Exhibit (d)(5)
FORM OF
SUBADVISORY AGREEMENT
PILGRIM RESEARCH ENHANCED INDEX FUND
AGREEMENT made this __th day of September, 2000 by and between Pilgrim
Investments, Inc., a Delaware Corporation (hereinafter the "Adviser"),
investment adviser for the Pilgrim Research Enhanced Index Fund, a series of
Pilgrim Mayflower Trust (the "Trust") (hereinafter the "Fund") and X.X. Xxxxxx
Investment Management Inc., a Delaware corporation (hereinafter the
"Subadviser").
WHEREAS, the Adviser has been retained by the Fund, an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), to provide investment advisory services to
the Fund pursuant to an Investment Advisory Agreement dated this ___th day of
September 2000 (the "Investment Advisory Agreement"); and
WHEREAS, the Fund's Trustees, including a majority of the Trustees who are
not "interested persons," as defined in the 1940 Act, and the Fund's
shareholders have approved the appointment of the Subadviser to perform certain
investment advisory services for the Fund pursuant to this Subadvisory Agreement
with the Adviser and the Subadviser is willing to perform such services for the
Fund;
WHEREAS, the Subadviser is or will be registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act") prior to
performing its services for the Fund under this Agreement;
NOW THEREFORE, in consideration of the promises and mutual convenants
herein contained, it is agreed between the Adviser and the Subadviser as
follows:
1. APPOINTMENT. The Adviser hereby appoints the Subadviser to perform advisory
services to the Fund for the periods and on the terms set forth in this
Subadvisory Agreement. The Subadviser accepts such appointment and agrees
to furnish the services herein set forth, for the compensation herein
provided.
2. DUTIES OF SUBADVISER. The Adviser hereby authorizes Subadviser to manage
the investment and reinvestment of cash and investments comprising the
assets of the Fund with power on behalf of and in the name of the Fund at
Subadviser's discretion; subject at all times to the supervision of the
Adviser and the Trustees of the Fund:
(a) to direct the purchase, subscription or other acquisition of
investments and to direct the sale, redemption, and exchange of
investments, subject to the duty to render to the Trustees of the
Fund, the Adviser and the Custodian written reports of the composition
of the portfolio of the Fund as often as the Trustees of the Fund
shall reasonably require;
(b) to make all decisions relating to the manner, method and timing of
investment transactions, to select brokers, dealers and other
intermediaries by or through whom such transactions will be effected,
and to engage such consultants, analysts and experts in connection
therewith as may be considered necessary or appropriate;
(c) to direct banks, brokers or custodians to disburse funds or assets
solely in order to execute investment transactions for the Fund,
provided that the Subadviser shall have no other authority to direct
the transfer of the Fund's funds or assets to itself or other persons
and shall have no other authority over the disbursement (as opposed to
investment decisions) of funds or assets nor any custody of any of the
Fund's funds or assets; and
(d) to take all such other actions as may be considered necessary or
appropriate to discharge its duties hereunder; PROVIDED THAT any
specific or general directions which the Trustees of the Fund, or the
Adviser may give to the Subadviser with regard to any of the foregoing
powers shall, unless the contrary is expressly stated therein,
override the general authority given by this provision to the extent
that the Trustees of the Fund may, at any time and from time to time,
direct, either generally or to a limited extent and either alone or in
concert with the Adviser or the Subadviser (provided that such
directions would not cause the Subadviser to violate any fiduciary
duties or any laws with regard to the Subadviser's duties and
responsibilities), all or any of the same as they shall think fit and,
in particular, the Adviser shall have the right to request the
Subadviser to place trades through brokers and other agents of the
Adviser's choice, subject to the Subadviser's judgment that such
brokers or agents will execute such trades on the best overall terms
available, taking into consideration factors the Subadviser deems
relevant including, without limitation, the price of the security,
research or other services which render that broker's services the
most appropriate for the Subadviser's needs, the financial condition
and dealing and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction
and on a continuing basis; and provided further that nothing herein
shall be construed as giving the Subadviser power to manage the
aforesaid cash and investments in such a manner as would cause the
Fund to be considered a "dealer" in stocks, securities or commodities
for U.S. federal income tax purposes.
The Adviser shall monitor and review the performance of the Subadviser
under this Agreement, including but not limited to the Subadviser's
performance of the duties delineated in subparagraphs (a)-(d) of this
provision.
