INVESTMENT SUB-ADVISORY CONTRACT
PITCAIRN INVESTMENT MANAGEMENT
AGREEMENT, dated as of September 5, 2001 by and between Pitcairn
Investment Management (the "Adviser"), a separately identifiable division of
Pitcairn Trust Company, a Pennsylvania corporation (the "Adviser"), and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Asset Management Company LLC, a Delaware limited liability company (the
"Manager").
WHEREAS, the Pitcairn Funds (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act");
WHEREAS, the Trust is and will continue to be a series fund having two
or more investment portfolios, each with its own investment objectives, policies
and restrictions;
WHEREAS, the Adviser is the investment adviser to the Trust;
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
WHEREAS, the Investment Company Act prohibits any person from acting as
an investment adviser to a registered investment company except pursuant to a
written contract (the "Agreement"); and
WHEREAS, the Board of Trustees of the Trust and the Adviser desire to
retain the Manager to render investment advisory services to the Small Cap
Growth Fund portfolio (the "Fund") in the manner and on the terms hereinafter
set forth;
NOW, THEREFORE, in consideration of the promises and covenants
hereinafter contained, the Adviser and Manager agree as follows:
1. APPOINTMENT OF MANAGER
The Adviser hereby appoints the Manager to act as investment adviser to
the Fund and to furnish the investment advisory services described below,
subject to the supervision of the Trustees of the Trust and the Adviser and in
accordance with the terms and conditions of this Agreement. The Manager will be
an independent contractor and will have no authority to act for or represent the
Trust or Adviser in any way or otherwise be deemed an agent of the Trust or
Adviser except as expressly authorized in this Agreement or another writing by
and among the Trust, Adviser and the Manager.
2. SERVICES TO BE RENDERED BY THE MANAGER TO THE TRUST
A. The Manager will have full discretionary authority to and will
manage the investment and reinvestment of the assets of the Fund and determine
the composition of the assets of the Fund, subject always to the direction and
control of the Trustees of the Trust and the Adviser and in accordance with the
provisions of the Trust's registration statement, as amended from time to time.
In fulfilling its obligations to manage the investment and reinvestment of the
assets of the Fund, the Manager will:
(i) furnish investment research and advice and formulate and
implement a continuous investment program for the Fund (a) consistent
with federal and state securities laws and regulations, the Fund's
compliance manual and policies and procedures and any written
instructions of the Adviser, the investment objectives, policies and
restrictions of the Fund as stated in the Trust's Agreement and
Declaration of Trust, By-Laws, and such Fund's currently effective
Prospectus. and Statement of Additional Information ("SAI") as amended
from time to time and provided to the Manager pursuant to Section 2.B
of this Agreement, and (b) in compliance with the requirements
applicable to the management of regulated investment companies'
accounts under Subchapter M of the Internal Revenue Code of 1986, as
amended;
(ii) take whatever steps are necessary to implement the
investment program for the Fund by the purchase, sale and exchange of
securities and other investments, including cash, authorized under the
Trust's Agreement and Declaration of Trust, By-Laws, and such Fund's
currently effective Prospectus and SAI and provided to the Manager
pursuant to Section 2.B of this Agreement, including the placing of
orders for such purchases sales and exchanges for the account of the
Trust on behalf of the Fund with such brokers and dealers as the
Adviser or the Manager shall have selected; to this end, the Manager is
expressly authorized as the agent of the Trust on behalf of the Fund to
give instructions to the Custodian of the Trust as to deliveries of
securities and payments of cash for the account of the Trust on behalf
of such Fund;
(iii) regularly report to the Trustees of the Trust and the
Adviser with respect to the implementation of the investment program
and, in addition, will provide such statistical information and special
reports concerning the Fund and/or important developments materially
affecting the investments held, or contemplated to be purchased, by the
Fund, as may reasonably be requested by the Adviser or the Trustees of
the Trust, and will attend Board of Trustees' meetings, as reasonably
requested, to present such information and reports to the Board;
(iv) provide information as reasonably requested by the
Advisor or the Trustees of the Trust to assist them in the
determination of the fair value of certain portfolio securities when
market quotations are not readily available for the purpose of
calculating the Fund's net asset value in accordance with procedures
and methods established by the Trustees of the Trust; and
(v) establish appropriate interfaces with the Trust's
administrator, custodian, transfer agent, and other agents and
representatives, and Adviser in order to provide such administrator and
Adviser with all information reasonably requested by the administrator
and Adviser necessary to the provision of the Manager's services
hereunder to the Fund.
