Exhibit (d)(2)
FORM OF
SUB-ADVISORY AGREEMENT
AGREEMENT made this ____ day of ________, 2000 between Pilgrim Investments,
Inc., a Delaware corporation (the "Manager"), and Xxxxxxxx-Xxxxxxxxx Capital
Management, a California limited partnership (the "Portfolio Manager").
WHEREAS, Pilgrim Mutual Funds (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, and
currently intends to offer shares of additional series in the future;
WHEREAS, pursuant to a Management Agreement, dated the date hereof (the
"Management Agreement"), a copy of which has been provided to the Portfolio
Manager, the Fund has retained the Manager to render advisory and management
services with respect to each of the Fund's series; and
WHEREAS, pursuant to authority granted to the Manager in the Management
Agreement, the Manager wishes to retain the Portfolio Manager to furnish
investment advisory services to one or more of the series of the Fund, and the
Portfolio Manager is willing to furnish such services to the Fund and the
Manager;
NOW, THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Manager and the
Portfolio Manager as follows:
1. APPOINTMENT. The Manager hereby appoints the Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager to
render investment advisory services hereunder, it shall notify the Portfolio
Manager in writing. If the Portfolio Manager 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-ADVISORY DUTIES. Subject to the supervision of the Fund's Board of
Trustees and the Manager, the Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager 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
Securities and Exchange Commission ("SEC"), as amended, copies of which shall be
sent to the Portfolio Manager by the Manager prior to the commencement of this
Agreement and promptly following any such amendment. The Portfolio Manager
further agrees as follows:
(a) The Portfolio Manager will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Fund's Board of
Trustees of which the Portfolio Manager has been sent a copy, and the provisions
of the Registration Statement of the Fund filed under the Securities Act of 1933
(the "1933 Act") and the 1940 Act, as supplemented or amended, of which the
Portfolio Manager 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 Portfolio Manager.
(b) In connection with the purchase and sale of securities for each Series,
the Portfolio Manager 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
Portfolio Manager will arrange for the prompt transmission of the confirmation
of such trades to the Fund's custodian and portfolio accounting agent.
(c) The Portfolio Manager will make available to the Fund and the Manager,
promptly upon request, any of the Series' investment records and ledgers
maintained by the Portfolio Manager (which shall not include the records and
ledgers 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 (the "Advisers Act"), as
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well as other applicable laws. The Portfolio Manager 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 Portfolio Manager 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.
3. BROKER-DEALER SELECTION. The Portfolio Manager is authorized to make
decisions to buy and sell securities and other investments for each Series'
portfolio, broker-dealer selection, and negotiation of brokerage commission
rates in effecting a security transaction. The Portfolio Manager'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
prospectus and/or statement of additional information for the Fund, and
determined in consultation with the Manager, 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
Portfolio Manager in the exercise of its 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, the Portfolio Manager
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 Portfolio Manager 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 Portfolio Manager's or the
Manager's overall responsibilities with respect to the Series and to their
respective other clients as to which they exercise investment discretion. The
Portfolio Manager will consult with the Manager to the end that portfolio
transactions on behalf of a Series are directed to broker-dealers on the basis
of criteria reasonably considered appropriate by the Manager. To the extent
consistent with these standards, the Portfolio Manager is further authorized to
allocate the orders placed by it on behalf of a Series to the Portfolio Manager
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 Portfolio Manager, or
an affiliate of the Portfolio Manager. Such allocation shall be in such amounts
and proportions as the Portfolio Manager shall determine consistent with the
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above standards, and the Portfolio Manager 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.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has reviewed
Post-Effective Amendment No. [67] to the Registration Statement for the Fund
filed with the SEC that contains disclosure about the Portfolio Manager, and
represents and warrants that, with respect to the disclosure about the Portfolio
Manager or information relating, directly or indirectly, to the Portfolio
Manager, 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 Portfolio Manager 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 Portfolio Manager
will provide the Manager with a copy of the Portfolio Manager's Form ADV, Part
II at the time the Form ADV is filed with the SEC.
5. EXPENSES. During the term of this Agreement, the Portfolio Manager will
pay all expenses incurred by it and its staff and for their activities in
connection with its Sub-Advisory duties under this Agreement. The Manager or the
Fund shall be responsible for all the expenses of the Fund's operations.