The Subadviser further agrees that, in performing its duties
hereunder, it will
(a) (i) comply with the 1940 Act and all rules and regulations thereunder,
the Advisers Act the Internal Revenue Code (the "Code") and all other
applicable federal and state laws and regulations, the current
Prospectus and Statement of Additional Information for the Fund
supplied to the Subadviser by the Adviser, and with any applicable
procedures adopted by the Trustees in writing supplied to the
Subadviser by the Adviser; (ii) manage the Fund in accordance with the
investment requirements for regulated investment companies under
Subchapter M of the Code and regulations issued thereunder; (iii)
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direct the placement of orders pursuant to its investment
determinations for the Fund directly with the issuer, or with any
broker or dealer, in accordance with applicable policies expressed in
the Fund's Prospectus and/or Statement of Additional Information and
in accordance with applicable legal requirements.
(b) furnish to the Fund whatever non-proprietary reports the Fund may
reasonably request with respect to the Fund's assets or contemplated
strategies. In addition, the Subadviser will keep the Fund and the
Trustees informed of developments materially affecting the Fund's
portfolio and shall, on the Subadviser's own initiative, furnish to
the Fund from time to time whatever information the Subadviser
believes appropriate for this purpose;
(c) make available to the Fund's administrator, Pilgrim Group, Inc. (the
"Administrator"), the Adviser, and the Fund, promptly upon their
request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the Adviser, the
Administrator and the Fund in their compliance with applicable laws
and regulations. The Subadviser will furnish the Trustees with such
periodic and special reports regarding the Fund as they may reasonably
request;
(d) immediately notify the Adviser and the Fund in the event that the
Subadviser or any of its affiliates: (i) becomes aware that it is
subject to a statutory disqualification that prevents the Subadviser
from serving as an investment adviser pursuant to this Subadvisory
Agreement; or (ii) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority. The
Subadviser further agrees to notify the Fund and the Adviser
immediately of any material fact known to the Subadviser respecting or
relating to the Subadviser that is not contained in the Fund's
Registration Statement, or any amendment or supplement thereto, but
that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect. The
Fund, Adviser, Administrator, and their Affiliates shall likewise
immediately notify the Subadviser if any of them becomes aware of any
regulatory action of the type described in this subparagraph 2(d).
3. ALLOCATION OF CHARGES AND EXPENSES. The Subadviser shall pay all expenses
associated with the management of its business operations in performing its
responsibilities hereunder, including the cost of its own overhead,
research, compensation and expenses of its directors, officers and
employees, and other internal operating costs; provided, however, that the
Subadviser shall be entitled to reimbursement on a monthly basis by the
Adviser of all reasonable out-of-pocket expenses properly incurred by it in
connection with serving as subadviser to the Fund. For the avoidance of
doubt, the Fund shall bear its own overhead and other internal operating
costs (whether incurred directly or by the Adviser or the Subadviser)
including, without limitation:
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(a) the costs incurred by the Fund in the preparation and printing of the
Prospectus or any offering literature (including any form of
advertisement or other solicitation materials calculated to lead to
investors subscribing for shares);
(b) all fees and expenses on behalf of the Fund to the Transfer Agent and
the Custodian;
(c) the reasonable fees and expenses of accountants, auditors, lawyers and
other professional advisors to the Fund;
(d) any interest, fee or charge payable on or on account of any borrowing
by the Fund;
(e) fiscal and governmental charges and duties relating to the purchase,
sale, issue or redemption of shares and increases in authorized share
capital of the Fund;
(f) the fees of any stock exchange or over-the-counter market on which
shares of the Fund may from time to time be listed, quoted or dealt in
and the expenses of obtaining any such listing, quotation or
permission to deal;
(g) the fees and expenses (if any) payable to Trustees;
(h) brokerage, fiscal or governmental charges or duties in respect of or
in connection with the acquisition, holding or disposal of any of the
assets of the Fund or otherwise in connection with its business;
(i) the expenses of publishing details and prices of shares of the Fund in
newspapers and other publications;
(j) all expenses incurred in the convening of meetings of shareholders or
in the preparation of agreements or other documents relating to the
Fund or in relation to the safe custody of the documents of title of
any investments;
(k) all Trustees communication costs; and
(l) all premiums and costs for Fund insurance and blanket fidelity bonds.
