EXHIBIT C -- AGREEMENT AND PLAN OF REORGANIZATION
PBHG INSURANCE SERIES FUND, INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
October __, 2000, is entered into by and between PBHG Insurance Series Fund,
Inc., a Maryland corporation (the "Company"), acting on its own behalf and on
behalf of each of its series portfolios, all of which are identified on Schedule
A to this Agreement, and PBHG Insurance Series Fund, a Delaware business trust
(the "Trust"), acting on its own behalf and on behalf of each of its series
portfolios, all of which are identified on Schedule A to this Agreement.
BACKGROUND
The Company is organized as a series management investment
company and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940. The Company currently publicly offers shares of
common stock representing interests in seven separate series portfolios. Each of
these series portfolios is listed on Schedule A and is referred to in this
Agreement as a "Current Fund."
The Company desires to change its form and place of
organization by reorganizing as the Trust. In anticipation of such
reorganization (the "Reorganization"), the Board of Trustees of the Trust has
established seven series portfolios corresponding to the Current Funds (each a
"New Fund"). Schedule A lists the New Funds.
The Reorganization will occur through the transfer of all of
the assets of each Current Fund to the corresponding New Fund. In consideration
of its receipt of these assets, each New Fund will assume all of the liabilities
of the corresponding Current Fund, and will issue to the Current Fund shares of
beneficial interest in the New Fund ("New Fund Shares"). New Fund Shares
received by the Current Fund will have an aggregate net asset value equal to the
aggregate net asset value of the shares of the Current Fund immediately prior to
the Reorganization (the "Current Fund Shares"). The Current Fund will then
distribute the New Fund Shares it has received to its shareholders.
The Reorganization is subject to, and shall be effected in
accordance with, the terms of this Agreement. This Agreement is intended to be
and is adopted by the Company, on its own behalf and on behalf of the Current
Funds, and by the Trust, on its own behalf and on behalf of the New Funds, as a
Plan of Reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS
Any capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the preamble or background of this Agreement. In addition,
the following terms shall have the following meanings:
1.1. "ASSETS" shall mean all assets including, without limitation, all
cash, cash equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and prepaid
expenses shown as assets on a Current Fund's books, and other property owned by
a Current Fund at the Effective Time.
1.2. "CLOSING" shall mean the consummation of the transfer of assets,
assumption of liabilities and issuance of shares described in Sections 2.1 and
2.2 of this Agreement, together with the related acts necessary to consummate
the Reorganization, to occur on the date set forth in Section 3.1.
1.3. "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.4. "CURRENT FUND" shall mean each of the Company's series portfolios
listed on Schedule A.
1.5. "CURRENT FUND SHARES" shall mean the shares of the Current Funds
outstanding immediately prior to the Reorganization.
1.6. "EFFECTIVE TIME" shall have the meaning set forth in Section 3.1.
1.7. "LIABILITIES" shall mean all liabilities of a Current Fund
including, without limitation, all debts, obligations, and duties of whatever
kind or nature, whether absolute, accrued, contingent, or otherwise, whether or
not determinable at the Effective Time, and whether or not specifically referred
to herein.
1.8. "NEW FUND" shall mean each of the series portfolios of the Trust,
each of which shall correspond to one of the Current Funds as shown on Schedule
A.
1.9. "NEW FUND SHARES" shall mean those shares of beneficial interest
in a New Fund, issued to a Current Fund in consideration of the New Fund's
receipt of the Current Fund's Assets.
2
1.10. "REGISTRATION STATEMENT" shall have the meaning set forth in
Section 5.4.
1.11. "RIC" shall mean a regulated investment company under Subchapter
M of the Code.
1.12. "SEC" shall mean the Securities and Exchange Commission.
1.13. "SHAREHOLDER(S)" shall mean a Current Fund's shareholder(s) of
record, determined as of the Effective Time.
1.14. "SHAREHOLDERS MEETING" shall have the meaning set forth in
Section 5.1.
1.15. "TRANSFER AGENT" shall have the meaning set forth in Section 2.2.
1.16. "1940 ACT" shall mean the Investment Company Act of 1940, as
amended.
2. PLAN OF REORGANIZATION
2.1 The Company agrees, on behalf of each Current Fund, to assign,
sell, convey, transfer and deliver all of the Assets of each Current Fund to its
corresponding New Fund. The Trust, on behalf of each New Fund, agrees in
exchange therefor:
(a) to issue and deliver to the Current Fund the number of
full and fractional (rounded to the third decimal place) New Fund Shares for
each New Fund designated in Schedule A equal to the number of full and
fractional Current Fund Shares for each corresponding Current Fund designated in
Schedule A that are issued and outstanding immediately prior to the Effective
Time; and
(b) to assume all of the Current Fund's Liabilities.
