Exhibit 99.(h)(5)(vi)
PBHG FUNDS
PBHG Disciplined Equity Fund
PBHG XXX Capital Preservation Fund
PBHG New Perspective Fund
PBHG REIT Fund
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of September 26, 2002 (the
"Effective Date"), by and between PBHG Funds (the "Trust"), on behalf of each
portfolio of the Trust set forth in Schedule A (each a "Portfolio," and
collectively, the "Portfolios"), with respect to its Advisor Class of shares,
and Pilgrim Xxxxxx & Associates, Ltd. (the "Adviser").
WHEREAS, the Trust is a Delaware Business Trust organized pursuant to an
Agreement and Declaration of Trust dated November 13, 2000 (the "Declaration"),
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management investment company of the series type,
and each Portfolio has been added as a series of the Trust pursuant to an
Amendment to the Declaration dated June5, 2001 and August 9, 2001; and
WHEREAS, the Trust and the Adviser have entered into an Investment
Advisory Agreement (the "Advisory Agreement"), pursuant to which the Adviser
will render investment advisory services to each Portfolio for compensation
based on the value of the average daily net assets of each such Portfolio; and
WHEREAS, the Portfolios have been subject to a Fee Limitation Agreement
dated October 23, 2001 pursuant to which certain fee limitations were imposed on
the Adviser and its affiliates for the period up to and including September 25,
2002; and
WHEREAS, the Trust and the Adviser have determined that it is appropriate
and in the best interests of each Portfolio and its shareholders to maintain
certain expenses of each Portfolio at a level below the level to which each such
Portfolio might be subject for the period beginning on the Effective Date.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1 APPLICABLE EXPENSE LIMIT. Beginning on the Effective Date, to the
extent that the aggregate expenses incurred by a Portfolio in any fiscal year,
including but not limited to investment advisory fees of the Adviser (but
excluding: (i) fees and expenses under the Fund's Service Plan, interest, taxes,
brokerage commissions, and other expenditures which are capitalized in
accordance with generally accepted accounting principles; and (ii) other
extraordinary expenses not incurred in the ordinary course of such Portfolio's
business) ("Portfolio Operating Expenses"), exceed the Operating Expense Limit,
as defined in Section 1.2 below, such excess amount (the "Excess Amount") shall
be the liability of the Adviser.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any year shall
be as set forth in Schedule A as to each Portfolio, or such other rate as may be
agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Adviser's liability with
respect to the Excess Amount, each month the Portfolio Operating Expenses for
each Portfolio shall be annualized as of the last day of the month. If the
annualized Portfolio Operating Expenses for any month of a Portfolio exceed the
Operating Expense Limit of such Portfolio, the Adviser shall first waive or
reduce its investment management fee for such month by an amount sufficient to
reduce the annualized Portfolio Operating Expenses to an amount no higher than
the Operating Expense Limit. If the amount of the waived or reduced investment
advisory fee for any such month is insufficient to pay the Excess Amount, the
Adviser may also remit to the appropriate Portfolio or Portfolios an amount
that, together with the waived or reduced advisory fee, is sufficient to pay
such Excess Amount.
