EXHIBIT (d)(5)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 1st day of September, 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 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 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 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.
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.
(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 Manage 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 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 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.
(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.
(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 /s/ Xxxxx Xxxxxxxxx
--------------------
SEVP
--------------------
Title
XXXXXXXX-XXXXXXXXX CAPITAL
MANAGEMENT
By /s/ E. XXXXX XXXXX, JR.
----------------------
GENERAL COUNSEL
----------------------
Title
AMENDED AND RESTATED
SCHEDULE A
WITH RESPECT TO THE
SUB-ADVISORY AGREEMENT
(SEPTEMBER 1,2000)
BETWEEN
ING INVESTMENTS, LLC
AN ARIZONA LIMITED LIABILITY COMPANY
(SUCCESSOR BY MERGER TO ING PILGRIM INVESTMENTS, LLC,
FORMERLY PILGRIM INVESTMENTS, INC.)
AND
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
ANNUAL LAST CONTINUED/
SERIES SUB-ADVISORY FEE APPROVED BY BOARD REAPPROVAL DATE
------ ----------------- ----------------- ---------------
(as a percentage of average daily net assets)
ING International SmallCap 0.50% of first $500 million of assets July 11,2002 September 1,2003
Growth Fund 0.45% of next $500 million of assets
0.425% of 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 /s/ Xxxxx Xxxxxxxxx
-------------------------
Acknowledged and Agreed:
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By: /s/ E. Xxxxx Xxxxx, Jr.
-----------------------
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.
FIRST AMENDMENT TO SUB-ADVISORY AGREEMENT
ING MUTUAL FUNDS
This First Amendment, effective as of July 1, 2003, amends the
Sub-Advisory Agreement (the "Agreement") dated the 1st day of September, 2000,
as amended, between ING Investments, LLC, (formerly known as Pilgrim
Investments, Inc.) an Arizona limited liability company (the "Manager") and
Xxxxxxxx-Xxxxxxxxx Capital Management, a California limited partnership (the
"Sub-Adviser") with regards to ING International SmallCap Growth Fund, a Series
of ING Mutual Funds.
W I T N E S S E T H
WHEREAS, the parties desire to amend the Agreement and agree that the
amendments will be effective as of July 1,2003.
NOW, THEREFORE, the parties agree as follows:
1. Section 2 of the Agreement is hereby amended by the addition
of the following sub-section (e):
(e) The Sub-Adviser will have no duty to vote any proxy solicited
by or with respect to the issuers of securities in which assets of the Series
are invested unless the Manager gives the Sub-Adviser written instructions to
the contrary. The Sub-Adviser will immediately forward any proxy solicited by or
with respect to the issuers of securities in which assets of the Series are
invested to the Manager or to any agent of the Manager designated by the Manager
in writing.
The Sub-Adviser will make appropriate personnel available for
consultation for the purpose of reviewing with representatives of the Manager
and/or the Board any proxy solicited by or with respect to the issuers of
securities in which assets of the Series are invested. Upon request, the
Sub-Adviser will submit a written voting recommendation to the Manager for such
proxies. In making such recommendations, the Sub-Adviser shall use its good
faith judgment to act in the best interests of the Series. The Sub-Adviser shall
disclose to the best of its knowledge any conflict of interest with the issuers
of securities that are the subject of such recommendation including whether such
issuers are clients or are being solicited as clients of the Sub-Adviser or of
its affiliates.
2. Section (b) of Annex I is hereby deleted in its entirety.
3. In all other respects, the Agreement is hereby confirmed and
remains in full force and effect.
- 1 -
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ING INVESTMENTS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By: /s/ Xxxxxxx X. Field
----------------------------
Name: Xxxxxxx X. Field
Title: Deputy General Counsel
- 2 -
SECOND AMENDMENT TO SUB-ADVISORY AGREEMENT
ING MUTUAL FUNDS
This Second Amendment, effective as of September 1, 2003, amends the
Sub-Advisory Agreement (the "Agreement") dated the 1st day of September, 2000,
as amended, between ING Investments, LLC, an Arizona limited liability company
(the "Manager") and Xxxxxxxx-Xxxxxxxxx Capital Management, a California limited
partnership (the "Sub-Adviser") with regards to ING International SmallCap
Growth Fund, a Series of ING Mutual Funds.
W I T N E S S E T H
WHEREAS, the parties desire to amend the Agreement and agree that the
amendment will be effective as of September 1,2003.
NOW, THEREFORE, the parties agree as follows:
1. The following Section 10 is hereby inserted between existing
Section 9 and Section 10:
10. Non-Exclusivity. The services of the Sub-Adviser to
the Series and the Fund are not to be deemed to be exclusive, and the
Sub-Adviser shall be free to render investment advisory or other services to
others (including other investment companies) and to engage in other activities,
provided, however, that the Sub-Adviser may not consult with any other
sub-adviser of the Fund concerning transactions in securities or other assets
for any investment portfolio of the Fund, including the Series, except that such
consultations are permitted between the current and successor sub-advisers of
the Series in order to effect an orderly transition of sub-advisory duties so
long as such consultations are not concerning transactions prohibited by Section
17(a) of the 1940 Act.
2. Each Section number and applicable references to each Section
following the inserted Section 10 above, will increase numerically by one (i.e.,
Section 13 will be Section 14, etc.).
3. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Agreement.
4. In all other respects, the Agreement is hereby confirmed and
remains in full force and effect.
- 1 -
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ING INVESTMENTS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By: /s/ Xxxxxxx X. Field
-----------------------------
Name: XXXXXXX X. FIELD
Title: DEPUTY GENERAL COUNSEL
- 2 -