Such transactions shall take place at the Closing.
2.2 At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Shares issued pursuant to paragraph 5.2 shall be
redeemed by each New Fund for $1.00 and (b) each Current Fund shall distribute
the New Fund Shares received by it pursuant to paragraph 2.1 to the Current
Fund's Shareholders in exchange for such Shareholders' Current Fund Shares. Such
3
distribution shall be accomplished through opening accounts, by the transfer
agent for the Trust (the "Transfer Agent"), on each New Fund's share transfer
books in the Shareholders' names and transferring New Fund Shares to such
accounts. Each Shareholder's account shall be credited with the respective PRO
RATA number of full and fractional (rounded to the third decimal place) New Fund
Shares of each New Fund due that Shareholder. All outstanding Current Fund
Shares, including those represented by certificates, if any, shall
simultaneously be deemed to have been redeemed by the Company. The Trust shall
not issue certificates representing the New Fund Shares in connection with the
Reorganization. However, certificates representing Current Fund Shares shall
represent New Fund Shares after the Reorganization.
2.3 As soon as reasonably practicable after distribution of the New
Fund Shares pursuant to paragraph 2.2, the Company shall dissolve its existence
as a corporation under Maryland law.
2.4 Any transfer taxes payable on the issuance of New Fund Shares in a
name other than that of the registered holder of the Current Fund Shares
exchanged therefor shall be paid by the person to whom such New Fund Shares are
to be issued, as a condition of such transfer.
2.5 Any reporting responsibility of the Company or each Current Fund to
a public authority is, and shall remain, its responsibility up to and including
the date on which it is terminated.
3. CLOSING
3.1 The Closing shall occur at the principal office of the Company on
March 31, 2001, or on such other date and at such other place upon which the
parties may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the Company's and the Trust's close of business on
the date of the Closing or at such other time as the parties may agree (the
"Effective Time").
3.2 The Company or its fund accounting agent shall deliver to the Trust
at the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot) concerning the
Assets, including all portfolio securities transferred by the Current Funds to
the New Funds, as reflected on the New Funds' books immediately following the
Closing, does or will conform to such information on the Current Funds' books
immediately before the Closing. The Company shall cause the custodian for each
Current Fund to deliver at the Closing a certificate of an authorized officer of
the custodian stating that (a) the Assets held by the custodian will be
transferred to each corresponding New Fund at the Effective Time and (b) all
necessary taxes in conjunction with the delivery of the Assets, including all
applicable federal and state stock transfer stamps, if any, have been paid or a
provision for payment has been made.
3.3 The Company's transfer agent shall deliver to the Trust's transfer
agent at the Closing a list of the names and addresses of each Shareholder of
each Current Fund and the number of outstanding Current Fund Shares of the
Current Fund owned by each Shareholder, all as of the Effective Time, certified
4
by the Company's Secretary or Assistant Secretary. The Trust shall cause the
Transfer Agent to deliver at the Closing a certificate as to the opening on each
New Fund's share transfer books of accounts in the Shareholders' names. The
Trust shall issue and deliver a confirmation to the Company evidencing the New
Fund Shares to be credited to each corresponding Current Fund at the Effective
Time or provide evidence satisfactory to the Company that such shares have been
credited to each Current Fund's account on such books. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, stock
certificates, receipts, or other documents as the other party or its counsel may
reasonably request.
