Exhibit 99.B5(a)
PBHG ADVISOR FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, entered into as of this 1st day of April, 1998, between
Pilgrim Xxxxxx & Associates, Ltd. (the "Adviser") and PBHG Advisor Funds, Inc.
(the "Company").
WHEREAS, the Company is a Maryland corporation organized under Articles
of Incorporation dated January 8, 1998 (the "Articles"), and is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company;
WHEREAS, the Company wishes to retain the Adviser to render investment
advisory services to the Company and the Adviser is willing to furnish such
services to the portfolios listed on Schedule A hereto (the "Funds");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the Company and the Adviser as
follows:
1. APPOINTMENT. The Company hereby appoints the Adviser to act as
investment adviser to the Company for the periods and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
2. INVESTMENT ADVISORY DUTIES. Subject to the supervision of the
Directors of the Company, the Adviser will, (a) provide a program of continuous
investment management for the Funds in accordance with the Funds' investment
objectives, policies and limitations as stated in each Fund's Prospectus and
Statement of Additional Information included as part of the Company's
Registration Statement filed with the Securities and Exchange Commission, as
they may be amended from time to time, copies of which shall be provided to the
Adviser by the Company; (b) make investment decisions for the Funds; and (c)
place orders to purchase and sell securities for the Funds.
In performing its investment management services to the Funds
hereunder, the Adviser will provide the Funds with ongoing investment guidance
and policy direction, including oral and written research, analysis, advice,
statistical and economic data and judgments regarding individual investments,
general economic conditions and trends and long-range investment policy. The
Adviser will determine the securities, instruments,
repurchase agreements, options, futures and other investments and techniques
that the Funds will purchase, sell, enter into or use, and will prove an ongoing
evaluation of the Funds' investments. The Adviser will determine what portion of
the Funds' investments shall be invested in securities and other assets, and
what portion, if any, should be held uninvested. The Adviser shall furnish to
the Company adequate (i) office space, which may be space within the offices of
the Adviser or in such other places as may be agreed upon from time to time and
(ii) office furnishings, facilities and equipment as may be reasonably required
for managing the corporate affairs and conducting the business of the Company,
including complying with the corporate reporting requirements of the various
states in which the Company does business, and conducting correspondence and
other communications with the stockholders of the Company. The Adviser shall
employ or provide and compensate the executive, secretarial and clerical
personnel necessary to provide such services. Subject to the approval of the
Board of Directors (including a majority of the Directors who are not
"interested persons" of the Company as defined in the 0000 Xxx) and of the
shareholders of the Company, the Adviser may delegate to a sub-adviser its
duties enumerated in Section 2 hereof. The Adviser shall continue to supervise
the performance of any such sub-adviser and shall report regularly thereon to
the Company's Board of Directors. The Adviser further agrees that, in performing
its duties hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, the Internal Revenue Code of 1986, as amended (the
"Code"), and all other applicable federal and state laws and regulations, and
with any applicable procedures adopted by the Directors;
(b) use reasonable efforts to manage each Fund so that it will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for
each Fund directly with the issuer, or with any broker or dealer, in accordance
with applicable policies expressed in each Fund's Prospectus and/or Statement of
Additional Information and in accordance with applicable legal requirements;
(d) furnish to the Company whatever statistical information
the Company may reasonably request with respect to each Fund's assets or
contemplated investments. In addition, the Adviser will keep the Fund and the
Directors informed of developments materially affecting each Funds's investments
and shall, on the Adviser's own initiative, furnish to the Company from time to
time whatever information the Adviser believes appropriate for this purpose;
(e) make available to the Company, promptly upon its request,
such copies of the Adviser's investment records and ledgers with respect of the
Funds as may be
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required to assist the Company in its compliance with applicable laws and
regulations. The Adviser will furnish the Directors with such periodic and
special reports regarding each Fund as they may reasonably request; and
(f) immediately notify the Company in the event that the
Adviser or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Adviser from serving as investment
adviser pursuant to this Agreement; or (2) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission ("SEC") or other regulatory authority. The Adviser further
agrees to notify the Company immediately of any material fact known to the
Adviser respecting or relating to the Adviser that is not contained in the
Company's Registration Statement, or any amendment or supplement thereto, but
that is required to be disclosed therein, and of any statement contained therein
that becomes untrue in any material respect.