B. To facilitate the Manager's fulfillment of its obligations under
this Agreement, the Adviser will undertake the following:
(i) the Adviser agrees promptly to provide the Manager with
all amendments or supplements to the Fund's Prospectus, SAI, the
Trust's registration statement on Form N-1A ("Registration Statement"),
the Trust's Agreement and Declaration of Trust, and By-Laws, and the
Trust's compliance manual and policies and procedures;
(ii) the Adviser agrees to notify the Manager expressly in
writing of each change in the fundamental and nonfundamental investment
policies of the Fund;
(iii) the Adviser agrees to provide, directly or indirectly,
the Manager with such assistance as may be reasonably requested by the
Manager in connection with its activities pertaining to the Fund under
this Agreement, including information as to the general condition of
the Fund's affairs; and
(iv) the Adviser will promptly provide to the Manager in
writing any guidelines, policies and procedures applicable to the
Manager or the Fund adopted from time to time by the Board of Trustees
of the Trust and agrees to promptly provide the Manager with copies of
all amendments thereto.
(v) The Manager shall implement any such amendment within a
reasonable time after receipt of such amendment.
C. The Manager, at its expense, will furnish: all necessary investment
and management facilities, overhead expenses and investment personnel,
including salaries, expenses and fees of any personnel required for it to
faithfully perform its duties under this Agreement.
D. The Manager will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. The Manager will place
all necessary orders with brokers, dealers, or issuers. The Manager is directed
at all times to seek to execute brokerage transactions for the Fund in
accordance with such policies or practices as may be established by the Board of
Trustees and described in the Trust's currently effective Prospectus and SAI, as
amended from time to time and provided to the Manager pursuant to Section 2.B of
this Agreement, including in particular policies and procedures in accordance
with Section 17(e) and Rule 17e-1 under the Investment Company Act. In placing
orders for the purchase or sale of investments for the Fund, in the name of the
Trust on behalf of the Fund or its nominees, the Manager shall use its best
efforts to obtain for the Fund the most favorable net price and best execution
available, considering all of the circumstances, and shall maintain records
adequate to demonstrate compliance with this requirement.
Subject to any appropriate policies and procedures as may from time to
time be approved by the Board of Trustees, the Manager may, to the extent
authorized by Section 28(e) of the Securities and Exchange Act of 1934, cause
the Fund to pay a broker or dealer that provides brokerage or research services
to, the Manager, an amount of commission for effecting a portfolio transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Manager determines, in good faith,
that such amount of commission is reasonable in relationship to the value of
such brokerage or research services provided viewed in terms of that particular
transaction or the Manager's overall responsibilities to the Fund or its other
advisory clients. To the extent authorized by Section 28(e) and the Trust's
Board of Trustees, the 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 such action.
E. On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients of the
Manager, the Manager, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Manager in
the manner the Manager considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to its other clients.
F. The Manager will maintain all accounts, books and records generated
by it with respect to the Fund as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and
Advisers Act and the rules thereunder.
G. The Manager will, unless and until otherwise directed by the Adviser
or the Board of Trustees, vote proxies with respect to the Fund's securities,
and exercise rights in corporate actions or otherwise.
3. COMPENSATION OF MANAGER
The Adviser will pay the Manager, with respect to the Fund,
compensation at the annual rate of 70 basis points (0.70%) of the average daily
value of the Fund's assets, as calculated in accordance with the computation of
net asset value included in the Trust's Registration Statement, and accrued on a
daily basis. In the event the calculation of any Fund's net asset value is
suspended, the net asset value used for any day will be that for the last
business day prior to such suspension until net asset value calculations are
resumed. Payments shall be made to the Manager on the first day of each month
for the preceding month or portion thereof
4. LIABILITY OF MANAGER
Neither the Manager nor any of its directors, officers, shareholders,or
employees shall be liable to the Adviser or the Trust for any loss suffered by
the Adviser or the Trust resulting from its acts or omissions as Manager to a
Fund, except for losses to the Adviser or the Trust resulting from willful
misconduct, bad faith, or gross negligence in the performance of, or from
reckless disregard of, the duties hereunder of the Manager or any of its
directors, officers or employees. The Manager, its directors, officers,
shareholders or employees shall not be liable to the Adviser or the Trust for
any loss suffered as a consequence of any action or inaction of other service
providers to the Trust, including in failing to observe the instructions of the
Manager, unless such action or inaction of such other service providers to the
Trust is a result of the willful misconduct, bad faith or gross negligence in
the performance of, or from reckless disregard of, the duties of the Manager,
its directors, officers or employees under this Agreement. The Manager will not
be responsible at any time for an addition to the fund until notification of
such addition has been confirmed by the Manager in writing to the Adviser (or
another person designated in writing to the Manager by the Adviser, which person
may be the Fund's administrator or other service provider), provided, however,
that the Manager shall promptly send such confirmation once it has received
notification of each addition. The written confirmation may be by fax, or any
other means agreed to by the parties.