6. COMPENSATION. For the services provided to each Series, the Manager will
pay the Portfolio Manager 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 Portfolio Manager, and the Portfolio Manager agrees to seek
payment of its fees solely from the Manager; provided, however, that if the Fund
fails to pay the Manager all or a portion of the management fee under said
Management Agreement when due, and the amount that was paid is insufficient to
cover the Portfolio Manager's fee under this Agreement for the period in
question, then the Portfolio Manager may enforce against the Fund any rights it
may have as a third-party beneficiary under the Management Agreement and the
Manager will take all steps appropriate under the circumstances to collect the
amount due from the Fund.
7. COMPLIANCE.
(a) The Portfolio Manager agrees to use reasonable compliance techniques as
the Manager or the Board of Trustees may adopt, including any written compliance
procedures.
(b) The Portfolio Manager agrees that it shall promptly notify the Manager
and the Fund (1) in the event that the SEC has censured the Portfolio Manager;
placed limitations upon its activities, functions or operations; suspended or
revoked its registration as an investment adviser; or has 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
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not qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code. The Portfolio Manager further agrees to notify the Manager and the
Fund promptly of any material fact known to the Portfolio Manager respecting or
relating to the Portfolio Manager that is not contained in the Registration
Statement or prospectus for the Fund (which describes the Series), or any
amendment or supplement thereto, or if any statement contained therein that
becomes untrue in any material respect.
(c) The Manager agrees that it shall promptly notify the Portfolio Manager
(1) in the event that the SEC has censured the Manager or the Fund; placed
limitations upon either of their activities, functions, or operations; suspended
or revoked the Manager's registration as an investment adviser; or has 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.
8. BOOKS AND RECORDS. The Portfolio Manager hereby agrees that all records
which it maintains for the Series are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's or
the Manager's request in compliance with the requirements of Rule 31a-3 under
the 1940 Act, although the Portfolio Manager may, at its own expense, make and
retain a copy of such records. The Portfolio Manager 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.
9. 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 Portfolio Manager shall treat as
confidential all information pertaining to the Fund and actions of the Fund, the
Manager and the Portfolio Manager, 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 Portfolio Manager, 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 Portfolio
Manager or the Manager, or if available from a source other than the Manager,
Portfolio Manager or this Fund.
10. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER. 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 Portfolio Manager 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 Portfolio Manager, except with the prior
permission of the Portfolio Manager.
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11. [INTENTIONALLY OMITTED]
12. CONTROL. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Fund shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement and has reserved the right to reasonably direct any action hereunder
taken on its behalf by the Portfolio Manager.
13. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, the Manager agrees that the Portfolio
Manager, any affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act controls the
Portfolio Manager (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 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 Portfolio Manager's duties, or by reason of reckless disregard of the
Portfolio Manager's obligations and duties under this Agreement.
14. INDEMNIFICATION.
(a) The Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager, and each person, if
any, who, within the meaning of Section 15 of the 1933 Act controls
("controlling person") the Portfolio Manager (all of such persons being referred
to as "Portfolio Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Portfolio Manager 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 Trust which
(1) may be based upon the Manager's willful misfeasance, bad faith, or
negligence 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 or (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
Trust 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 Trust or to any affiliated person of the Manager
by a Portfolio Manager Indemnified Person; provided however, that in no case
shall the indemnity in favor of the Portfolio 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, or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of obligations and duties under this Agreement.
