) For a period of one-year after the effective date of the
Registration Statement filed with the SEC pertaining to each Series of the Fund
(the "Non-Compete Period"), the Sub-Adviser will not act as an investment
adviser or investment sub-adviser to any "investment company," as that term is
currently defined in the 1940 Act, that is organized in any jurisdiction in the
United States and is registered with the SEC pursuant to Section 8 of the 1940
Act that has investment objectives, investment policies and investment
restrictions substantially similar to those of the Series of the Fund to which
this Agreement relates as reflected in the Fund's effective Registration
Statement. Exempted from this restriction will be any non mutual fund sales,
multi-manager mutual funds, proprietary mutual funds, separate accounts or
variable annuity mutual funds. The parties agree that any change in control of
the Manager or any termination of this Agreement prior to the end of the
Non-Compete Period will terminate any prohibition on the Sub-Adviser's ability
to act as an investment adviser or investment sub-adviser as described above.
(b) The Sub-Adviser will comply with (1) the 1940 Act and all rules
and regulations thereunder; (2) all other applicable federal and state laws and
regulations; (3) any applicable procedures adopted by the Fund's Board of
Trustees in accordance with the foregoing, of which the Sub-Adviser has been
sent a copy; and (4) the provisions of the Registration Statement of the Fund
filed under the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act, as supplemented or amended, of which the Sub-Adviser has received a
copy, and with the Manager's portfolio manager operating policies and procedures
as in effect on the date hereof, as such policies and procedures may be revised
or amended by the Manager and agreed to by the Sub-Adviser. In carrying out its
duties under the Sub-Advisory Agreement, the Sub-Adviser will comply with the
following policies and procedures:
(i) The Sub-Adviser will manage each Series so that it meets the
income and asset diversification requirements of Section 851 of the Internal
Revenue Code.
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(ii) The Sub-Adviser will make commercially reasonable efforts to
vote all proxies solicited by or with respect to the issuers of securities which
assets of the Series are invested. Such votes shall be consistent with any
procedures or guidelines promulgated by the Board or the Manager and provided to
the Sub-Adviser or, if none, in the discretion of the Sub-Adviser based upon the
best interests of the Series. The Sub-Adviser will maintain appropriate records
detailing its voting of proxies on behalf of the Fund and will provide to the
Fund at least quarterly a report setting forth the proposals voted on and how
the Series' shares were voted since the prior report, including the name of the
corresponding issuers.
(iii) In connection with the purchase and sale of securities for
each Series, the Sub-Adviser will arrange for the transmission to the custodian
and portfolio accounting agent for the Series on a daily basis such
confirmation, trade tickets, and other documents and information, including, but
not limited to, Cusip, Cedel, or other numbers that identify securities to be
purchased or sold on behalf of the Series, as may be reasonably necessary to
enable the custodian and portfolio accounting agent to perform its
administrative and recordkeeping responsibilities with respect to the Series.
With respect to portfolio securities to be settled through the Depository Trust
Company, the Sub-Adviser will arrange for the prompt transmission of the
confirmation of such trades to the Fund's custodian and portfolio accounting
agent.
(iv) The Sub-Adviser will assist the custodian and portfolio
accounting agent for the Fund in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the Fund or
adopted by the Board of Trustees, the value of any portfolio securities or other
assets of the Series for which the custodian and portfolio accounting agent
seeks assistance from or identifies for review by the Sub-Adviser. The parties
acknowledge that the Sub-Adviser is not a custodian of the Series' assets and
will not take possession or custody of such assets.
(v) The Sub-Adviser will provide the Manager, within a mutually
agreed period of time following the end of the second and fourth fiscal quarters
of each Series (currently ten (10) days), a commentary (to be subject to review
and editing by the Manager) containing a discussion of those factors referred to
in Item 5(a) of Form N-1A, promulgated pursuant to the 1933 and 1940 Acts, in
respect of both the prior reporting period and the fiscal year to date. The
Sub-Adviser will also provide such other periodic reports as the parties may
mutually agree to from time to time.
(vi) The Sub-Adviser will complete and deliver to the Manager a
written compliance checklist in a form provided by the Manager for each month
generally by the 10th day of the following month, unless otherwise agreed by the
parties.