5. INDEMNIFICATIONS
A. The Adviser shall indemnify the Manager and its controlling persons,
officers, directors, employees, agents, legal representatives and persons
controlled by it (which shall not include the Trust or any Fund) (collectively,
"Manager Related Persons") to the fullest extent permitted by law against any
and all loss, damage, judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees (collectively "Losses"), incurred
by the Manager or Manager Related Persons arising from or in connection with
this Agreement or the performance by the Manager or Manager Related Persons of
its or their duties hereunder so long as such Losses arise out of the Adviser's
gross negligence, willful misconduct or bad faith in performing its
responsibilities hereunder or under its agreements with the Trust, including,
without limitation, such Losses arising under any applicable law or that may be
based upon any untrue statement of a material fact contained in the Trust's
Registration Statement, or any amendment thereof or any supplement thereto, or
the omission to state therein a material fact known or which should have been
known and was required to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was made in reasonable
reliance upon information furnished to the Adviser or the Trust by the Manager
or a Manager Related Person specifically for inclusion in the Registration
Statement or any amendment or supplement thereto, except to the extent any such
Losses referred to in this paragraph A result from willful misfeasance, bad
faith, gross negligence or reckless disregard on the part of the Manager or a
Manager Related Person in the performance of any of its duties under, or in
connection with, this Agreement.
B. The Manager shall indemnify the Adviser and its controlling persons,
officers, directors, employees, agents, legal representatives and persons
controlled by it (collectively, "Adviser Related Persons") to the fullest extent
permitted by law against any and all Losses incurred by the Adviser or Adviser
Related Persons arising from or in connection with this Agreement or the
performance by the Adviser or Adviser Related Persons of its or their duties
hereunder so long as such Losses arise out of the Manager's gross negligence,
willful misconduct or bad faith in performing its responsibilities hereunder,
including, without limitation, such Losses arising under any applicable law or
that may be based upon any untrue statement of a material fact contained in the
Trust's Registration Statement, or any amendment thereof or any supplement
thereto or the omission to state therein a material fact known or which should
have been known and was required to be stated therein or necessary to make the
statements therein not misleading, in any case only to the extent that such
statement or omission was made in reasonable reliance upon and in accordance
with written information furnished by the Manager or Manager Related Person to
the Adviser or the Trust specifically for inclusion in the Registration
Statement or any amendment or supplement thereto, except to the extent any such
Losses referred to in this paragraph (I.E., paragraph B) result from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Adviser or a Adviser Related Person in the performance of any of its duties
under, or in connection with, this Agreement.
C. The indemnifications provided in this Section 10 shall survive the
termination of this Agreement. Neither party shall be obligated under this
Section 5 to make any payment in
respect of a settlement unless such party shall have consented thereto, such
consent not to be withheld or delayed unreasonably.
6. NON-EXCLUSIVITY
The services of the Manager to the Fund and the Trust are not to be
deemed to be exclusive, and the Manager shall be free to render investment
advisory or other services to others (including other investment companies) and
to engage in other activities. It is understood and agreed that the directors,
officers, and employees of the Manager are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers, directors, trustees, or employees of any other
firm or corporation, including other investment companies. The Adviser
understand that nothing in this Agreement will in any way limit or restrict the
Manager or any of its officers, directors, or employees from buying, selling, or
trading in any securities (including securities purchased or sold for the
Portfolio) for its own or their own accounts or for the accounts of other
clients, consistently with applicable law and fiduciary duties. The Adviser
acknowledges that variations may arise in the allocation of investment
opportunities between the Portfolio and other accounts which the Manager
manages. Although the Manager will allocate such opportunities in a manner which
it believes to be equitable consistent with applicable law and the Manager's
fiduciary duty to the Fund, there can be no assurance that a particular
investment opportunity which comes to the attention of the Manager will be
allocated in any particular manner. Other accounts managed by the Manager may
have different investment objectives, policies, or considerations than the
Portfolio, therefore decisions as to purchases and sales for each account are
made separately and independently in accordance with the investment objectives
and purposes of each account.
7. SUPPLEMENTAL ARRANGEMENTS
The Manager may enter into arrangements with other persons affiliated
with the Manager for the provision of certain personnel and facilities to the
Manager to better enable it to fulfill its duties and obligations under this
Agreement. As used in this Agreement, any reference to the "Manager" refers also
to such affiliate.
8. REGULATION
The Manager shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports, or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
9. RECORDS
The records relating to the services provided under this Agreement
shall be the property of the Trust and shall be under its control; however, the
Trust shall furnish to the Manager such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
in order to carry out its duties. In the event of the termination of this
Agreement, such records shall promptly be returned to the Trust by the Manager
free from any
claim or retention of rights therein except that the Manager shall be entitled
to retain copies of such records as the Manager is required by law to retain.