4. COMPENSATION. As compensation for the services provided by the Subadviser
under this Agreement, the Adviser will pay the Subadviser at the end of
each calendar month an advisory fee computed daily at an annual rate equal
to 0.20 of 1% of the Fund's average daily net assets. The "average daily
net assets" of the Fund shall mean the average of the values placed on the
Fund's net assets as of 4:00 p.m. (New York time) on each day on which the
net asset value of the Fund is determined consistent with the provisions of
Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as of such
other time. The value of net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Funds Declaration of Trust and
the Registration Statement. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business
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day, then for the purposes of this Section 4, the value of the net assets
of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of regular trading on the New York Stock Exchange,
or as of such other time as the value of the net assets of the Fund's
portfolio may lawfully be determined, on that day. If the determination of
the net asset value of the shares of the Fund has been so suspended for a
period including any month end when the Subadviser's compensation is
payable pursuant to this Section, the Subadviser's compensation payable at
the end of such month shall be computed on the basis of the value of the
net assets of the Fund as last determined (whether during or prior to such
month). If the Fund determines the value of the net assets of its portfolio
more than once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that day for
the purposes of this Section 4.
5. BOOKS AND RECORDS. The Subadviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the
manner required by applicable laws or regulations. The Subadviser also
agrees that records it maintains and preserves pursuant to Rules 31a-2
under the 1940 Act (excluding trade secrets or intellectual property
rights) in connection with its services hereunder are the property of the
Fund and will be surrendered promptly to the Fund upon its request and the
Subadviser further agrees that it will furnish to regulatory authorities
having the requisite authority any information or reports in connection
with its services hereunder which may be requested in order to determine
whether the operations of the Fund are being conducted in accordance with
applicable laws and regulations.
6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Subadviser shall exercise
its best judgment in rendering the services provided by it under this
Subadvisory Agreement. The Subadviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the
holders of the Fund's shares or by the Adviser in connection with the
matters to which this Subadvisory Agreement relates, provided that nothing
in this Subadvisory Agreement shall be deemed to protect or purport to
protect the Subadviser against liability to the Fund or to holders of the
Fund's shares or to the Adviser to which the Subadviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of the Subadviser's
reckless disregard of its obligations and duties under this Subadvisory
Agreement. As used in this Section 6, the term "Subadviser" shall include
any officers, directors, employees or other affiliates of the Subadviser
performing services for the Fund.
7. SERVICES NOT EXCLUSIVE. The Advisor understands that the Subadviser now
acts, will continue to act and may act in the future as investment advisor
to fiduciary and other managed accounts and as investment advisor to other
investment companies, and, except as may be separately agreed to from time
to time between the Advisor and the Subadviser, the Trust has no objection
to the Subadviser so acting, provided that whenever the Fund and one or
more other accounts or investment companies advised by the Subadviser have
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available funds for investment, investments suitable and appropriate for
each will be allocated in accordance with a methodology believed to be
equitable to each entity. The Subadviser agrees to allocate similar
opportunities to sell securities. The Advisor recognizes that, in some
cases, this procedure may limit the size of the position that may be
acquired or sold for the Fund. In addition, the Adviser understands that
the persons employed by the Subadviser to assist in the performance of the
Shareholder's duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict
the right of the Subadviser or any affiliate of the Subadviser to engage in
and devote time and attention to other business or to render services of
whatever kind or nature.
8. DURATION AND TERMINATION. This Agreement shall become effective as of the
date of its execution and shall continue in effect for a period of two
years from the date of execution. Thereafter, this Agreement shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Fund's Trustees or (ii)
a vote of a "majority" (as defined in the 0000 Xxx) of the Fund's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Trustees who are
not "interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, on
60 days written notice, by the Adviser, by the Fund's Trustees, or by vote
of holders of a majority of the Fund's shares. For a period of eighteen
months from the date of execution of this Agreement, the Subadviser may
terminate this Agreement, without penalty, on six months written notice.
Thereafter, the Subadviser may terminate this Agreement, without penalty,
on 60 days written notice. This Agreement will terminate automatically five
business days after the Subadviser receives written notice of the
termination of the advisory agreement between the Fund and the Adviser.