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(b) Notwithstanding Section 13 of this Agreement, the Portfolio Manager
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 Portfolio Manager's responsibilities as Portfolio Manager of
the Series which (1) may be based upon the Portfolio Manager's willful
misfeasance, bad faith, or negligence in the performance of its duties (which
could include a negligent action or a negligent omission to act), or by reason
of the Portfolio Manager's reckless disregard of its obligations and duties
under this Agreement, or (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 Trust 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 Portfolio Manager and
was required to be stated therein or necessary to make the statements therein
not misleading, if such a statement or omission was made in reliance upon
information furnished to the Manager, the Trust, or any affiliated person of the
Manager or Trust by the Portfolio Manager or any affiliated person of the
Portfolio Manager; 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 14
with respect to any claim made against a Portfolio Manager Indemnified Person
unless such Portfolio Manager 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 Portfolio Manager Indemnified Person (or after such Portfolio Manager
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 Portfolio Manager
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 Portfolio Manager Indemnified Person, the
Manager will be entitled to participate, at its own expense, in the defense
thereof or, after notice to the Portfolio Manager Indemnified Person, to assume
the defense thereof, with counsel satisfactory to the Portfolio Manager
Indemnified Person. If the Manager assumes the defense of any such action and
the selection of counsel by the Manager to represent the Manager and the
Portfolio Manager Indemnified Person would result in a conflict of interests and
therefore, would not, in the reasonable judgment of the Portfolio Manager
Indemnified Person, adequately represent the interests of the Portfolio Manager
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 Portfolio Manager Indemnified Person, which counsel shall be satisfactory
to the Manager and to the Portfolio Manager Indemnified Person. The Portfolio
Manager Indemnified Person shall bear the fees and expenses of any additional
counsel retained by it, and the Manager shall not be liable to the Portfolio
7
Manager Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Portfolio Manager 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 Portfolio Manager
Indemnified Person if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under Paragraph (b) of this
Section 14 with respect to any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have notified the Portfolio 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 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 Portfolio Manager of any such claim shall not relieve the
Portfolio Manager from any liability which it may have to the Manager
Indemnified Person against whom such action is brought except to the extent the
Portfolio Manager is prejudiced by the failure or delay in giving such notice.
In case any such action is brought against the Manager Indemnified Person, the
Portfolio Manager 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 Portfolio Manager assumes the defense of any such action and the
selection of counsel by the Portfolio Manager to represent both the Portfolio
Manager 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 Portfolio Manager will, at its own expense, assume the
defense with counsel to the Portfolio Manager and, also at its own expense, with
separate counsel to the Manager Indemnified Person, which counsel shall be
satisfactory to the Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager 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.
15. 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
defined in the 0000 Xxx) of the Manager or the Portfolio Manager, 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 for two years from such date and continue on an annual basis thereafter
8
with respect to each Series covered by this Agreement; provided that such annual
continuance is specifically approved each year by (a) 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 (b) 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 (i) that this
Agreement has not been approved by the holders of a majority of the outstanding
shares of any other Series or (ii) 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: (a) by the Manager at any time, upon sixty
(60) days' written notice to the Portfolio Manager and the Fund, (b) 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 Portfolio Manager, or (c) by the
Portfolio Manager upon three (3) months written notice unless the Fund or the
Manager requests additional time to find a replacement for the Portfolio
Manager, in which case the Portfolio Manager shall allow the additional time
requested by the Fund or Manager not to exceed three (3) additional months
beyond the initial three-month notice period; provided, however, that the
Portfolio Manager may terminate this Agreement at any time without penalty,
effective upon written notice to the Manager and the Fund, in the event either
the Portfolio Manager (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 Portfolio Manager 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, all records of each Series for
which the Agreement is terminated shall promptly be returned to the Manager or
the Fund, free from any claim or retention of rights in such record by the
Portfolio Manager, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. 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 2(g), 8, 9, 10, 12, 13 and
14 of this Agreement shall remain in effect, as well as any applicable provision
of this Section numbered 15 and, to the extent that only amounts are owed to the
Portfolio Manager as compensation for services rendered while the agreement was
in effect, Section 6.
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(b) Notices.
Any notice must be in writing and shall be sufficiently given (1) when
delivered in person, (2) when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by postage prepaid first class air mail
simultaneously dispatched), (3) when sent by internationally recognized
overnight courier service (with receipt confirmed by such overnight courier
service), or (4) when 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 specify in writing to the other party.
If to the Fund:
Pilgrim Mutual Funds
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
If to the Portfolio Manager:
Xxxxxxxx-Xxxxxxxxx Capital Management
000 Xxxx Xxxxxxxx
Xxx Xxxxx, XX 00000
Attention: E. Xxxxx Xxxxx
16. 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 amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Series, and (ii) 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.
17. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of
California, 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, 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 0000 Xxx.
(b) The Manager and the Portfolio Manager acknowledge that the Fund enjoys
the rights of a third-party beneficiary under this Agreement, and the Manager
acknowledges that the Portfolio Manager enjoys the rights of a third party
beneficiary under the Management Agreement.
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(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) To the extent permitted under Section 15 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent of
the other parties.
(e) 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.
