Exhibit 99.H6
PBHG INSURANCE SERIES FUND
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of ______________, 2001, by and
between PBHG Insurance Series Fund (the "Trust"), on behalf of each portfolio of
the Trust set forth in Schedule A (each a "Portfolio", and collectively, the
"Portfolios"), as may be amended from time to time, and Pilgrim Xxxxxx &
Associates, Ltd. (the "Adviser").
WHEREAS, the Trust is a Delaware Business Trust organized under an
Agreement and Declaration of Trust dated __________, 2000 (the "Articles"), 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 is one of the series of the Trust; 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 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 would normally be subject during its start-up period.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1 APPLICABLE EXPENSE LIMIT. 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) 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 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, 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, 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 (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 each Portfolio as of the date
set forth on Schedule A until the end of the then-current fiscal year 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 Articles 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 and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: PBHG INSURANCE SERIES FUND
on behalf of each of the
Portfolios listed on Schedule A
By:
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Secretary
ATTEST: PILGRIM XXXXXX & ASSOCIATES, LTD.
By:
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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 Growth II Portfolio 1.20%
PBHG Large Cap Growth Portfolio 1.10%
PBHG Small Cap Value Portfolio 1.20%
PBHG Select Value Portfolio 1.00%
PBHG Technology & Communications Portfolio 1.20%
PBHG Select 20 Portfolio 1.20%
PBHG Mid-Cap Value Portfolio 1.20%
PBHG Small Cap Growth Portfolio 1.20%
DATED: ____________________, 2001
