EXHIBIT 9(d)(9)
THE PBHG FUNDS, INC.
ADVISOR CLASS SHARES
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of June, 1997, by and
between The PBHG Funds, Inc. (the "Fund"), on behalf of each series of the Fund
set forth in Schedule A attached hereto (each a "Portfolio" and collectively,
the "Portfolios"), with respect to its Advisor Class shares, and Pilgrim ▇▇▇▇▇▇
& Associates, Ltd.
WHEREAS, the Fund is a Maryland corporation organized under Articles of
Incorporation dated July 31, 1992 (the "Articles"), and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
diversified management company of the series type, and each Portfolio is a
series of the Fund; and
WHEREAS, the Fund 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 Fund and the Adviser have determined that it is
appropriate and in the best interests of each Portfolio and its shareholders to
maintain the expenses of each Portfolio at the levels specified in Schedule A.
NOW THEREFORE, the parties hereto agree as follows:
1. Expense Limitation
1.1 Applicable Expense Limit. To the extent that the aggregate expenses
of every character incurred by a Portfolio in any fiscal year, including but not
limited to investment advisory fees of the Adviser (but excluding fees and
expenses incurred under the Fund's Service Plan, interest, taxes, brokerage
commissions, and any expenditures that are capitalized in accordance with
generally accepted accounting principles, and any extraordinary expenses not
incurred in the ordinary course of the 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
with respect to each Portfolio shall be the amount specified in Schedule A based
on a percentage of the average daily net assets of 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 a Portfolio's total
assets are greater than $75million and in which the Advisory Agreement is still
in effect, the estimated aggregate Portfolio Operating Expenses for the fiscal
year are less than the Operating Expense Limit for that year, subject to
quarterly approval by the Fund's Board of Directors 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 the 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 with
respect to any Portfolio pursuant to this provision in any fiscal quarter,
unless the Fund's Board of Directors has determined that the payment of such
reimbursement is in the best interests of such Portfolio and its shareholders.
The Fund's Board of Directors shall determine quarterly in advance whether any
reimbursement may be paid to the Adviser with respect to any Portfolio in such
quarter.
2.3 Method of Computation. To determine a 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.
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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 a period of one year from
the date of its execution and from year to year thereafter provided such
continuance is specifically approved by a majority of the Directors of the Fund
who (i) are not "interested persons" of the Fund or any other party to this
Agreement, as defined in the Act, and (ii) have no direct or indirect financial
interest in the operation of this Agreement ("Non-Interested Directors").
Nevertheless, this Agreement may be terminated 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 Fund, such action shall be authorized by resolution of a majority of the
Non-Interested Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund.
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. Nothing herein contained shall be deemed to require
the Fund or a Portfolio to take any action contrary to the Fund's Articles of
Incorporation 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
Fund's Board of Directors of its responsibility for and control of the conduct
of the affairs of the Fund or the Portfolio.
4.3 Definitions. Any question 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.
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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: THE PBHG FUNDS, INC.
------------------------------------- By:------------------------------
Secretary
ATTEST: PILGRIM ▇▇▇▇▇▇ & ASSOCIATES, LTD.
------------------------------------ By:------------------------------
Secretary
SCHEDULE A
EXPENSE LIMITATION AMOUNTS
This Agreement relates to the following Portfolios of the Fund with respect to
its Advisor Class Shares:
Maximum Expense
Name of Portfolio Limitation Amount
----------------- -----------------
PBHG Growth Fund 1.50%
PBHG Emerging Growth Fund 1.50%
PBHG International Fund 2.25%
PBHG Large Cap Growth Fund 1.50%
PBHG Select Equity Fund 1.50%
PBHG Technology & Communications Fund 1.50%
PBHG Core Growth Fund 1.50%
PBHG Limited Fund 1.50%
PBHG Large Cap 20 Fund 1.50%
PBHG Large Cap Value Fund 1.50%
PBHG Mid-Cap Value Fund 1.50%
PBHG Strategic Small Company Fund 1.50%
PBHG Small Cap Value Fund 1.50%
