Exhibit 99.B5(c)
PBHG ADVISOR FUNDS, INC.
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 1st day of April, 1998, by and among Pilgrim
Xxxxxx & Associates, Ltd., a Pennsylvania partnership (the "Adviser"),
Wellington Management Company, LLP, a Massachusetts limited liability
partnership (the "Sub- Adviser"), and PBHG Advisor 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");
and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated April 1, 1998 (the "Advisory Agreement") with the Company, pursuant to
which the Adviser will act as investment adviser to the PBHG Advisor Cash
Reserves Fund (the "Fund"); and
WHEREAS, the Adviser and the Company each desire to retain the Sub-
Adviser to provide investment sub-advisory services to the Company in connection
with the management of the Fund, and the Sub-Adviser is willing to render such
investment sub- 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 Fund and the composition of the Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the
Fund's investment objectives, policies and restrictions as stated in
the Fund's Prospectus (such Prospectus and the 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:
(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 Fund's 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 Charter (as defined herein) and the Prospectus and with
the instructions and
directions of the Adviser and of the Board of Directors of the
Company and will conform to and comply with the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as each is
amended from time to time.
(3) The Sub-Adviser 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 Directors or the
Adviser may direct from time to time, in conformity with federal
securities laws. In providing the Fund with investment sub-advisory
services, 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-Adviser have access to
supplemental investment and market research and security and
economic analysis provided by brokers who may execute brokerage
transactions at 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 such 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 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 transaction, will be made by the
Sub-Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligation to the Fund and to such
other clients.
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(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 Board of Directors
such periodic and special reports as the Board of Directors 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 sub-advisory 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 partners,
officers or employees.
(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 property of the Fund 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:
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(a) The Company's Articles of Incorporation, as filed with the Department
of Assessments and Taxation of the State of Maryland (such Articles of
Incorporation, as in effect on the date of this Agreement and as
amended and supplemented from time to time, herein called the
"Charter");
(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 Board of Directors authorizing the
appointment of the Adviser and the Sub-Adviser with respect to the
Fund, 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 Fund and shares of the Fund's common stock, and all amendments
thereto;
(e) Notification of Registration of the Company 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, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees
to accept as full compensation therefore a sub-advisory fee at an annual
rate of .075% of the average daily net assets of the Fund up to and
including $500 million and .020% of the average daily net assets of the Fund
over $500 million. The Fund is subject to a minimum annual sub-advisory fee
of $50,000. 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 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.
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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 with respect to the Fund (a) by the Fund 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 the Fund, (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 it principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Fund, the Company or the public that
refer 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) 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
Fund.
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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 subject matter. This Agreement may be executed
in any number of counterparts, each of which 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:
Pilgrim Xxxxxx & Associates, Ltd.
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: President
To the Sub-Advisor at:
Wellington Management Company, LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
To the Company or the Fund at:
PBHG Advisor Funds, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: President
Any party may change its address for notices or reports
hereunder by giving notice of such change to the other parties
in accordance with this Section 13.
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
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special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
15. In the event that there is a change in the partners of the Sub-Adviser, the
Adviser will notify the Adviser and the Company within a reasonable period
of time.
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. WELLINGTON MANAGEMENT
COMPANY, LLP
By: /s/ Xxxx X. Xxxxxxxxx By: /s/
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Title: Chief Financial Officer Title: Senior Vice President
PBHG ADVISOR FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Vice President
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