3.4 The Company and the Trust shall deliver to the other at the Closing
a certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Company represents and warrants on its own behalf and on behalf
of each Current Fund as follows:
(a) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland, and its Charter is on
file with the Maryland Department of Assessments and Taxation;
(b) The Company is duly registered as an open-end series management
investment company under the 1940 Act, and such registration is in full force
and effect;
(c) Each Current Fund is a duly established and designated series of
the Company;
(d) At the Closing, each Current Fund will have good and marketable
title to its Assets and full right, power, and authority to sell, assign,
transfer, and deliver its Assets free of any liens or other encumbrances; and
upon delivery and payment for the Assets, the corresponding New Fund will
acquire good and marketable title to the Assets;
(e) The New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms hereof;
(f) Each Current Fund is a "fund" as defined in Section 851(g)(2) of
the Code; each Current Fund qualified for treatment as a RIC for each past
taxable year since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year (and the Assets
will be invested at all times through the Effective Time in a manner that
ensures compliance with the foregoing); each Current Fund has no earnings and
profits accumulated in any taxable year in which the provisions of Subchapter M
did not apply to it; and each Current Fund has made all distributions for each
such past taxable year that are necessary to avoid the imposition of federal
5
excise tax or has paid or provided for the payment of any excise tax imposed for
any such year;
(g) There is no plan or intention of the Shareholders who individually
own 5% or more of any Current Fund Shares and, to the best of the Company's
knowledge, there is no plan or intention of the remaining Shareholders to redeem
or otherwise dispose of any New Fund Shares to be received by them in the
Reorganization. The Company does not anticipate dispositions of those shares at
the time of or soon after the Reorganization to exceed the usual rate and
frequency of redemptions of shares of the Current Fund as a series of an
open-end investment company. Consequently, the Company is not aware of any plan
that would cause the percentage of Shareholder interests, if any, that will be
disposed of as a result of or at the time of the Reorganization to be one
percent (1%) or more of the shares of the Current Fund outstanding as of the
Effective Time;
(h) The Liabilities were incurred by the Current Funds in the ordinary
course of their business and are associated with the Assets;
(i) The total adjusted basis of the Assets of each Current Fund
transferred to each New Fund will equal or exceed the sum of the Liabilities to
be assumed by each New Fund, plus the amount of Liabilities, if any, to which
the transferred Assets are subject;
(j) The Company is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within the
meaning of Section 368(a)(3)(A) of the Code;
(k) As of the Effective Time, no Current Fund will have outstanding any
warrants, options, convertible securities, or any other type of rights pursuant
to which any person could acquire Current Fund Shares except for the right of
investors to acquire its shares at net asset value in the normal course of its
business as an open-end diversified management investment company operating
under the 1940 Act;
(l) At the Effective Time, the performance of this Agreement shall have
been duly authorized by all necessary action by the Company's shareholders;
(m) Throughout the five-year period ending on the date of the Closing,
each Current Fund will have conducted its historic business within the meaning
of Section 1.368-1(d) of the Income Tax Regulations under the Code in a
substantially unchanged manner;
(n) The fair market value of the Assets of each Current Fund
transferred to the corresponding New Fund will equal or exceed the sum of the
Liabilities assumed by the New Fund plus the amount of Liabilities, if any, to
which the transferred Assets are subject; and
(o) Each Current Fund will pay its respective expenses, if any,
incurred in connection with the Reorganization.
6
4.2 The Trust represents and warrants on its own behalf, and on behalf
of each New Fund, as follows:
(a) The Trust is a business trust duly organized, validly existing, and
in good standing under the laws of the State of Delaware, and its Certificate of
Trust has been duly filed in the office of the Secretary of State of Delaware;
(b) At the Effective Time, the Trust will succeed to the Company's
registration statement filed under the 1940 Act with the SEC and thus will
become duly registered as an open-end management investment company under the
1940 Act;
(c) At the Effective Time, each New Fund will be a duly established and
designated series of the Trust;
(d) No New Fund has commenced operations nor will any New Fund commence
operations until after the Closing;
(e) Prior to the Effective Time, there will be no issued and
outstanding shares in any New Fund or any other securities issued by the Trust
on behalf of any New Fund, except as provided in paragraph 5.2;
(f) The New Fund Shares to be issued and delivered to the corresponding
Current Fund hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly and validly
issued and outstanding shares of the New Fund, fully paid and non-assessable;
(g) Each New Fund will be a "fund" as defined in section 851(g)(2) of
the Code and will meet all the requirements to qualify for treatment as a RIC
for its taxable year in which the Reorganization occurs;
(h) The Trust, on behalf of the New Funds, has no plan or intention to
issue additional New Fund Shares following the Reorganization except for shares
issued in the ordinary course of its business as a series of an open-end
investment company; nor does the Trust, on behalf of the New Funds, have any
plan or intention to redeem or otherwise reacquire any New Fund Shares issued
pursuant to the Reorganization, other than in the ordinary course of its
business or to the extent necessary to comply with its legal obligation under
Section 22(e) of the 1940 Act;
(i) Each New Fund will actively continue the corresponding Current
Fund's business in substantially the same manner that the Current Fund conducted
that business immediately before the Reorganization; and no New Fund has any
plan or intention to sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of its business or dispositions
necessary to maintain its qualification as a RIC, although in the ordinary
course of its business the New Fund will continuously review its investment
portfolio (as each Current Fund did before the Reorganization) to determine
whether to retain or dispose of particular stocks or securities, including those
included in the Assets;
7
(j) There is no plan or intention for any of the New Funds to be
dissolved or merged into another corporation or business trust or "fund" thereof
(within the meaning of section 851(g)(2) of the Code) following the
Reorganization; and
(k) Each New Fund will pay its respective expenses, if any, incurred in
connection with the Reorganization.