(f) Nothing herein shall be construed as constituting the Portfolio Manager
as an agent or co-partner of the Manager, or constituting the Manager as an
agent or co-partner of the Portfolio Manager.
(g) 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.
PILGRIM INVESTMENTS, INC.
By:
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Title
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By:
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Title
Schedule A
SERIES ANNUAL SUB-ADVISORY FEE
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Pilgrim Large Cap Growth Fund 0.375% of the first $500 million of the
Series' average net assets, 0.3375% of
the next $500 million of average net
assets, and 0.325% of the average net
assets in excess of $1 billion
Pilgrim Emerging Countries Fund 0.625% of the Series' average net assets
Pilgrim Worldwide Growth Fund 0.50% of the first $500 million of the
Series' average net assets, 0.45% of the
next $500 million of average net assets,
and 0.425% of the average net assets in
excess of $1 billion
Pilgrim International Small Cap 0.50% of the first $500 million of the
Growth Fund Series' average net assets, 0.45% of the
next $500 million of average net assets,
and 0.425% of the average net assets in
excess of $1 billion
Pilgrim Convertible Fund 0.375% of the first $500 million of the
Series' average net assets, 0.3375% of
the next $500 million of average net
assets, and 0.325% of the average net
assets in excess of $1 billion
Pilgrim International Core Growth 0.50% of the first $500 million of the
Fund Series' average net assets, 0.45% of the
next $500 million of average net assets,
and 0.425% of the average net assets in
excess of $1 billion
PILGRIM INVESTMENTS, INC.
XXX XXXXXXXXXXX XXXXXX
XXXXXXX, XXXXXXX 00000-0000
Xxxxxxxx-Xxxxxxxxx Capital Management
000 Xxxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is hereby made to Section 2(a) of the Sub-Advisory Agreement
dated as of May 21, 1999 between you and us in respect of Pilgrim Mutual Funds
which provides that in carrying out your duties under such Agreement you will
comply with our portfolio manager operating policies and procedures in effect on
the date of such Agreement. Attached hereto as Annex I is a list of such
policies and procedures. Please sign below to acknowledge your receipt and
acceptance of these policies and procedures.
Very truly yours,
PILGRIM INVESTMENTS, INC.
By:
-------------------------------------
Acknowledged and Agreed:
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By:
-------------------------------------
Annex I
PORTFOLIO MANAGER OPERATING POLICIES AND PROCEDURES
In carrying its duties under the Sub-Advisory Agreement, the Portfolio
Manager will comply with the following policies and procedures (capitalized
terms used herein shall have the meaning given such terms in the Sub-Advisory
Agreement):
(a) The Portfolio Manager will manage each Series so that it meets the
income and asset diversification requirements of Section 851 of the Internal
Revenue Code.
(b) The Portfolio Manager will vote all proxies solicited by or with
respect to the issuers of securities which assets of the Series are invested
consistent with any procedures or guidelines promulgated by the Board or the
Manager, or if none, in the discretion of the Portfolio Manager based upon the
best interests of the Series. The Portfolio Manager 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.
(c) In connection with the purchase and sale of securities for each Series,
the Portfolio Manager 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, Sedol, 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
Portfolio Manager will arrange for the prompt transmission of the confirmation
of such trades to the Fund's custodian and portfolio accounting agent.
(d) The Portfolio Manager 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 Portfolio Manager. The
parties acknowledge that the Portfolio Manager is not a custodian of the Series'
assets and will not take possession or custody of such assets.
(e) The Portfolio Manager will provide the Manager, no later than the 20th
day following the end of each of the first three fiscal quarters of each Series
and the 45th day following the end of each Series' fiscal year, a letter to
shareholders (to be subject to review and editing by the Manager) containing a
discussion of those factors referred to in Item 5(a) of 1940 Act Form N-1A in
respect of both the prior quarter and the fiscal year to date.
(f) The Portfolio Manager will complete and deliver to the Manager a
written compliance checklist in a form provided by the Manager for each month by
the 10th day of the following month.
(g) The parties agree that in the event that the Manager or an affiliated
person of the Manager sends sales literature or other promotional material to
the Portfolio Manager for its approval and the Portfolio Manager has not
commented within 10 days, the Manager and its affiliated persons may use and
distribute such sales literature or other promotional material.