(vii) The parties agree that the Manager or an affiliated person
of the Manager will send sales literature or other promotional material to the
Sub-Adviser for its prior approval before use of said material for any purpose
by the Manager. The Sub-Adviser agrees to use its best efforts to respond to
such requests for approval promptly.
(c) The Sub-Adviser will make available to the Fund and the Manager,
promptly upon request, any of the Series' investment records and ledgers
maintained by the Sub-Adviser (which shall not include the records and ledgers
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maintained by the custodian or portfolio accounting agent for the Fund) as are
necessary to assist the Fund and the Manager to comply with requirements of the
1940 Act and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), as well as other applicable laws. The Sub-Adviser will furnish to
regulatory authorities having the requisite authority any information or reports
in connection with such services in respect to the Series which may be requested
in order to ascertain whether the operations of the Fund are being conducted in
a manner consistent with applicable laws and regulations.
(d) The Sub-Adviser will provide reports to the Fund's Board of
Trustees for consideration at meetings of the Board on the investment program
for each Series and the issuers and securities represented in each Series'
portfolio, and will furnish the Fund's Board of Trustees with respect to each
Series such periodic and special reports as the Trustees and the Manager may
reasonably request.
4. REPRESENTATIONS AND WARRANTIES OF THE MANAGER. The Manager represents
and warrants to the Sub-Adviser as follows:
(a) The Manager is registered as an investment adviser under the
Advisers Act;
(b) The Manager is a limited liability company duly organized and
validly existing under the laws of the State of Delaware with the power to own
and possess its assets and carry on its business as it is now being conducted;
(c) The Manager will comply with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and
regulations, with any procedures adopted by the Fund's Board of Trustees, and
the provisions of the Registration Statement of the Fund filed under the 1933
Act, and the 1940 Act, as supplemented or amended.
(d) The execution, delivery and performance by the Manager of this
Agreement are within the Manager's powers and have been duly authorized by all
necessary action on the part of its Board of Directors, and no action by or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Manager for the execution, delivery and performance
by the Manager of this Agreement, and the execution, delivery and performance by
the Manager of the Agreement do not contravene or constitute a default under (i)
any provision of applicable law, rule or regulation, (ii) the Manager's
governing instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Manager;
(e) The Form ADV of the Manager as provided to the Sub-Adviser is a
true, complete, and current copy of the Form ADV as is currently filed (Part I)
or is currently on file with the Manager (Part II) as is required by SEC and the
information contained therein is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading;
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(f) The Manager acknowledges that it received a copy of the
Sub-Adviser's Form ADV prior to the execution of this agreement;
(g) The Manager and each of its officers, directors, employees and
agents, shall comply at all times with all applicable laws pertaining to its
business and to the operation of the Series of the Fund and to the offering of
their shares;
(h) To the best of the Manager's knowledge, the Fund is duly
organized, validly existing and in good standing under the laws of the state of
its organization;
(i) The Manager will take all reasonable and practicable steps to
assure that the Fund will operate in accordance with the 1940 Act and in
accordance with all applicable laws; and
(j) The Manager will notify the Sub-Adviser if the Manager or the Fund
becomes the subject of any legal or regulatory investigation, examination or
judicial proceeding which may affect its ability to perform its obligations
under this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE SUB-ADVISER. The Sub-Adviser
represents and warrants to the Manager as follows:
(a) The Sub-Adviser is registered as an investment adviser under the
Advisers Act;
(b) The Sub-Adviser is a limited partnership duly organized and
validly existing under the laws of the State of California with the power to own
and possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Sub-Adviser of this
Agreement are within the Sub-Adviser's powers and have been duly authorized by
all necessary action, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the Sub-Adviser
for the execution, delivery and performance by the Sub-Adviser of this
Agreement, and the execution, delivery and performance by the Sub-Adviser of the
Agreement do not contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Sub-Adviser's governing
instruments, or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Sub-Adviser;
(d) The Form ADV of the Sub-Adviser as provided to the Manager is a
true, complete, and current copy of the Form ADV as is currently filed (Part I)
or is currently on file with the Manager (Part II) as is required by SEC and the
information contained therein is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading;
(e) The Sub-Adviser acknowledges that it received a copy of the
Manager's Form ADV prior to the execution of this agreement;
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(f) The Sub-Adviser and each of its officers, directors, employees and
agents, shall comply at all times with all applicable laws pertaining to its
business and to the operation of the Series of the Fund and to the offering of
their shares, to the extent applicable;
(g) The Sub-Adviser will take all reasonable and practicable steps to
assure that the Fund will operate in accordance with the 1940 Act and in
accordance with all applicable laws; and
(h) The Sub-Adviser will notify the Manager if the Sub-Adviser becomes
the subject of any legal or regulatory investigation, examination or judicial
proceeding which may affect its ability to perform its obligations under this
Agreement.