4.3 Each of the Company and the Trust, on its own behalf and on behalf
of each Current Fund or each New Fund, as appropriate, represents and warrants
as follows:
(a) The fair market value of the New Fund Shares of each New Fund
received by each Shareholder will be approximately equal to the fair market
value of the Current Fund Shares of the corresponding Current Fund surrendered
in exchange therefor;
(b) Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares of each New Fund and will own such
shares solely by reason of their ownership of the Current Fund Shares of the
corresponding Current Fund immediately before the Reorganization;
(c) The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
(d) There is no intercompany indebtedness between a Current Fund and a
New Fund that was issued or acquired, or will be settled, at a discount;
(e) Immediately following consummation of the Reorganization, each New
Fund will hold the same assets, except for assets distributed to shareholders in
the course of its business as a RIC and assets used to pay expenses incurred in
connection with the Reorganization, and be subject to the same liabilities that
the corresponding Current Fund held or was subject to immediately prior to the
Reorganization. Assets used to pay (i) expenses, (ii) all redemptions (other
than redemptions at the usual rate and frequency of the Current Fund as a series
of an open-end investment company), and (iii) distributions (other than regular,
normal distributions), made by a Current Fund after the date of this Agreement
will, in the aggregate, constitute less than one percent (1%) of its net assets;
and
(f) No consideration other than New Fund Shares (and the New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets and no
consideration other than New Fund Shares will be received by the Shareholders in
connection with the Reorganization.
5. COVENANTS
5.1 As soon as practicable after the date of this Agreement, the
Company shall call a meeting of its Shareholders (the "Shareholders Meeting") to
consider and act on this Agreement. The Board of Directors of the Company shall
8
recommend that Shareholders approve this Agreement and the transactions
contemplated by this Agreement. Approval by Shareholders of this Agreement will
authorize the Company, and the Company hereby agrees, to vote on the matters
referred to in Sections 5.2 and 5.3.
5.2 The Trust's trustees shall authorize the issuance of, and each New
Fund shall issue, prior to the Closing, one New Fund Share of each New Fund that
corresponds to a Current Fund for which shares are issued and outstanding to the
Company in consideration of the payment of $1.00 per share for the purpose of
enabling the Company to elect the Company's directors as the Trust's trustees
(to serve without limit in time, except as they may resign or be removed by
action of the Trust's trustees or shareholders), to ratify the selection of the
Trust's independent accountants, and to vote on the matters referred to in
Section 5.3.
5.3 Prior to the Closing, the Trust (on its own behalf of and with
respect to each New Fund) shall enter into an Investment Advisory Agreement, a
Sub-Advisory Agreement, an Administrative Services Agreement, Sub-Administrative
Services Agreement, Distribution Agreement, Custodian Agreements, and an Agency
Agreement and shall enter into or adopt, as appropriate, such other agreements
and plans as are necessary for each New Fund's operation as a series of an
open-end investment company. Each such agreement and plan shall have been
approved by the Trust's trustees and, to the extent required by law, by such of
those trustees who are not "interested persons" of the Trust (as defined in the
0000 Xxx) and by the Company as the sole shareholder of each New Fund.
5.4 The Company or the Trust, as appropriate, shall file with the SEC one or
more post-effective amendments to the Company's Registration Statement on Form
N-1A under the Securities Act of 1933, as amended, and the 1940 Act, as amended
(the "Registration Statement"), (i) which contain such amendments to such
Registration Statement as are determined by the Company to be necessary and
appropriate to effect the Reorganization and (ii) pursuant to which the Trust
adopts such Registration Statement, as so amended, as its own, and shall use its
best efforts to have such post-effective amendment or amendments to the
Registration Statement become effective as of the Closing.
6. CONDITIONS PRECEDENT
The obligations of the Company, on its own behalf and on behalf of each
Current Fund, and the Trust, on its own behalf and on behalf of each New Fund,
will be subject to (a) performance by the other party of all its obligations to
be performed hereunder at or before the Effective Time, (b) all representations
and warranties of the other party contained herein being true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated hereby, as of the Effective Time, with the same
force and effect as if made on and as of the Effective Time, and (c) the further
conditions that, at or before the Effective Time:
9
6.1 The Shareholders of the Company shall have approved this Agreement
and the transactions contemplated by this Agreement in accordance with
applicable law.
6.2 All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either the Company or the Trust to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain such consults, orders,
and permits would not involve a risk of a material adverse effect on the assets
or properties of either a Current Fund or a New Fund, provided that either the
Company or the Trust may for itself waive any of such conditions.
