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