Exhibit 99(d)(3)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 11th day of July, 2001 by and among Pilgrim
Xxxxxx & Associates, Ltd. (the "Adviser"), Wellington Management Company, LLP
(the "Sub-Adviser"), and PBHG Funds, a Delaware business trust (the "Trust").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, pursuant to the Investment Advisory Agreement dated July 16, 2001
and Schedule A dated July 16, 2001 between the Adviser and the Trust, the
Adviser will act as investment adviser to PBHG Cash Reserves Fund ("the
Portfolio"); and
WHEREAS, the Adviser and the Trust each desire to retain the Sub-Adviser
to provide investment advisory services to the Trust in connection with the
management of the Portfolio, and the Sub-Adviser is willing to render such
investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. (a) Subject to supervision by the Adviser and the Trust's Board of Trustees,
the Sub-Adviser shall manage the investment operations of the Portfolio and the
composition of the Portfolio's investment portfolio, including the purchase,
retention and disposition thereof, in accordance with the Portfolio's investment
objectives, policies and restrictions as stated in such Portfolio's Prospectus
(such Prospectus and 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 understandings:
(1) The Sub-Adviser shall provide supervision of the Portfolio's
investments and determine from time to time what investments and securities will
be purchased, retained or sold by the Portfolio and what portion of the 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 Trust's Agreement
and Declaration of Trust and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees and will conform and
comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986,
as amended, and all other applicable federal and state laws and regulations, as
each is amended from time to time.
(3) The Sub-Adviser shall determine the securities to be purchased
or sold by the Portfolio and will place orders with or through such persons,
brokers or dealers to carry out the policy with respect to brokerage set forth
in such Portfolio's Registration Statement (as defined herein) and Prospectus or
as the Board of Trustees or the Adviser may direct from time to time, in
conformity with
federal securities laws. In providing the Portfolio with investment supervision,
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 Portfolio that the Sub-Advisor have access to supplemental
investment and market research and security and economic analysis provided by
brokers who may execute brokerage transactions at a higher cost to the Portfolio
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 Portfolio with brokers, subject to review by the Trust's
Board of Trustees 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 a Portfolio 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 obligations
to the Portfolio in question and to such other clients.
(4) The Sub-Adviser shall maintain all books and records with
respect to the Portfolio'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 Trust's Board of Trustees such periodic and
special reports as the Trust's Board of Trustees may reasonably request.
(5) The Sub-Adviser shall provide the Portfolio's Custodian on each
business day with information relating to all transactions concerning the
Portfolio's assets and shall provide the Adviser with such information upon
request of the Adviser.
(6) (a) The investment management 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 Trust.
(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
officers or employees.
(c) The Sub-Adviser shall keep the Portfolio's books and records
required to be maintained by the Sub-Adviser pursuant to paragraph 1(a) of this
Agreement and shall
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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 Portfolio required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser agrees that all records that it maintains on behalf of the Portfolio
are property of the Portfolio and the Sub-Adviser will surrender promptly to a
Portfolio any of such records upon that Portfolio'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 Portfolio 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:
(a) Agreement and Declaration of Trust, as filed with the Secretary of
State of Delaware (such Agreement and Declaration of Trust as in effect on the
date of this Agreement, and as amended from time to time, are herein called the
"Agreement and Declaration of Trust");
(b) By-Laws of the Trust (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 Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser 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 Portfolio
and shares of the Portfolio's beneficial shares, and all amendments thereto;
(e) Notification of Registration of the Portfolio under the 1940 Act on
Form N-8A as filed with the Commission, and all amendments thereto; and
(f) Prospectus of the Portfolio.
4. For the services to be provided by the Sub-Adviser pursuant to this Agreement
for the Portfolio, the Adviser will pay to the Sub-Adviser as full compensation
therefor a fee at an annual rate equal to 0.075% of the Portfolio's average
daily net assets up to and including $500 million and 0.020% of the Portfolio's
average daily net assets over $500 million, but subject to a minimum annual
sub-advisory fee of $50,000. This fee will be paid to the Sub-Adviser from the
Adviser's advisory fee for such Portfolio. This fee will be computed daily and
paid to the Sub-Adviser monthly.
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5. The Sub-Adviser shall not be liable for any error of judgment or for any loss
suffered by a Portfolio 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.
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 (a) by the Portfolio at any time, without the
payment of any penalty, by the vote of a majority of Trustees of the Trust or by
the vote of a majority of the outstanding voting securities of a Portfolio, (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 its principal office all prospectuses, proxy statements, reports
to shareholders, sales literature or other materials prepared for distribution
to shareholders of the Portfolio, the Trust or the public that refers 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 upon) 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 Trustee or Shareholder of the Trust shall be personally liable for any
debts, liabilities, obligations or expenses incurred by, or contracted for under
this Agreement.
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10. 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 Portfolio.
11. This Agreement shall be governed by the laws of the state of Delaware;
provided, however, that nothing herein shall be construed as being inconsistent
with the 1940 Act.
12. 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; all such
counterparts shall, together, constitute only one instrument.
13. 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.
14. Any notice, advice or report to be given pursuant to this Agreement shall be
delivered or mailed:
To the Adviser at:
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
To the Sub-Adviser at:
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Regulatory Affairs
To the Trust or a Portfolio at:
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
15. 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 special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
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.
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PILGRIM XXXXXX & ASSOCIATES, LTD. PBHG FUNDS
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxx X. Xxxxxxxx
Title: CFO Title: CFO
WELLINGTON MANAGEMENT COMPANY, LLP
By:
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