The Manager shall keep confidential any information obtained in connection with
its duties hereunder and disclose such information only if the Trust has
authorized such disclosure or if such disclosure is expressly required or
requested by applicable federal or state regulatory authorities.
10. DURATION OF AGREEMENT
This Agreement shall become effective with respect to the Fund on the
date of its execution, or if later, the date of the commencement of operations
of the Fund. This Agreement will continue in effect for a period more than two
years from the date of its execution only so long as such continuance is
specifically approved at least annually by the Board of Trustees or majority of
outstanding voting securities, provided that in such event such continuance
shall also be approved by the vote of a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act) ("Independent
Trustees") of any party to this Agreement, cast in person at a meeting called
for the purpose of voting on such approval.
11. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of
any penalty, (A) by the Adviser at the direction of the Board of Trustees,
including a majority of the Independent Trustees, (B) by the vote of a majority
of the outstanding voting securities of the Fund, on thirty (30) days' written
notice to the Adviser and the Manager, or (C) by the Adviser or Manager on
thirty (30) days' written notice to the Trust and the other party. This
Agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the Investment Company Act) or in the
event the Investment Management Agreement between the Adviser and the Trust is
assigned or terminates for any other reason. This Agreement will also terminate
upon written notice to the other party that the other party is in material
breach of this Agreement, unless the other party in material breach of this
Agreement cures such breach to the reasonable satisfaction of the party alleging
the breach within ten (10) days after written notice.
12. PROVISION OF CERTAIN INFORMATION BY MANAGER
The Manager will promptly notify the Adviser in writing of the
occurrence of any of the following events:
A. the Manager fails to be registered as an investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the Manager is
required to be registered as an investment adviser in order to perform its
obligations under this Agreement;
B. the Manager is served or otherwise receives notice of any action,
suit, proceeding, inquiry, or investigation, at law or in equity, before or
by any court, public board, or body, involving the affairs of the Manager as
they relate to the Manager's responsibilities under this Agreement; and/or
C. the portfolio manager or managers of the Fund change or there
occurs any assignment of the Manager.
13. USE OF MANAGER'S NAME
The Adviser will not use the Manager's name (or that of any affiliate)
in Trust literature without prior review and approval by the Manager, which may
not be unreasonably withheld or delayed.
14. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the
rules or regulations thereunder or pursuant to any exemptive relief granted by
the Securities and Exchange Commission ("SEC"), this Agreement may be amended by
the parties only if such amendment, if material, is specifically approved by the
vote of a majority of the outstanding voting securities of the Fund (unless such
approval is not required by Section 15 of the Investment Company Act as
interpreted by the SEC or its staff or the Trust has obtained an exemption from
the voting requirements of Section 15) and by the vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to the Fund if a majority of the outstanding voting securities of
the Fund vote to approve the amendment, notwithstanding that the amendment may
not have been approved by a majority of the outstanding voting securities of any
other portfolio affected by the amendment or all the portfolios of the Trust.
15. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Fund.
16. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
17. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of each applicable party
in person or by registered mail or a private mail or delivery service providing
the sender with notice of receipt. The specific person to whom notice shall be
provided with respect to the Manager shall be President, and with respect to the
Adviser shall be its Corporate Counsel, unless another person is specified in
writing to the other party. Notice shall be deemed given on the date delivered
or mailed in accordance with this paragraph.
18. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
19. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware, or any of the applicable
provisions of the Investment Company Act. To the extent that the laws of the
State of Delaware, or any of the provisions in this Agreement, conflict with
applicable provisions of the Investment Company Act, the latter shall control.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act shall be resolved by reference to such term or
provision of the Investment Company Act and to interpretations thereof, if any,
by the United States courts or, in the absence of any controlling decision of
any such court, by rules, regulations or orders of the SEC validly issued
pursuant to the Investment Company Act. Specifically, the terms "vote of a
majority of the outstanding voting securities," "interested persons,"
"assignment," and "affiliated persons," as used herein shall have the meanings
assigned to them by Section 2(a) of the Investment Company Act. In addition,
where the effect of a requirement of the Investment Company Act reflected in any
provision of this Agreement is relaxed by a rule, regulation or order of the
SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
PITCAIRN TRUST COMPANY, on behalf of
PITCAIRN INVESTMENT MANAGEMENT, a division thereof
By:
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and Chief Legal
Officer
▇▇▇▇▇▇▇▇ MELLON ASSET MANAGEMENT COMPANY LLC
By:
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Name:
Title: