Exhibit 99.(d)(9)
INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this _____ day of _______, by and among Pilgrim
Xxxxxx & Associates, Ltd. (the "Adviser"), Investment Management Acquisition
Company, LLC (the "Sub-Adviser") and PBHG Funds (the "Trust "), on behalf of the
PBHG Special Equity Fund (the "Fund").
WHEREAS, the Trust is a Delaware business trust and is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, pursuant to the Investment Advisory Agreement dated July 11, 2001
and amended Schedule A dated October 23, 2001 between the Adviser and the Trust
, the Adviser acts as investment adviser to the separate portfolios of the Trust
specified in that Schedule A, including the Fund;
WHEREAS, pursuant to the Investment Sub-Adviosry Agreement dated October
23, 2001 among the Adviser, NWQ Investment Management Company, Inc. the
Sub-Adviser's predecessor (the "Predecessor") and the Trust, on behalf of the
Fund, the Predecessor acts as sub-adviser to the Fund (the "Prior Investment
Sub-Advisory Agreement");
WHEREAS, The Xxxx Nuveen Company has announced its intention to acquire a
controlling interest in the Predecessor either directly or indirectly through an
affiliated company and thereafter merger the Predecessor into the Sub-Adviser,
which will then change its name to NWQ Investment Management Company, LLC, a
transaction that will result in an "assignment" of the Prior Investment
Sub-Adviosry Agreement, as that term is defined in the 1940 Act;
WHEREAS, the Prior Investment Sub-Advisory Agreement will terminate upon
its "assignment" as that term is defined under the 1940 Act;
WHEREAS, the Sub-Adviser is willing to continue to furnish sub-advisory
services to the Fund under this interim investment sub-advisory agreement until
a new investment sub-advisory agreement is approved by the trustees of the Trust
on behalf of the Fund and the shareholders of the Fund as required by Section 15
of the 1940 Act;
WHEREAS, the Trust, the Adviser and the Sub-Advisers desire to comply with
the provisions of Rule 15a-4, including subsection (b) thereof, under the 1940
Act; and
WHEREAS, the trustees of the Trust, including a majority of those trustees
who are not interested persons of the Trust, have found that the scope and
quality of services to be provided to the Trust, on behalf of the Fund under
this Agreement will be at least equivalent to the scope and quality of services
provided under the Prior Investment Sub-Advisory Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. (a) Subject to supervision by the Adviser and the Trust's Board of Trustees ,
the Sub-Adviser shall manage the investment operations of the Fund and the
composition of the Fund's investment portfolio, including the purchase,
retention and disposition thereof, in accordance with the Fund's investment
objective, policies and restrictions as stated in the Fund's Prospectus and
Statement of Additional Information (such Prospectus and Statement of Additional
Information as currently in effect and as amended or supplemented from time to
time, being collectively called herein the "Prospectus"), and subject to the
following understandings:
(1) The Sub-Adviser shall provide supervision of the Fund's
investments and determine from time to time what investments and securities will
be purchased, retained or sold by the Fund, and what portion of the assets will
be invested or held uninvested in cash.
(2) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Trust's Agreement
and Declaration of Trust and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees and will conform and
comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986,
as amended, and all other applicable federal and state laws and regulations, as
each is amended from time to time.
(3) The Sub-Adviser shall determine the securities to be purchased
or sold by the Fund and will place orders with or through such persons, brokers
or dealers to carry out the policy with respect to brokerage set forth in the
Fund's Registration Statement (as defined herein) and Prospectus or as the Board
of Trustees or the Adviser may direct from time to time, in conformity with
federal securities laws. In providing the Fund with investment supervision, the
Sub-Adviser will give primary consideration to securing the most favorable price
and efficient execution. Within the framework of this policy, the Sub-Adviser
may consider the financial responsibility, research and investment information
and other services provided by brokers or dealers who may effect or be a party
to any such transaction or other transactions to which the Sub-Adviser's other
clients may be a party. It is understood that it is desirable for the Fund that
the Sub-Advisor have access to supplemental investment and market research and
security and economic analysis provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable price and
efficient execution. Therefore, the Sub-Adviser is authorized to place orders
for the purchase and sale of securities for the Fund with brokers, subject to
review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Sub-Adviser in connection with the
Sub-Adviser's services to other clients.