6.3 Each of the Company and the Trust shall have received an opinion
from Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP as to the federal income tax
consequences mentioned below. In rendering such opinion, such counsel may rely
as to factual matters, exclusively and without independent verification, on the
representations made in this Agreement (and in separate letters of
representation that the Company and the Trust shall use their best efforts to
deliver to such counsel upon request) and the certificates delivered pursuant to
Section 3.4. Such opinion shall be substantially to the effect that, based on
the facts and assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income tax
purposes:
(a) The transfer of the Assets of each Current Fund to the
corresponding New Fund pursuant to the Reorganization will constitute a
reorganization within the meaning of section 368(a) of the Code, and each
Current Fund and each New Fund will be "a party to a reorganization" within the
meaning of section 368(b) of the Code;
(b) No gain or loss will be recognized to a Current Fund on the
transfer of the Assets to the corresponding New Fund in exchange solely for New
Fund Shares and the New Fund's assumption of the Liabilities or on the
subsequent distribution of New Fund Shares to the Shareholders, in constructive
exchange for their Current Fund Shares, in liquidation of the Current Fund;
(c) No gain or loss will be recognized to a New Fund on its receipt of
the Assets in exchange for New Fund Shares and its assumption of the
Liabilities;
(d) Each New Fund's basis for the Assets will be the same as the basis
thereof in the corresponding Current Fund's hands immediately before the
Reorganization, and the New Fund's holding period for the Assets will include
the Current Fund's holding period therefor;
(e) A Shareholder will recognize no gain or loss on the constructive
exchange of Current Fund Shares solely for New Fund Shares pursuant to the
Reorganization; and
(f) A Shareholder's basis for the New Fund Shares of each New Fund to
be received in the Reorganization will be the same as the basis for the Current
10
Fund Shares of the corresponding Current Fund to be constructively surrendered
in exchange for such New Fund Shares, and a Shareholder's holding period for
such New Fund Shares will include its holding period for the Current Fund Shares
constructively surrendered, provided that the New Fund Shares are held as
capital assets by the Shareholder at the Effective Time.
6.4 No stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the SEC (and not withdrawn or terminated).
At any time prior to the Closing, any of the foregoing conditions
(except those set forth in Section 6.1) may be waived by the directors/trustees
of either the Company or the Trust if, in their judgment, such waiver will not
have a material adverse effect on the interests of the Current Fund's
shareholders.
7. EXPENSES
Except as otherwise provided in Section 4.3(c), all expenses incurred
in connection with the transactions contemplated by this Agreement (regardless
of whether they are consummated) will be borne by the parties as they mutually
agree.
8. ENTIRE AGREEMENT
Neither party has made any representation, warranty, or covenant not
set forth herein, and this Agreement constitutes the entire agreement between
the parties.
9. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding its approval by the Company's Shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
10. TERMINATION
This Agreement may be terminated at any time at or prior to the
Effective Time, whether before or after approval by the Company's Shareholders:
10.1 By either the Company or the Trust (a) in the event of the other
party's material breach of any representation, warranty, or covenant contained
herein to be performed at or prior to the Effective Time, (b) if a condition to
its obligations has not been met and it reasonably appears that such condition
will not or cannot be met, or (c) if the Closing has not occurred on or before
August 31, 2001; or
10.2 By the parties' mutual agreement.
11
Except as otherwise provided in Section 7, in the event of termination
under Sections 10.1(c) or 10.2, there shall be no liability for damages on the
part of either the Company or the Trust or any Current Fund or corresponding New
Fund, to the other.
11. MISCELLANEOUS
11.1 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware; provided that, in the case of
any conflict between such laws and the federal securities laws, the latter shall
govern.
11.2 Nothing expressed or implied herein is intended or shall be
construed to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any rights or
remedies under or by reason of this Agreement.
11.3 The execution and delivery of this Agreement have been authorized
by the Trust's trustees, and this Agreement has been executed and delivered by
authorized officers of the Trust acting as such; neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them or any shareholder of the Trust personally, but shall bind only the
assets and property of the New Funds, as provided in the Trust's Agreement and
Declaration of Trust.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
Attest: PBHG INSURANCE SERIES FUND, INC.,
on behalf of each of its series
listed in Schedule A to this
Agreement
________________________________ By:____________________________________
Title:___________________________________
Attest: PBHG INSURANCE SERIES FUND
on behalf of each of its series
listed in Schedule A to this
Agreement
________________________________ By:____________________________________
Title:___________________________________
12
SCHEDULE A
CORRESPONDING SERIES OF
SERIES OF PBHG INSURANCE PBHG INSURANCE SERIES FUND
PBHG Growth II Portfolio PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio PBHG Large Cap Growth Portfolio
PBHG Select Value Portfolio PBHG Select Value Portfolio
PBHG Mid-Cap Value Portfolio PBHG Mid-Cap Value Portfolio
PBHG Small Cap Value Portfolio PBHG Small Cap Value Portfolio
PBHG Technology & Communications PBHG Technology & Communications
Portfolio Portfolio
PBHG Select 20 Portfolio PBHG Select 20 Portfolio
SCHEDULE 1
ADVISORY FEES PAID AND ADVISORY FEES WAIVED
UNDER THE FORMER INVESTMENT ADVISORY AGREEMENT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
The amount of advisory fees paid by each Fund to Pilgrim Xxxxxx &
Associates, Ltd. under the Former Investment Advisory Agreement for the fiscal
year ended December 31, 1999 is set forth below under the column "Advisory Fees
Paid." The amount of advisory fees waived and/or expenses reimbursed for each
Fund by Pilgrim Xxxxxx & Associates, Ltd. under the expense limitation
agreements for the fiscal year ended December 31, 1999 is set forth below under
the column "Advisory Fees Waived/Expenses Reimbursed."