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced and other payments remitted by the Adviser to the Portfolio or
Portfolios with respect to the previous fiscal year shall equal the Excess
Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any year subsequent to the Effective Date during
which the total assets of a Portfolio are greater than $75 million and in which
the Advisory Agreement is still in effect, the estimated aggregate Portfolio
Operating Expenses of such Portfolio for the fiscal year are less than the
Operating Expense Limit for that year, subject to quarterly approval by the
Trust's Board of Trustees as provided in Section 2.2 below, the Adviser shall be
entitled to reimbursement by such Portfolio, in whole or in part as provided
below, of the advisory fees waived or reduced and other payments remitted by the
Adviser to such Portfolio pursuant to Section 1 hereof. The total amount of
reimbursement to which the Adviser may be entitled (the "Reimbursement Amount")
shall equal, at any time subsequent to the Effective Date, the sum of all
investment advisory fees previously waived or reduced by the Adviser and all
other payments remitted by the Adviser to the Portfolio, pursuant to Section 1
hereof, during any of the previous two (2) fiscal years subsequent to the
Effective Date, less any reimbursement previously paid by such Portfolio to the
Adviser, pursuant to Sections 2.2 or 2.3 hereof, with respect to such waivers,
reductions, and payments. The Reimbursement Amount shall not include any
additional charges or fees whatsoever, including, e.g., interest accruable on
the Reimbursement Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Adviser pursuant
to this provision in any fiscal quarter, unless the Trust's Board of Trustees
has determined that the payment of such reimbursement is in the best interests
of the Portfolio or Portfolios and their shareholders. The Trust's Board of
Trustees shall determine quarterly in advance whether any reimbursement may be
paid to the Adviser in such quarter.
2.3 METHOD OF COMPUTATION. To determine each Portfolio's payments, if any,
to reimburse the Adviser for the Reimbursement Amount, each month the Portfolio
Operating Expenses of each Portfolio shall be annualized as of the last day of
the month. If the annualized Portfolio Operating Expenses of a Portfolio for any
month are less than the Operating Expense Limit of such Portfolio, such
Portfolio, only with the prior approval of the Board, shall pay to the Adviser
an amount sufficient to increase the annualized Portfolio Operating Expenses of
that Portfolio to an amount no greater than the Operating Expense Limit of that
Portfolio, provided that such amount paid to the Adviser will in no event exceed
the total Reimbursement Amount.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Portfolio Operating Expenses of a
Portfolio for the prior fiscal year subsequent to the Effective Date (including
any reimbursement payments hereunder with respect to such fiscal year) do not
exceed the Operating Expense Limit.
3. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from the
Effective Date and from year to year thereafter provided such continuance is
specifically approved by a majority of the Trustees of the Trust who (i) are not
"interested persons" of the Trust or any other party to this Agreement, as
defined in the 1940 Act, and (ii) have no direct or indirect financial interest
in the operation of this Agreement ("Non-Interested Trustees"). Nevertheless,
this Agreement may be terminated as to any one or all Portfolios by either party
hereto, without payment of any penalty, upon 90 days' prior written notice to
the other party at its principal place of business; provided that, in the case
of termination by the Trust, such action shall be authorized by resolution of a
majority of the Non-Interested Trustees of the Trust or by a vote of a majority
of the outstanding voting securities of the Trust.
4. MISCELLANEOUS.
4.1 CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no other way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
4.2 INTERPRETATION. This Agreement shall be construed in accordance with
the laws of the [Commonwealth of Pennsylvania] without reference to conflicts of
law rules. Nothing herein contained shall be deemed to require the Trust or any
Portfolio to take any action contrary to the Trust's Declaration or By-Laws, or
any applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Trust's Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Trust or the
Portfolios.
4.3 DEFINITIONS. Any questions of interpretation of any term or provision
of this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation of expenses, having a
counterpart in or otherwise derived from the terms and
provisions of the Advisory Agreement or the 1940 Act, shall have the same
meaning as and be resolved by reference to such Advisory Agreement or the 1940
Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the day and year first
above written.
ATTEST: PBHG FUNDS
on behalf of each of the
Portfolios listed on Schedule A
/s/ Xxxx X. Xxxx By: /s/ Xxx X. Xxxxxxxx
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Secretary
ATTEST: PILGRIM XXXXXX & ASSOCIATES, LTD.
/s/ Xxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxxxx
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Secretary
SCHEDULE A
TO
EXPENSE LIMITATION AGREEMENT
Operating
Expense
Limit
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This Agreement relates to the following
Portfolios of the Trust:
PBHG Disciplined Equity Fund 1.50%
PBHG XXX Capital Preservation Fund 1.25%
PBHG New Perspective Fund 1.50%
PBHG REIT Fund 1.50%
DATED: September 26, 2002