On occasions when the Sub-Adviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be so purchased or sold in order to obtain the most 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
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transaction, will be made by the Sub-Adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the Fund and
to such other clients.
(4) The Sub-Adviser shall maintain all books and records with
respect to the Fund' s portfolio transactions required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Trust's Board of Trustees such periodic and special
reports as the Trust's Board of Trustees may reasonably request.
(5) The Sub-Adviser shall provide the Fund's Custodian on each
business day with information relating to all transactions concerning the Fund's
assets and shall provide the Adviser with such information upon request of the
Adviser.
(6) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive and the Sub-Adviser shall be
free to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(b) Services to be furnished by the Sub-Adviser under this Agreement may
be furnished through the medium of any of the Sub-Adviser's officers or
employees. It is understood that the Sub-Adviser may obtain certain
administrative services, including, without limitation, services relating to
trade reconciliation and the production of client reports, from its parent
company or other affiliated entities in carrying out its obligations under this
Agreement.
(c) The Sub-Adviser shall keep the Fund's books and records required to be
maintained by the Sub-Adviser pursuant to paragraph 1(a) of this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to keep the
other books and records of the Fund required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser agrees that all records that it maintains on behalf of the Fund
are the Fund's property and the Sub-Adviser will surrender promptly to the Fund
any of such records upon the Fund's request; provided, however, that the
Sub-Adviser may retain a copy of such records. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by it pursuant to paragraph 1(a) of
this Agreement.
2. The Adviser shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Advisory Agreement and shall oversee and
review the Sub-Adviser's performance of its duties under this Agreement.
3. The Adviser has delivered to the Sub-Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Agreement and Declaration of Trust, as filed with the Secretary of
State of Delaware (such Agreement and Declaration of Trust as in effect on the
date of this Agreement, and as amended from time to time, are herein called the
"Agreement and Declaration of Trust" );
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(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement, and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser and approving the form of this Agreement;
(d) Registration Statements under the 1940 Act and the Securities Act of
1933, as amended on Form N-1A (the "Registration Statement") as filed with the
Securities and Exchange Commission (the "Commission") relating to the Fund and
shares of the Fund's beneficial shares, and all amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus of the Fund.
4. For the services to be provided by the Sub-Adviser pursuant to this Agreement
for the Fund, the Adviser will pay to the Sub-Adviser as full compensation
therefor a fee at an annual rate specified in Schedule A. This fee will be paid
to the Sub-Adviser from the Adviser's advisory fee for the Fund. Such
compensation will be deposited and held in interest-bearing escrow accounts for
the Fund with the Fund's custodian bank. If a majority of the Fund's outstanding
voting securities (as defined in the 0000 Xxx) are voted to approve a new
contract with the Sub-Adviser by the end of the 150-day period (commencing on
the Assignment Date, as defined hereinafter), the amount in the escrow account
(including interest earned) will be paid to the Sub-Adviser. If a majority of
the Fund's outstanding voting securities are not voted to approve a new contract
with the Sub-Adviser by the end of such 150 day period, the Sub-Adviser shall be
paid, out of the escrow account, the lesser of: (i) any costs incurred in
performing the interim contract (plus interest earned on that amount while in
escrow) or (ii) the total amount in the escrow account (plus interest earned).
5. The Sub-Adviser shall not be liable for any error of judgment or for any loss
suffered by the Fund or the Adviser in connection with performance of its
obligations under this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act), or a loss resulting from willful
misfeasance, bad faith or gross negligence on the Sub-Adviser's part in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement, except as may otherwise be provided under
provisions of applicable state law which cannot be waived or modified hereby.