3. ADDITIONAL SERVICES. If the Company so requests, the Adviser shall
also maintain all internal bookkeeping, accounting and auditing services and
records in connection with maintaining the Company's financial books and
records, and shall calculate each Fund's daily net asset value. For these
services, each Fund shall pay to the Adviser a monthly fee, which shall be in
addition to the fees payable pursuant to Section 5 hereof, to reimburse the
Adviser for its costs, without profit, for performing such services.
4. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically
provided in this Section 4, the Adviser shall pay the compensation and expenses
of all its directors, officers and employees who serve as officers and executive
employees of the Company (including the Company's share of payroll taxes for
such persons), and the Adviser shall make available, without expense to the
Company, the service of its directors, officers and employees who may be
duly-elected officers of the Company, subject to their individual consent to
serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Company
other than those specifically allocated to the Adviser in this Section 4. In
particular, but without limiting the generality of the foregoing, the Adviser
shall not be responsible, except to the extent of the reasonable compensation of
such of the Company's employees as are officers or employees of the Adviser
whose services may be involved, for the following expenses of the Company;
organization and certain offering expenses of the Company (including
out-of-pocket expenses, but not including the Adviser's overhead and employee
costs); fees payable to the Adviser and to any other Company advisers or
consultants; legal expenses, auditing and accounting expenses; interest
expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses incurred by or
with respect to the Company in connection with membership in investment company
trade organizations; costs of insurance relating to fidelity coverage for the
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Company's officers and employees; fees and expenses of the Company's custodian,
any sub-custodian, shareholder servicing agent, transfer agent, registrar, or
dividend disbursing agent; payments to the Adviser for maintaining the Company's
financial books and records and calculating the daily net asset value pursuant
to Section 3 hereof, other payments for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if any; expenses
of preparing share certificates; other expenses in connection with the issuance,
offering, distribution, sale or redemption of securities issued by the Company;
expenses relating to investor and public relations; expenses of registering and
qualifying shares of the Company for sale, freight, insurance and other charges
in connection with the shipment of the Company's portfolio securities; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other assets of the Company, or of entering into other transactions or
engaging in any investment practices with respect to the Company; expenses of
printing and distributing Prospectuses, Statements of Additional Information,
reports, notices and dividends to stockholders; costs of stationery; any
litigation expenses; costs of stockholders' meetings; the compensation and all
expenses (specifically including travel expenses relating to the Company's
business) of officers, directors and employees of the Company who are not
interested persons of the Adviser; and travel expenses (or an appropriate
portion thereof) of officers or directors of the Company who are officers,
directors or employees of the Adviser to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Company with respect to
matters concerning the Company, or any committees thereof or advisers thereto.
5. COMPENSATION. As compensation for the services provided and expenses
assumed by the Adviser under this Agreement, except for any additional services
provided by the Adviser pursuant to Section 3 hereof, each Fund will pay the
Adviser at the end of each calendar month an advisory fee as set forth in
Schedule A hereto. The advisory fee is computed daily as a percentage of each
portfolio's average daily net assets. The "average daily net assets" of a Fund
shall mean the average of the values placed on the Fund's net assets on each day
on which the net asset value of the Fund is determined. The value of net assets
of the Fund shall be determined pursuant to the applicable provisions of the
Articles and the Registration Statement. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business day,
then for the purposes of this Section 5, the value of the net assets of the Fund
as last determined shall be deemed to be the value of its net assets as of the
close of regular trading on the New York Stock Exchange, or as of such other
time as the value of the net assets of the Fund's securities may lawfully be
determined, on that day. If the determination of the net asset value of the
shares of a Fund has been so suspended for a period including any month and when
the Adviser's compensation is payable at the end of such month, then such value
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month). If the Fund determines
the value of the net assets more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole determination
thereof on that day for the purposes of this Section 5.
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6. BOOKS AND RECORDS. The Adviser agrees to maintain such books and
records with respect to its services to the Company as are required by Section
31 under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Adviser also
agrees that records it maintains and preserves pursuant to Rules 31a-1 and 31a-2
under the 1940 Act as otherwise in connection with its services hereunder are
the property of the Company and will be surrendered promptly to the Company upon
its request. The Adviser further agrees that it will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with its services hereunder which may be requested in order to
determine whether the operations of the Company are being conducted in
accordance with applicable law and regulations. The books and records maintained
by the Adviser under this Section 6 shall be the property of the Company, and
the Adviser will surrender promptly to the Company any such records as the
Company may request; provided, however, that the Adviser may retain a copy of
such records.
7. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Adviser shall
exercise its best judgment in rendering the services provided by it under this
Agreement. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Company or the holders of the Company's
shares in connection with the matters to which this Agreement relates, provided
that nothing in this Agreement shall be deemed to protect or purport to protect
the Adviser against any liability to the Company or to holders of the Company's
shares to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Adviser's reckless disregard of its obligations and
duties under this Agreement. As used in this Section 7, the term "Adviser" shall
include any officers, directors, employees or other affiliates of the Adviser
performing services with respect to the Company.
8. SERVICES NOT EXCLUSIVE. It is understood that the services
of the Adviser are not exclusive, and that nothing in this Agreement shall
prevent the Adviser from providing similar services to other investment advisory
clients, other investment companies or to other series of investment companies,
or from engaging in other activities, provided such other services and
activities do not, during the term of the Agreement, interfere in a material
manner with the Adviser's ability to meet its obligations to the Company
hereunder. When the Adviser recommends the purchase or sale of the same security
for a Fund, it is understood that in light of its fiduciary duty to the Fund,
such transactions will be executed on a basis that is fair and equitable to the
Fund. In connection with purchases or sales of portfolio securities for the
account of a Fund, provided that portfolio transactions for a Fund may be
executed through firms affiliated with the Adviser, in accordance with
applicable legal requirements. If the Adviser provides any advice to its
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clients concerning the shares of the Company, the Adviser shall act solely as
investment counsel for such clients and not in any way on behalf of the Company.
9. DURATION AND TERMINATION. This Agreement shall continue
until April 1, 1999, and thereafter shall continue automatically for successive
annual periods, provided such continuance is specifically approved at least
annually by (i) the Directors or (ii) a vote of a "majority" of each Fund's
outstanding voting securities (as defined in the 1940 Act), provided that in
either event the continuance is also approved by a majority of the Directors who
are not "interested persons" of any party to this Agreement (as defined in the
1940 Act), by vote cast in person at a meeting called for the purpose of voting
on such approval. Notwithstanding the foregoing, this Agreement may be
terminated as to a Fund (a) at any time without penalty by the Company upon the
vote of a majority of the Directors or by vote of the majority of the Fund's
outstanding voting securities, upon sixty (60) days' written notice to the
Adviser or (b) by the Adviser at any time without penalty, upon sixty (60) days'
written notice to the Company. This Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act).
10. AMENDMENTS. No provision of this Agreement may be discharged,
waived, or terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought, and no amendment of this Agreement shall be effective until approved
by an affirmative vote of (i) a majority of the outstanding voting securities of
the Company, and (ii) a majority of the Directors, including a majority of
Directors 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.
11. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
(b) 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.
(c) 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 hereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
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(d) Nothing herein shall be construed as constituting the
Adviser as an agent of the Company.
IN WITNESS WHEREFORE, the parties hereto have caused this Agreement to
be executed by their officers designated below as of April 1, 1998.
PBHG ADVISOR FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Title: Vice President
PILGRIM XXXXXX & ASSOCIATES, LTD.
By: /s/ Xxxx X. Xxxxxxxxx
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Title:
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SCHEDULE A DATED APRIL 1, 1998
TO THE INVESTMENT ADVISORY AGREEMENT DATED
APRIL 1, 1998 BETWEEN
PBHG ADVISOR FUNDS, INC.
AND
PILGRIM XXXXXX & ASSOCIATES, LTD.
Pursuant to Section 5 of this Agreement, each Fund shall pay
the Adviser, at the end of each calendar month, compensation computed daily at
an annual rate of the Fund's average daily net assets as follows:
FUND FEE
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PBHG Advisor Core Value Fund 0.60%
PBHG Advisor Blue Chip Growth Fund 0.60%
PBHG Advisor Global Technology & Communications Fund 0.85%
PBHG Advisor Growth II Fund 0.85%
PBHG Advisor Growth Opportunities Fund 0.65%
PBHG Advisor High Yield Fund 0.50%
PBHG Advisor Large Cap Concentrated Fund 0.85%
PBHG Advisor New Contrarian Fund 0.60%
PBHG Advisor Trend Fund 0.65%
PBHG Advisor Cash Reserves Fund 0.30%
PBHG Advisor Value Opportunities Fund 0.85%
PBHG Advisor New Opportunities Fund 0.75%
PBHG Advisor Enhanced Equity Fund 0.60%
PBHG Advisor Master Fixed Income Fund 0.45%
PBHG Advisor Short-Term Government Fund 0.30%
PBHG Advisor REIT Fund 0.75%