--------------------------------------------------------------------------------
Fund
--------------------------------------------------------------------------------
Advisory Fees Paid Advisory Fees
--------------------------------------------------------------------------------
PBHG Growth II Portfolio $420,736 $0
--------------------------------------------------------------------------------
PBHG Large Cap Growth Portfolio $114,971 $10,085
--------------------------------------------------------------------------------
PBHG Select Value Portfolio $256,577 $0
--------------------------------------------------------------------------------
PBHG Select 20 Portfolio $3,374,963 $0
--------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio $5,102 $27,773
--------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio $415,589 $38,777
--------------------------------------------------------------------------------
PBHG Technology & Communications Portfolio $3,374,963 $0
--------------------------------------------------------------------------------
SCHEDULE 2 - OTHER INVESTMENT COMPANIES ADVISED BY PILGRIM XXXXXX
-----------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVE NET ASSETS EXPENSE
-----------------------------------------------------------------------------------------------------
PBHG Growth Growth $5,632,386,828 0.85% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Emerging Growth Emerging Growth $1,061,875,667 0.85% None
-----------------------------------------------------------------------------------------------------
PBHG New Opportunities Small Cap Growth $145,933,553 1.00% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Large Cap Growth Large Cap Growth $455,837,544 0.75% None
-----------------------------------------------------------------------------------------------------
PBHG Select Equity Growth $1,873,923,967 0.85% None
-----------------------------------------------------------------------------------------------------
PBHG Core Growth Growth $154,670.333 0.85% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Limited Small Cap Growth $129,030,033 1.00% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Large Cap 20 Large Cap Value $1,058,909,831 0.85% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Large Cap Value Large Cap Value $77,865,953 0.65% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Mid-Cap Value Mid-Cap Value $115,939,645 0.85% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Small Cap Value Small Cap Value $198,580,287 1.00% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG Focused Value Value $45,811,545 0.85% 1.50%
-----------------------------------------------------------------------------------------------------
PBHG International International $8,796,484 1.00% 2.25%
-----------------------------------------------------------------------------------------------------
PBHG Cash Reserves Money Market 0.30% None
-----------------------------------------------------------------------------------------------------
PBHG Technology & Technology $2,752,877,700 0.85% None
-----------------------------------------------------------------------------------------------------
PBHG Global Technology Technology $95,687,122 1.50% 2.15%
-----------------------------------------------------------------------------------------------------
PBHG Strategic Small Small Cap Growth & $94,186,206 1.00% 1.50%
-----------------------------------------------------------------------------------------------------
WRL PB Mid Cap Growth Mid Cap Growth $265,457,054 0.50% to $100 No expense
-----------------------------------------------------------------------------------------------------
IDEX PB Mid Cap Growth Mid Cap Growth $147,604,939 0.50% to $100 No expense
-----------------------------------------------------------------------------------------------------
Ohio National Fund Inc Growth $45,284,286 0.75% to $50 No expense
-----------------------------------------------------------------------------------------------------
ONE Fund, Inc Growth $7,911,774 0.75% to $50 No expense
-----------------------------------------------------------------------------------------------------
IDEX PB Technology Technology $87,153,157 0.55% to $100 No expense
-----------------------------------------------------------------------------------------------------
SCHEDULE 3 - OTHER INVESTMENT COMPANIES ADVISED BY VALUE INVESTORS
-----------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVE EXPENSE
-----------------------------------------------------------------------------------------------------
PBHG Large Cap Value Large Cap Value $77,865,953 0.40% No expense
-----------------------------------------------------------------------------------------------------
PBHG Mid-Cap Value Fund Mid-Cap Value $115,939,645 0.50% No expense
-----------------------------------------------------------------------------------------------------
PBHG Small Cap Value Small Cap Value $198,580,287 0.65% No expense
-----------------------------------------------------------------------------------------------------
PBHG Focused Value Fund Value $45,811,545 0.85% No expense
-----------------------------------------------------------------------------------------------------
PBHG Strategic Small Small Cap Growth & $43,366,057 0.30% No expense
-----------------------------------------------------------------------------------------------------
SCHEDULE 4 - CURRENT FUNDAMENTAL RESTRICTIONS
Each Fund may not:
1. Make loans, except that each Portfolio, in accordance with that Portfolio's
investment objectives and policies, may (i) purchase debt instruments, and
(ii) enter into repurchase agreements. In addition, the PBHG Mid-Cap Value
Portfolio may lend its portfolio securities in an amount not exceeding
one-third the value of its total assets.