6. This Agreement shall commence on the date on which the Prior Investment
Sub-Advisory Agreement is terminated by its assignment (the "Assignment Date")
and continue until, the sooner of the date: (i) the date when a new investment
advisory agreement is approved by the Trustees and a majority (as defined in the
0000 Xxx) of the holders of the Fund's outstanding voting securities (as defined
in the 1940 Act); or (ii) One hundred and fifty (150) days from the Assignment
Date. Once the Fund receives approval from the holders of a
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majority of the outstanding voting securities as required by section (i) above,
the Fund will be deemed to have terminated this Agreement and the new
sub-advisory agreement shall take effect. Notwithstanding the foregoing, this
Agreement may be terminated (a) at any time without penalty by the Trust upon
the vote of a majority of the Trustees of the Trust or by vote of the majority
of the Fund's outstanding voting securities, upon ten (10) days' written notice
to the Adviser or (b) by the Adviser at any time without penalty, upon sixty
(60) days' written notice to the Trust. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act), but
not including the assignment referenced in the first sentence of this section
and the Whereas clauses.
7. Nothing in this Agreement shall limit or restrict the right of any of the
Sub-Adviser's directors, officers, or employees to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any business, whether of a similar or dissimilar nature, nor limit or
restrict the Sub-Adviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
8. During the term of this Agreement, the Adviser agrees to furnish the
Sub-Adviser at its principal office all prospectuses, proxy statements, reports
to shareholders, sales literature or other materials prepared for distribution
to shareholders of the Fund, the Trust or the public that refers to the
Sub-Adviser or its clients in any way prior to use thereof and not to use those
materials if the Sub-Adviser reasonably objects in writing within five business
days (or such other period as may be mutually agreed) after receipt thereof. The
Sub-Adviser's right to object to such materials is limited to the portions of
such materials that expressly relate to the Sub-Adviser, its services and its
clients. The Adviser agrees to use its reasonable best efforts to ensure that
materials prepared by its employees or agents or its affiliates that refer to
the Sub-Adviser or its clients in any way are consistent with those materials
previously approved by the Sub-Adviser as referenced in the first sentence of
this paragraph. Sales literature may be furnished to the Sub-Adviser by
first-class or overnight mail, facsimile transmission equipment or hand
delivery.
9. (a) No provisions 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
the vote of the majority of the outstanding voting securities of the Fund.
(b). No Trustee or Shareholder of the Trust shall be personally liable for
any debts, liabilities, obligations or expenses incurred by or contracted for
under this Agreement.
10. This Agreement shall be governed by the laws of the state of Delaware;
provided, however, that nothing herein shall be construed as being inconsistent
with the 1940 Act.
11. This Agreement embodies the entire agreement and understanding among the
parties hereto, and supersedes all prior agreements and understandings relating
to this Agreement's subject matter. This Agreement may be executed in any number
of counterparts, each of which
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shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
12. Should any part of this Agreement be held invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
13. Any notice, advice or report to be given pursuant to this Agreement shall be
delivered or mailed:
To the Adviser at:
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
To the Sub-Adviser at:
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
To the Trust or the Fund at:
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
14. Where the effect of a requirement of the 1940 Act reflected in any provision
of this Agreement is altered by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
PILGRIM XXXXXX & ASSOCIATES, LTD. PBHG FUNDS
By: _______________________________ By: ______________________________
Title: _____________________________ Title: __________________________
Investment Management Acquisition Company, LLC
By: _______________________________
Title: _____________________________
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SCHEDULE A
PBHG Special Equity Fund
For services to be provided by the Sub-Adviser pursuant to this Agreement
for the Fund, the Adviser will pay to the Sub-Adviser as full compensation
therefore: (a) until September 25, 2002, a fee at the annual rate of 0.85% on
the assets transferred over to the Fund as a result of the reorganization of the
NWQ Special Equity Fund into the Fund (so called "Legacy Assets") and a fee of
0.425% on non-Legacy Assets (in each instance net of any waivers, reimbursement
payments, supermarket fees and alliance fees waived, reimbursed or paid by the
Adviser in respect of the Fund) and (b) after September 25, 2002, a fee at the
annual rate of 0.50% of the Fund's average net assets (net of 50% of any
waivers, reimbursement payments, supermarket fees and alliance fees waived,
reimbursed or paid by the Adviser in respect of the Fund).