This Agreement also will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
9. AMENDMENTS. No provision of this Subadvisory Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by both parties, and no material amendment of this
Subadvisory Agreement shall be effective until approved by an affirmative
vote of (i) a majority of the outstanding voting securities of the Fund,
and (ii) a majority of the Trustees of the Fund, including a majority of
Trustees who are not interested persons of any party to this Subadvisory
Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
10. INDEMNIFICATION.
(a) The Adviser hereby agrees to indemnify the Subadviser and its
affiliates from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation to the preparation of this Agreement; each party
bearing responsibility for its own such costs and fees) or damages
(other than liabilities, losses, expenses, attorneys fees and costs or
damages arising from the Subadviser failing to meet the standard of
care required in Section 6 of this Subadvisory Agreement in the
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performance by the Subadviser of, or its failure to perform, the
services required hereunder), arising from the Adviser's (its
affiliates and their respective agents and employees) failure to
perform its duties or assume its obligations hereunder, or from its
wrongful actions or omissions, including, but not limited to, any
claims for non-payment of advisory fees; claims asserted or threatened
by any shareholder of the Fund, governmental or regulatory agency, or
any other person; claims arising from any wrongful act by the Fund or
any of the Fund's trustees, officers, employees, or representatives,
or by the Adviser, its officers, employees or representatives, or from
any actions by the Fund's distributors or any representative of the
Fund; any action or claim against the Subadviser based on any alleged
untrue statement or misstatement of material fact in any registration
statement, prospectus, shareholder report or other information or
materials covering shares filed or made public by the Fund or any
amendment thereof or supplement thereto, or the failure or alleged
failure to state therein a material fact required to be stated in
order that the statements therein are not misleading, provided that
such claim is not based upon information provided to the Adviser by
the Subadviser or approved by the Subadviser in the manner provided in
paragraph 12(b) of this Agreement, or which facts or information the
Subadviser failed to provide or disclose. With respect to any claim
for which the Subadviser shall be entitled to indemnity hereunder, the
Adviser shall assume the reasonable expenses and costs (including any
reasonable attorneys' fees and costs) of the Subadviser of
investigating and/or defending any claim asserted or threatened by any
party, subject always to the Adviser first receiving a written
under-taking from the Subadviser to repay any amounts paid on its
behalf in the event and to the extent of any subsequent determination
that the Subadviser was not entitled to indemnification hereunder in
respect of such claim.
(b) The Subadviser hereby agrees to indemnify the Adviser, its affiliates
and the Fund from and against all liabilities, losses, expenses,
reasonable attorneys' fees and costs (other than attorneys' fees and
costs in relation, to the preparation of this Agreement; each party
bearing responsibility for its own such costs and fees) or damages
(other than liabilities, losses, expenses, attorneys fees and costs or
damages arising from the Adviser's failure to perform its
responsibilities hereunder or claims arising from its acts or failure
to act in performing this Agreement) arising from Subadviser's (its
affiliates and their respective agents and employees) willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of the Subadviser's reckless disregard of its
obligations and duties under this Subadvisory Agreement, or arising
from failure to act in any action or claim against the Adviser based
on any alleged untrue statement or misstatement of a material fact
made or provided by or with the consent of Subadviser contained in any
registration statement, prospectus, shareholder report or other
information or materials relating to the Fund and shares issued by the
Fund, or the failure or alleged failure to state a material fact
therein required to be stated in order that the statements therein are
not misleading, which fact should have been made or provided by the
Subadviser to the Adviser. With respect to any claim for which the
Adviser is entitled to indemnity hereunder, the Subadviser shall
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assume the reasonable expenses and costs (including any reasonable
attorneys' fees and costs) of the Adviser of investigating and/or
defending any claim asserted or threatened by any party, subject
always to the Subadviser first receiving a written undertaking from
the Adviser to repay any amounts paid on its behalf in the event and
to the extent of any subsequent determination that the Adviser was not
entitled to indemnification hereunder in respect of such claim.
(c) In the event that the Subadviser or Adviser is or becomes a party to
any action or proceedings in respect of which indemnification may be
sought hereunder, the party seeking indemnification shall promptly
notify the other party thereof. After becoming notified of the same,
the party from whom indemnification is sought shall be entitled to
participate in any such action or proceeding and shall assume any
payment for the full defense thereof with counsel reasonably
satisfactory to the party seeking indemnification. After properly
assuming the defense thereof, the party from whom indemnification is
sought shall not be liable hereunder to the other party for any legal
or other expenses subsequently incurred by such party in connection
with the defense thereof, other than damages, if any, by way of
judgment, settlement, or otherwise pursuant to this provision. The
party from whom indemnification is sought shall not be liable
hereunder for any settlement of any action or claim effected without
its written consent, which consent shall not be unreasonably withheld.
11. INDEPENDENT CONTRACTOR. Subadviser shall for all purposes of this Agreement
be deemed to be an independent contractor and, except as otherwise
expressly provided herein, shall have no authority to act for, bind or
represent the Fund in any way or otherwise be deemed to be an agent of the
Fund. Likewise, the Fund, the Adviser and their respective affiliates,
agents and employees shall not be deemed agents of the Subadviser and shall
have not authority to bind Subadviser.
12. USE OF NAME.
(a) The Fund may, subject to sub-clause (b) below, use the name, "X.X.
Xxxxxx Investment Management Inc. or "X.X. Xxxxxx" for promotional
purposes only for so long as this Agreement (or any extension, renewal
or amendment thereof) continues in force, unless the Subadviser shall
specifically consent in writing to such continued use thereafter. Any
permitted use by the Fund during the term hereof of the name of the
Subadviser or X.X. Xxxxxx shall in no way prevent the Subadviser or
any of it shareholders or any of their successors, from using or
permitting the use of such name (whether singly or in any combination
with any other words) for, by or in connection with an entity or
enterprise other than the Fund. The name and right to the name X.X.
Xxxxxx Investment Management Inc. or any derivation of the name X.X.
Xxxxxx shall at all times be owned and be the sole and exclusive
property of X.X. Xxxxxx and its affiliated entities. X.X. Xxxxxx
Investment Management Inc., by entering into this Agreement, is
allowing the Fund to use the name X.X. Xxxxxx Investment Management
Inc. and/or X.X. Xxxxxx solely by or on behalf of the Fund. At the
conclusion of this Agreement or in the event of any termination of
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this Agreement or if the Subadviser's services are terminated for any
reason, each of the authorized parties and their respective employees,
representatives, affiliates, and associates agree that they shall
immediately cease using the name X.X. Xxxxxx Investment Management
Inc. and/or X.X. Xxxxxx of said name for any purpose whatsoever.
(b) The Adviser and its affiliates shall not publish or distribute, and
shall cause the Fund not to publish or distribute to Fund
shareholders, prospective investors, sales agents or members of the
public any disclosure document, offering literature (including any
form of advertisement or other solicitation materials calculated to
lead investors to subscribe for and purchase shares of the Fund) or
other document referring by name to the Subadviser or any of its
affiliates, unless the Subadviser shall have consented in writing to
such references in the form and context in which they appear; provided
however, that where the Fund timely seeks to obtain approval of
disclosure contained in any documents required to be filed by the
Fund, and such approval is not forthcoming on or before the date on
which such documents are required by law to be filed, the Subadviser
shall be deemed to have consented to such disclosure.
13. MISCELLANEOUS.
(a) This Subadvisory Agreement shall be governed by the laws of the State
of New York, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act, the Advisers Act, or rules or
orders of the SEC thereunder. In the event of any litigation in which
the Adviser and the Subadviser are adverse parties and there are no
other parties to such litigation, such action shall be brought in the
United States District Court for the State of New York, located in New
York, New York.
(b) The captions of this Subadvisory 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.
(c) This Agreement may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same
instrument.
14. NOTICES. Any notice, instruction or other instrument required or permitted
to be given hereunder may be delivered in person to the offices of the
parties as set forth therein during normal business hours, or delivered or
sent by prepaid registered mail, express mail or by facsimile to the
parties at such offices or such other address as may be notified by either
party from time to time. Such notice, instruction or other instrument shall
be deemed to have been served, in the case of a registered letter at the
expiration of seventy-two (72) hours after posting; in the case of express
mail, within twenty-four (24) hours after dispatch; and in the case of
facsimile, immediately on dispatch, and if delivered outside normal
business hours it shall be deemed to have been received at the next time
after delivery or transmission when normal business hours commence.
Evidence that the notice, instruction or other instrument was properly
addressed, stamped and put into the post shall be conclusive evidence of
posting.
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15. NON-SOLICITATION. Adviser, its affiliates and their respective agents
(including brokers engaged in marketing and selling shares of the Fund),
and each of their employees and affiliates agree not to knowingly solicit
to invest, or accept or retain as investors, in the Fund any persons or
entities who are clients of or investors in any fund or investment vehicle
managed by any entity owned or affiliated with X.X. Xxxxxx Investment
Management Inc.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year set forth
above.
PILGRIM INVESTMENTS, INC.
By:
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Title:
X.X. Xxxxxx Investment Management Inc.
By:
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Title:
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