6. BROKER-DEALER SELECTION. The Sub-Adviser is authorized to make decisions
to buy and sell securities and other investments for each Series' portfolio, to
select a broker-dealer to effect a transaction, and to negotiate brokerage
commission rates in effecting a security transaction. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
execution for the Series, taking into account the factors specified in the
then-current prospectus and/or statement of additional information for the
Series, which include price (including the applicable brokerage commission or
dollar spread), the size of the order, the nature of the market for the
security, the timing of the transaction, the reputation, the experience and
financial stability of the broker-dealer involved, the quality of the service,
the difficulty of execution, and the execution capabilities and operational
facilities of the firm involved, and the firm's risk in positioning a block of
securities. Accordingly, the price to a Series in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Sub-Adviser in the exercise of its
reasonable business judgement and fiduciary obligations to the Fund, by other
aspects of the portfolio execution services offered. Subject to such policies as
the Fund's Board of Trustees or Manager may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Sub-Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused a Series to pay a broker-dealer for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either that particular
transaction or the Sub-Adviser's overall responsibilities with respect to the
Series and to their respective other clients as to which they exercise
investment discretion. To the extent consistent with these standards, the
Sub-Adviser is further authorized to allocate the orders placed by it on behalf
of a Series to the Sub-Adviser if it is registered as a broker-dealer with the
SEC, to an affiliated broker-dealer, or to such brokers and dealers who also
provide research or statistical material, or other services to the Series, the
Sub-Adviser, or an affiliate of the Sub-Adviser. Such allocation shall be in
such amounts and proportions as the Sub-Adviser shall determine consistent with
the above standards, and the Sub-Adviser will report on said allocation
regularly to the Fund's Board of Trustees indicating the broker-dealers to which
such allocations have been made and the basis therefor.
7. DISCLOSURE ABOUT SUB-ADVISER. The Sub-Adviser has reviewed the most
recent Post-Effective Amendment to the Registration Statement for the Fund filed
with the SEC that contains disclosure about the Sub-Adviser, and represents and
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warrants that, with respect to the disclosure about the Sub-Adviser or
information relating, directly or indirectly, to the Sub-Adviser, such
Registration Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material fact which was
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and will maintain such
registration so long as this Agreement remains in effect. The Sub-Adviser will
provide the Manager with an updated copy of the Sub-Adviser's Form ADV, Part II
at the time the updated Form ADV, Part II is finalized.
8. EXPENSES. Except to the extent expressly assumed by the Sub-Adviser and
except to any extent required by law to be paid or reimbursed by the
Sub-Adviser, the Sub-Adviser shall have no duty to pay any ordinary operating
expenses incurred in the organization and operation of the Series of the Fund.
Ordinary operating expenses include, but are not limited to, brokerage
commissions and other transaction charges, taxes, legal, auditing, printing, or
governmental fees, other Fund service providers' fees and expenses, expenses
relating to the issue, sale (including any sales loads), redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
expenses relating to Board and shareholder meetings, and the cost of preparing
and distributing reports and notices to shareholders. The Sub-Adviser shall pay
all other expenses incurred by it in connection with its services under this
Agreement.
9. COMPENSATION. For the services provided to each Series, the Manager will
pay the Sub-Adviser an annual fee equal to the amount specified for such Series
in Schedule A hereto, payable monthly in arrears. The fee will be appropriately
prorated to reflect any portion of a calendar month that this Agreement is not
in effect among the parties. In accordance with the provisions of the Management
Agreement, the Manager is solely responsible for the payment of fees to the
Sub-Adviser, and the Sub-Adviser agrees to seek payment of its fees solely from
the Manager.
10. COMPLIANCE.
(a) The Sub-Adviser agrees to use such compliance techniques as the
Manager or the Board of Trustees may adopt, including any written compliance
procedures, which are mutually agreed to by the Manager and Sub-Adviser, which
agreement shall not be unreasonably withheld.
(b) The Sub-Adviser agrees that it shall promptly notify the Manager
and the Fund (1) in the event that the SEC has (i) censured the Sub-Adviser;
(ii) placed limitations upon its activities, functions or operations; (iii)
suspended or revoked its registration as an investment adviser; or (iv)
commenced proceedings or an investigation that may result in any of these
actions; or (2) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code. The Sub-Adviser further agrees to
notify the Manager and the Fund promptly of any material fact known to the
Sub-Adviser respecting or relating to the Sub-Adviser that is not contained in
the Registration Statement or prospectus covering shares of any Series covered
by this Agreement, or any amendment or supplement thereto, but which should be
contained therein in order make the statements made, in light of the
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circumstances in which they were made, not misleading, or if any statement
contained therein becomes untrue in any material respect.
(c) The Manager agrees that it shall promptly notify the Sub-Adviser
(1) in the event that the SEC has (i) censured the Manager or the Fund; (ii)
placed limitations upon either of their activities, functions, or operations;
(iii) suspended or revoked the Manager's registration as an investment adviser;
or (iv) commenced proceedings or an investigation that may result in any of
these actions; or (2) upon having a reasonable basis for believing that the
Series has ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. The Manager further
agrees to notify the Sub-Adviser promptly of any material fact known to the
Manager respecting or relating to the Manager that is not contained in the
Registration Statement or prospectus covering shares of any Series covered by
this Agreement, or any amendment or supplement thereto, but which should be
contained therein in order make the statements made, in light of the
circumstances in which they were made, not misleading, or if any statement
contained therein becomes untrue in any material respect.
11. BOOKS AND RECORDS. The Sub-Adviser hereby agrees to provide access to
and copies of all records which it maintains for the Series (including but not
limited to documents, manuals, computer disks and CD-ROMs) to the Fund and to
provide such records promptly and with no charge upon the Fund's or the
Manager's request in compliance with the requirements of Rule 31a-3 under the
1940 Act. The Sub-Adviser further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-l under the 1940 Act.
12. COOPERATION; CONFIDENTIALITY. Each party to this Agreement agrees to
cooperate with the other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the SEC) in
connection with any investigation or inquiry relating to this Agreement or the
Fund. Subject to the foregoing, the Sub-Adviser shall treat as confidential all
information pertaining to the Fund and actions of the Fund, the Manager and the
Sub-Adviser, and the Manager shall treat as confidential and use only in
connection with the Series all information furnished to the Fund or the Manager
by the Sub-Adviser, in connection with its duties under the Agreement except
that the aforesaid information need not be treated as confidential if required
to be disclosed under applicable law, if generally available to the public
through means other than by disclosure by the Sub-Adviser or the Manager, or if
available from a source other than the Manager, Sub-Adviser or the Fund.
13. REPRESENTATIONS RESPECTING SUB-ADVISER. The Manager agrees that neither
the Manager, nor affiliated persons of the Manager, shall give any information
or make any representations or statements in connection with the sale of shares
of the Series concerning the Sub-Adviser or the Series other than the
information or representations contained in the Registration Statement,
prospectus, or statement of additional information for the Fund's shares, as
they may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional material
approved in advance by the Sub-Adviser, except with the prior permission of the
Sub-Adviser.
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14. LIABILITY.
(a) Except as may otherwise be required by the 1940 Act or the rules
thereunder or other applicable law, the Manager agrees that the Sub-Adviser, any
affiliated person of the Sub-Adviser, and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls the Sub-Adviser (1) shall bear no
responsibility and shall not be subject to any liability for any act or omission
respecting any series of the Fund that is not a Series hereunder, and (2) shall
not be liable for, or subject to any damages, expenses, or losses in connection
with, any error of judgment, mistake of law or act or omission connected with or
arising out of any services rendered under this Agreement, except by reason of
willful misfeasance, bad faith, or gross negligence in the performance of the
Sub-Adviser's duties, or by reason of reckless disregard of the Sub-Adviser's
obligations and duties under this Agreement.
(b) The Manager acknowledges that the Sub-Adviser has no authority or
responsibility with respect to (1) the structure of the Fund; (2) the promotion,
marketing or sale of the Fund's shares, subject to the exception noted below;
(3) the Fund's relations or dealings with investors and shareholders; (4) the
disclosure provided to investors and shareholders; (5) the supervision of the
day-to-day activities of the Manager; or (6) the supervision of the day-to-day
activities of any custodian to the Fund ("Custodian") or any administrator to
the Fund ("Administrator") with the exception of the duties of the Sub-Adviser
noted in Sections 3(b)(iii) and 3(b)(iv) of this Agreement. The Sub-Adviser
specifically acknowledges that it does have responsibility with respect to any
sales literature or other promotional material approved by the Sub-Adviser for
use in marketing the Fund.
15. INDEMNIFICATION.
(a) The Manager agrees to indemnify and hold harmless the Sub-Adviser,
any affiliated person of the Sub-Adviser, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls ("controlling person") the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities, or
litigation (including legal and other expenses) to which a Sub-Adviser
Indemnified Person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, under any other statute, at common law or otherwise, arising out
of the Manager's responsibilities to the Fund which (1) may be based upon the
Manager's negligence, willful misfeasance, or bad faith in the performance of
its duties (which could include a negligent action or a negligent omission to
act), or by reason of the Manager's reckless disregard of its obligations and
duties under this Agreement; (2) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or prospectus covering shares of the Fund or any Series, or any
amendment thereof or any supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon information furnished to the Manager or the Fund or to
any affiliated person of the Manager by a Sub-Adviser Indemnified Person; (3)
may be based on the issue, sale and distribution of the Fund's shares to the
extent such loss, claim, damages, liabilities or litigation is based on an
action taken or omitted to be taken by the Manager or ING Pilgrim Securities,
Inc.; (4) may be based on any breach by the Manager of any representation or
warranty, or any failure by the Manager or the Fund to comply with any agreement
contained in the Agreement; or (5) may be based on any action taken or omitted
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to be taken by the Administrator or the Custodian, to the extent such action or
omission is the result of an action or omission of the Manager; provided,
however, that in no case shall the indemnity in favor of the Sub-Adviser
Indemnified Person be deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
by reason of its reckless disregard of obligations and duties under this
Agreement.
(b) Notwithstanding Section 14 of this Agreement, the Sub-Adviser
agrees to indemnify and hold harmless the Manager, any affiliated person of the
Manager, and any controlling person of the Manager (all of such persons being
referred to as "Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Manager Indemnified Person may become subject under the 1933 Act,
1940 Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser of the Series
which (1) may be based upon the Sub-Adviser's negligence, willful misfeasance,
or bad faith in the performance of its duties (which could include a negligent
action or a negligent omission to act), or by reason of the Sub-Adviser's
reckless disregard of its obligations and duties under this Agreement; (2) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or prospectus covering the shares
of the Fund or any Series, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact known or which
should have been known to the Sub-Adviser and was required to be stated therein
or necessary to make the statements therein not misleading, unless such a
statement or omission was made in reliance upon information furnished to the
Manager, the Fund, or any affiliated person of the Manager or Fund by the
Sub-Adviser or any affiliated person of the Sub-Adviser; (3) may be based on any
breach by the Sub-Adviser of any representation or warranty, or any failure by
the Sub-Adviser to comply with any agreement contained in the Agreement; or (4)
may be based on any action taken or omitted to be taken by Administrator or
Custodian, to the extent such action or omission is the result of an action or
omission of the Sub-Adviser; provided, however, that in no case shall the
indemnity in favor of a Manager Indemnified Person be deemed to protect such
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this
Section 15 with respect to any claim made against a Sub-Adviser Indemnified
Person unless such Sub-Adviser Indemnified Person shall have notified the
Manager in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Sub-Adviser Indemnified Person (or after such Sub-Adviser
Indemnified Person shall have received notice of such service on any designated
agent), but failure to notify the Manager of any such claim shall not relieve
the Manager from any liability which it may have to the Sub-Adviser Indemnified
Person against whom such action is brought, except to the extent the Manager is
prejudiced by the failure or delay in giving such notice. In case any such
action is brought against the Sub-Adviser Indemnified Person, the Manager will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Sub-Adviser Indemnified Person, to assume the defense thereof,
with counsel satisfactory to the Sub-Adviser Indemnified Person. If the Manager
assumes the defense of any such action and the selection of counsel by the
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Manager to represent the Manager and the Sub-Adviser Indemnified Person would
result in a conflict of interests and therefore, would not, in the reasonable
judgment of the Sub-Adviser Indemnified Person, adequately represent the
interests of the Sub-Adviser Indemnified Person, the Manager will, at its own
expense, assume the defense with counsel to the Manager and, also at its own
expense, with separate counsel to the Sub-Adviser Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Sub-Adviser Indemnified
Person. The Sub-Adviser Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Manager shall not be liable to
the Sub-Adviser Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Sub-Adviser Indemnified Person
independently in connection with the defense thereof other than reasonable costs
of investigation. The Manager shall not have the right to compromise on or
settle the litigation without the prior written consent of the Sub-Adviser
Indemnified Person if the compromise or settlement results or may result in a
finding of wrongdoing on the part of the Sub-Adviser Indemnified Person.