2. Act as an underwriter of securities of other issuers, except as it may be
deemed an underwriter under the 1933 Act in connection with the purchase and
sale of portfolio securities.
3. Purchase or sell commodities or commodity contracts, except that a
Portfolio, in accordance with its investment objective and policies may: (i)
invest in readily marketable securities of issuers which invest or engage in
such activities; and (ii) enter into forward contracts, futures contracts
and options thereon.
4. Purchase or sell real estate, or real estate partnership interests, except
that this limitation shall not prevent a Portfolio from investing directly
or indirectly in readily marketable securities of issuers which can invest
in real estate, institutions that issue mortgages, or real estate investment
trusts which deal with real estate or interests therein.
5. Issue senior securities (as defined in the 1940 Act), except as permitted in
connection with the Portfolio's policies on borrowing and pledging, or as
permitted by rule, regulation or order of the SEC.
6. Purchase more than 10% of the voting securities of any one issuer or
purchase securities of any one issuer if, at the time of purchase, more than
5% of its total assets will be invested in that issuer, except with respect
to each Portfolio, up to 25% of its assets may be invested without regard to
these limits.
This limitation does not apply to the Select 20 Portfolio or the Technology
& Communications Portfolio. In addition, for purposes of this investment
limitation, the term "issuer" does not include obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations.
7. Invest 25% or more of its total assets at the time of purchase in securities
of one or more issuers (other than obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities and repurchase
agreements collateralized by such obligations) whose principal business
activities are in the same industry. For purposes of this limitation,
supranational organizations are deemed to be issuers conducting their
principal business activities in the same industry; state and municipal
governments and their agencies and authorities are not deemed to be
industries, utility companies will be divided according to their services
(e.g., gas, gas transmission, electric, electric and gas and telephone) and
financial service companies will be classified according to the end use of
their service (e.g., automobile finance, bank finance and diversified
finance).
This limitation does not apply to the Technology & Communications Portfolio.
8. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of the Portfolio's total assets
(except not exceeding 33 1/3% of the value of total assets with respect to
the Growth II, Mid-Cap Value, and Small Cap Value Portfolios). This
borrowing provision is intended to facilitate the orderly sale of portfolio
securities to accommodate substantial redemption requests if they should
occur, and is not for investment purposes. All borrowings in excess of 5% of
the Portfolio's total assets will be repaid before making investments.
9. Invest in companies for the purpose of exercising control.
10. Pledge, mortgage or hypothecate assets, except (i) to secure temporary
borrowings permitted by each Portfolio's limitation on permitted borrowings,
or (ii) in connection with permitted transactions regarding options and
futures contracts.
11. Make short sales of securities, maintain a short position or purchase
securities on margin, except that each Portfolio may (i) obtain short-term
credits as necessary for the clearance of security transactions and (ii)
establish margin accounts as may be necessary in connection with the
Portfolio's use of options and futures contracts.
12. Purchase securities of other investment companies except as permitted by the
1940 Act and the rules and regulations thereunder.
13. Invest in interests in oil, gas or other mineral exploration or development
programs.
SCHEDULE 5- OTHER MATERIAL PAYMENTS
The following chart sets forth the fees paid during the fiscal year
ended December 31, 1999 by each Fund to PBHG Fund Services, a wholly-owned
subsidiary of Pilgrim Xxxxxx for administrative services and shareholder
services and amount reimbursed during the fiscal year ended December 31, 1999 by
each Fund to Pilgrim Xxxxxx pursuant to the expense limitation agreements for
advisory fees previously waived and/or expenses previously reimbursed by Pilgrim
Xxxxxx. The administrative and other services currently provided by and
shareholder services and its affiliates will continue to be provided after the
investment advisory contract with Pilgrim Xxxxxx is approved. In addition,
Pilgrim Xxxxxx has committed to maintain the expense limitation agreements for a
period of two years from the date of the consummation of the Transaction.
