EXHIBIT C -- NEW INVESTMENT SUB-ADVISORY AGREEMENT (WELLINGTON)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this _____ day of _______, by and among Pilgrim
Xxxxxx & Associates, Ltd. (the "Adviser"), Wellington Management Company, LLP
(the "Sub-Adviser"), and The PBHG Funds Inc., a Maryland corporation (the
"Company").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, pursuant to the Investment Advisory Agreement dated
_______________ and Schedule A dated _______________ between the Adviser and the
Company, the Adviser will act as investment adviser to PBHG Cash Reserves Fund
("the Portfolio"); and
WHEREAS, the Adviser and the Company each desire to retain the
Sub-Adviser to provide investment advisory services to the Company in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. (a) Subject to supervision by the Adviser and the Company's Board of
Directors, the Sub-Adviser shall manage the investment operations of the
Portfolio and the composition of the Portfolio's investment portfolio, including
the purchase, retention and disposition thereof, in accordance with the
Portfolio's investment objectives, policies and restrictions as stated in such
Portfolio's Prospectus (such Prospectus and Statement of Additional Information
as currently in effect and as amended or supplemented from time to time, being
herein called the "Prospectus"), and subject to the following understandings:
(1) The Sub-Adviser shall provide supervision of the Portfolio's
investments and determine from time to time what investments and securities will
be purchased, retained or sold by the Portfolio 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 Company's Articles of
Incorporation and the Prospectus and with the instructions and directions of the
Adviser and of the Board of Directors 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 Portfolio and will place orders with or through such persons, brokers or
dealers to carry out the policy with respect to brokerage set forth in such
Portfolio's Registration Statement (as defined herein) and Prospectus or as the
Board of Directors or the Adviser may direct from time to time, in conformity
with federal securities laws. In providing the Portfolio 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 Portfolio 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 Portfolio
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 Portfolio with brokers, subject to review by the Company's
Board of Directors 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 a Portfolio 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
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
Portfolio in question and to such other clients.
(4) The Sub-Adviser shall maintain all books and records with respect to
the Portfolio'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 Company's Board of Directors such periodic and special
reports as the Company's Board of Directors may reasonably request.
(5) The Sub-Adviser shall provide the Portfolio's Custodian on each
business day with information relating to all transactions concerning the
Portfolio's assets and shall provide the Adviser with such information upon
request of the Adviser.
(6) (a) 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 Company.
(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.
(c) The Sub-Adviser shall keep the Portfolio'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 Portfolio required by Rule 31a-1 under the
1940 Act. The Sub-Adviser agrees that all records that it
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maintains on behalf of the Portfolio are property of the Portfolio and the
Sub-Adviser will surrender promptly to a Portfolio any of such records upon that
Portfolio'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 Portfolio 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) Articles of Incorporation, as filed with the Secretary of State of
Maryland (such Articles of Incorporation as in effect on the date of this
Agreement, and as amended from time to time, are herein called the "Articles of
Incorporation");
(b) By-Laws of the Company (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 Company's Board of Directors authorizing
the appointment of the Sub-Adviser and approving the form of this Agreement;
(d) Registration Statement 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 Portfolio
and shares of the Portfolio's beneficial shares, and all amendments thereto;
(e) Notification of Registration of the Portfolio under the 1940 Act on
Form N-8A as filed with the Commission, and all amendments thereto; and
(f) Prospectus of the Portfolio.
4. For the services to be provided by the Sub-Adviser pursuant to this Agreement
for the Portfolio, the Adviser will pay to the Sub-Adviser as full compensation
therefor a fee at an annual rate equal to 0.075% of the Portfolio's average
daily net assets up to and including $500 million and 0.020% of the Portfolio's
average daily net assets over $500 million, but subject to a minimum annual
sub-advisory fee of $50,000. This fee will be paid to the Sub-Adviser from the
Adviser's advisory fee for such Portfolio. This fee will be computed daily and
paid to the Sub-Adviser monthly.
5. The Sub-Adviser shall not be liable for any error of judgment or for any loss
suffered by a Portfolio 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
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may otherwise be provided under provisions of applicable state law which cannot
be waived or modified hereby.
6. This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved at
least annually in conformance with the 1940 Act provided, however, that this
Agreement may be terminated (a) by the Portfolio at any time, without the
payment of any penalty, by the vote of a majority of Directors of the Company or
by the vote of a majority of the outstanding voting securities of a Portfolio,
(b) by the Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the other parties, or (c)
by the Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the other parties. This Agreement shall terminate
automatically and immediately in the event of its assignment. As used in this
Section 6, the terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the respective meanings set forth in the 1940 Act
and the rules and regulations thereunder, subject to such exceptions as may be
granted by the Commission under the 1940 Act.
7. Nothing in this Agreement shall limit or restrict the right of any of the
Sub-Adviser's partners, 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 Portfolio, the Company or the public that refers to the
Sub-Adviser or its clients in any way prior to use thereof and not to use
material if the Sub-Adviser reasonably objects in writing within five business
days (or such other period as may be mutually agreed upon) 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. 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 Portfolio.
10. This Agreement shall be governed by the laws of the state of Maryland;
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
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subject matter. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; all 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:
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
To the Sub-Adviser at:
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Regulatory Affairs
To the Company or a Portfolio at:
000 Xxxxxxxxx Xxxx
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. THE PBHG FUNDS, INC.
By: ________________________________ By: ______________________________
Title: ______________________________ Title: ___________________________
WELLINGTON MANAGEMENT COMPANY, LLP
By: ________________________________
Title: ______________________________
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