(d) The Sub-Adviser shall not be liable under Paragraph (b) of this
Section 15 with respect to any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have notified the Sub-Adviser in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Manager Indemnified Person (or after such Manager Indemnified Person shall have
received notice of such service on any designated agent), but failure to notify
the Sub-Adviser of any such claim shall not relieve the Sub-Adviser from any
liability which it may have to the Manager Indemnified Person against whom such
action is brought except to the extent the Sub-Adviser is prejudiced by the
failure or delay in giving such notice. In case any such action is brought
against the Manager Indemnified Person, the Sub-Adviser will be entitled to
participate, at its own expense, in the defense thereof or, after notice to the
Manager Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Manager Indemnified Person. If the Sub-Adviser assumes the
defense of any such action and the selection of counsel by the Sub-Adviser to
represent both the Sub-Adviser and the Manager Indemnified Person would result
in a conflict of interests and therefore, would not, in the reasonable judgment
of the Manager Indemnified Person, adequately represent the interests of the
Manager Indemnified Person, the Sub-Adviser will, at its own expense, assume the
defense with counsel to the Sub-Adviser and, also at its own expense, with
separate counsel to the Manager Indemnified Person, which counsel shall be
satisfactory to the Sub-Adviser and to the Manager Indemnified Person. The
Manager Indemnified Person shall bear the fees and expenses of any additional
counsel retained by it, and the Sub-Adviser shall not be liable to the Manager
Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Manager Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The Sub-Adviser shall not have the right to compromise on or
settle the litigation without the prior written consent of the Manager
Indemnified Person if the compromise or settlement results or may result in a
finding of wrongdoing on the part of the Manager Indemnified Person.
16. DURATION AND TERMINATION.
(a) This Agreement shall become effective on the date first indicated
above, subject to the condition that the Fund's Board of Trustees, including a
majority of those Trustees who are not interested persons (as such term is
-11-
defined in the 0000 Xxx) of the Manager or the Sub-Adviser, and the shareholders
of each Series, shall have approved this Agreement. Unless terminated as
provided herein, this Agreement shall remain in full force and effect with
respect to each Series until the Reapproval Date set forth for such Series on
Schedule B to this Agreement, and shall continue on an annual basis thereafter
with respect to each Series provided that such annual continuance is
specifically approved each year by (1) the Board of Trustees of the Fund, or by
the vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of each Series, and (2) the vote of a majority of those Trustees who
are not parties to this Agreement or interested persons (as such term is defined
in the 0000 Xxx) of any such party to this Agreement cast in person at a meeting
called for the purpose of voting on such approval. However, any approval of this
Agreement by the holders of a majority of the outstanding shares (as defined in
the 0000 Xxx) of a Series shall be effective to continue this Agreement with
respect to such Series notwithstanding (1) that this Agreement has not been
approved by the holders of a majority of the outstanding shares of any other
Series or (2) that this Agreement has not been approved by the vote of a
majority of the outstanding shares of the Fund, unless such approval shall be
required by any other applicable law or otherwise. Notwithstanding the
foregoing, this Agreement may be terminated with respect to any Series covered
by this Agreement: (1) by the Manager at any time, upon sixty (60) days' written
notice to the Sub-Adviser and the Fund, (2) at any time without payment of any
penalty by the Fund, by the Fund's Board of Trustees or a majority of the
outstanding voting securities of each Series, upon sixty (60) days' written
notice to the Manager and the Sub-Adviser, or (3) by the Sub-Adviser upon sixty
(60) days' written notice to the Manager and the Fund. Notwithstanding the
above, the Sub-Adviser may terminate this Agreement at any time without penalty,
effective upon written notice to the Manager and the Fund, in the event either
the Sub-Adviser (acting in good faith) or the Manager ceases to be registered as
an investment adviser under the Advisers Act or otherwise becomes legally
incapable of providing investment management services pursuant to its respective
contract with the Fund, or in the event the Manager becomes bankrupt or
otherwise incapable of carrying out its obligations under this Agreement, or in
the event that the Sub-Adviser does not receive compensation for its services
from the Manager or the Fund as required by the terms of this Agreement.
In the event of termination for any reason, the Sub-Adviser will
promptly provide, at no charge, copies of all records of each Series for which
the Agreement is terminated to the Manager or the Fund. This Agreement shall
automatically terminate in the event of its assignment (as such term is
described in the 1940 Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or Paragraphs numbered 11,
12, 13, 14 and 15 of this Agreement shall remain in effect, as well as any
applicable provision of this Section 16 and, to the extent that only amounts are
owed to the Sub-Adviser as compensation for services rendered while the
Agreement was in effect, Section 9.
(b) NOTICES.
Any notice must be in writing and shall be sufficiently given when (1)
delivered in person, (2) dispatched by telegram or electronic facsimile transfer
(confirmed in writing by postage prepaid first class air mail simultaneously
dispatched), (3) sent by internationally recognized overnight courier service
(with receipt confirmed by such overnight courier service), or (4) sent by
registered or certified mail, to the other party at the address of such party
set forth below or at such other address as such party may from time to time
-12-
specify in writing to the other party. Notwithstanding the above, any notice
under this Agreement may be sent via electronic mail, provided that the
receiving party agrees to such delivery method orally in advance.
If to the Fund:
Pilgrim Equity Trust
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx
If to the Manager:
ING Pilgrim Investments, LLC
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
If to the Sub-Adviser:
Xxxxxxx Investment Partners, L.P.
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
17. AMENDMENTS. No provision 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 material amendment of this Agreement shall be
effective until the terms of any such material amendment have been approved by
an affirmative vote of (1) the holders of a majority of the outstanding voting
securities of the Series, and (2) the Trustees of the Fund, including a majority
of the Trustees of the Fund who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
18. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1933 Act, the 1934 Act, the 1940 Act, the Advisers Act or
rules or orders of the SEC thereunder, and without regard for the conflicts of
laws principle thereof. The term "affiliate" or "affiliated person" as used in
this Agreement shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(i) The Fund shall be entitled to commence a civil action seeking
enforcement and/or for breach of this Agreement in any state or federal court of
Delaware. The Sub-Adviser shall submit to the personal jurisdiction of any such
court and shall not contend that the court is not a proper venue for any such
civil action. The parties to this Agreement authorize and direct the court to:
-13-
(1) revise and amend the provisions of Section 3 to the extent that the court
finds those provisions too broad or otherwise unenforceable; and (2) enforce
this Agreement as revised or amended.
(ii) The party substantially prevailing in a civil action brought
to enforce and/or for breach of this Agreement shall be entitled to recover the
reasonable attorneys' fees and legal expenses incurred by that party in that
litigation.
(b) The Manager and the Sub-Adviser acknowledge that the Fund enjoys
the rights of a third-party beneficiary under this Agreement, and the Manager
acknowledges that the Sub-Adviser enjoys the rights of a third-party beneficiary
under the Management Agreement.
(c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(d) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Sub-Adviser
as an agent or co-partner of the Manager, or constituting the Manager as an
agent or co-partner of the Sub-Adviser.
(f) This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ING PILGRIM INVESTMENTS, LLC
By:
-----------------------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President
Xxxxxxx Investment Partners, L.P.
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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SCHEDULE A
to the
Sub-Advisory Agreement
between
ING PILGRIM INVESTMENTS, LLC
and
XXXXXXX INVESTMENT PARTNERS, L.P.
SERIES ANNUAL SUB-ADVISORY FEE
------ -----------------------
ING MidCap Value Fund 0.70%
ING SmallCap Value Fund 0.70%
-15-
SCHEDULE B
to the
Sub-Advisory Agreement
between
ING PILGRIM INVESTMENTS, LLC
and
XXXXXXX INVESTMENT PARTNERS, L.P.
Series Approved by Board Reapproval Date
------ ----------------- ---------------
ING MidCap Value Fund __________, 2001 __________, 2003
ING SmallCap Value Fund __________, 2001 __________, 2003
-16-