-----------------------------------------------------------------------------------
ADMINISTRATIVE AND SHAREHOLDER AMOUNTS
NAME OF FUND REIMBURSED TO PILGRIM
-----------------------------------------------------------------------------------
PBHG Growth II Portfolio $31,616
-----------------------------------------------------------------------------------
PBHG Large Cap Growth Portfolio $0
-----------------------------------------------------------------------------------
PBHG Select Value Portfolio $0
-----------------------------------------------------------------------------------
PBHG Select 20 Portfolio $27,776
-----------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio $0
-----------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio $0
-----------------------------------------------------------------------------------
PBHG Technology & Communications Portfolio $93,603
-----------------------------------------------------------------------------------
SCHEDULE 6
PRINCIPAL EXECUTIVE OFFICER and Directors
of Pilgrim Xxxxxx and Value Investors
officers & dIRECTORS OF PBHG INSURANCE SERIES Fund, Inc.
WHO ARE OFFICERS, EMPLOYEES OR DIRECTORS
OF PILGRIM XXXXXX AND VALUE INVESTORS
The following table provides information with respect to the principal
executive officer and the directors of Pilgrim Xxxxxx and Value Investors and
officers and directors of The PBHG Funds, Inc., all of whose business address is
000 Xxxxxxxxx Xxxx, Xxxxx, Xxxxxxxxxxxx 00000.
PILGRIM XXXXXX
------------------------------------------------------------------------------------------------
Position with
------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxx Director, Chairman of the Same
------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxx Director, President and Same
------------------------------------------------------------------------------------------------
VALUE INVESTORS
------------------------------------------------------------------------------------------------
Position with
------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxx Director, Chairman of the Same
------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxx Director, President and Same
------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxxxx Treasurer, Chief Financial Same
----------------------------------- ------------------------------ -----------------------------
PBHG INSURANCE SERIES FUND, INC.
Position with Position with Position with
------------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxx Chairman/Director Director/CEO Chairman Director/CEO
------------------------------------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxx President Director/President CIO Director/President
------------------------------------------------------------------------------------------------------------------------------
Xxx X. Xxxxxxxx Treasurer, Chief Financial
------------------------------------------------------------------------------------------------------------------------------
Xxxx X. Xxxx Vice President/ General Counsel/ General Counsel/
------------------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx Vice President/ Counsel/ Counsel/
------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. XxXxxxxxxx Assistant Secretary Legal Assistant Legal Assistant
------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7 - BROKERAGE COMMISSIONS PAID TO SEI INVESTMENTS DISTRIBUTION CO.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
The following chart sets forth the aggregate amount of brokerage
commissions paid by each Fund to SEI Distribution Co., the distributor for PBHG
Insurance Series Fund, Inc. for the fiscal year ended December 31, 1999 and the
percentage of each Fund's aggregate brokerage commissions paid to SEI
Investments Distribution Co. for the fiscal year ended December 31, 1999. These
commissions were paid to SEI Investments Distribution co. in connection with
repurchase agreements.
--------------------------------------------------------------------------------------------------------------
Fund Aggregate Amount of Brokerage Percent of Aggregate Brokerage
--------------------------------------------------------------------------------------------------------------
PBHG Growth II Portfolio $3,168 2%
--------------------------------------------------------------------------------------------------------------
PBHG Large Cap Growth Portfolio $823 3%
--------------------------------------------------------------------------------------------------------------
PBHG Select Value Portfolio $1,147 0%
--------------------------------------------------------------------------------------------------------------
PBHG Select 20 Portfolio $23,014 4%
--------------------------------------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio $15 0%
--------------------------------------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio $733 0%
--------------------------------------------------------------------------------------------------------------
PBHG Technology & Communications $16,280 2%
--------------------------------------------------------------------------------------------------------------
SCHEDULE 8--BENEFICIAL OWNERS OF 5% OR MORE OF EACH FUNDS
SHARES ON NOVEMBER 17, 2000
-----------------------------------------------------------------------------------------------
Fund 5% of More Beneficial Owner
-----------------------------------------------------------------------------------------------
PBHG Growth II Portfolio
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PBHG Large Cap Growth Portfolio
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PBHG Select Value Portfolio
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PBHG Select 20 Portfolio
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
PBHG Technology & Communications Portfolio
-----------------------------------------------------------------------------------------------
SCHEDULE 9 - Outstanding Shares of the Company as of NOVEMBER 17, 2000
-------------------------------------------------------------------------------
NAME OF FUND NUMBER OF SHARES OUTSTANDING
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Growth II Portfolio
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Large Cap Growth Portfolio
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Select Value Portfolio
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Select 20 Portfolio
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Mid-Cap Value Portfolio
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Small Cap Value Portfolio
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PBHG Technology & Communications Portfolio
-------------------------------------------------------------------------------
