Exhibit 99.(d)(10)
ESCROW AGREEMENT
This ESCROW AGREEMENT dated this ___ day of ________, 2002, is by
and among PBHG FUNDS (the "Trust"), on behalf of PBHG Special Equity Fund (the
`Fund"), PILGRIM XXXXXX & ASSOCIATES, LTD. (the "Adviser"), NWQ Investment
Management Company, LLC (the 'Sub-Adviser") and FIRST UNION NATIONAL BANK (the
"Escrow Agent").
RECITALS:
WHEREAS, pursuant to an Interim Investment Sub-Advisory Agreement,
dated the date hereof, among the Trust, Adviser and the Sub-Adviser (the
"Interim Agreement"), the Sub-Adviser has been appointed by the Trust to provide
investment advice pursuant to the terms of the Interim Agreement. Except as
provided herein, capitalized terms used but not defined herein have the meanings
given to such terms in the Interim Agreement; and
WHEREAS, in accordance with Section 4 of the Interim Agreement,
compensation for the Sub-Adviser's services will be deposited in an
interest-bearing escrow account at the end of each month by the Trust, on behalf
of the Fund ; and
WHEREAS, Trust, Adviser, Sub-Adviser and the Escrow Agent now wish
to provide for the appointment of an escrow agent to hold the escrowed funds,
and to set forth the terms and conditions under which the funds held in escrow
shall be disbursed;
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Appointment of Escrow Agent. The Trust, on behalf of the Fund,
Adviser and the Sub-Adviser hereby appoint the Escrow Agent as the escrow agent
under this Escrow Agreement and the Escrow Agent hereby accepts such appointment
and agrees to hold and deposit all of the funds deposited into escrow with it
pursuant to the Interim Agreement in accordance with the terms hereof, and to
perform its other duties hereunder.
2. Establishment of Escrow Funds. The Adviser hereby directs the
Trust, on behalf of the Fund to deliver the Sub-Adviser's compensation, as
provided in Section 4 of the Interim Agreement, to the Escrow Agent. The Escrow
Agent will maintain a separate escrow account for the Fund. Upon receipt of a
deposit from the Trust on behalf of the Fund, the Escrow Agent shall provide
written confirmation to the Trust, the Adviser and the Sub-Adviser that such sum
has been deposited
with it. The Sub-Adviser's compensation for the Fund held in escrow by the
Escrow Agent hereunder, together with all interest thereon, herein is referred
to as an "Escrow Fund," and collectively as "Escrow Funds."
3. Duty to Invest Escrow Funds. All Escrow Funds must be invested
into overnight repurchase agreements meeting the requirements of SEC Rule 2a-7,
or in other money market instruments as agreed to in writing by all of the
parties.
4. Income on an Escrow Fund. All income earned on an Escrow Fund
shall be added to the Escrow Fund and distributed in accordance with the terms
hereof.
5. Delivery of Escrow Fund by Escrow Agent.
(a) If a majority of the Fund's outstanding voting securities
approve a New Investment Sub-Advisory Agreement with the Sub-Adviser within 150
days after the Assignment Date, the amount in the escrow account (including
interest earned) which has been deposited by the Trust on behalf of the Fund
will be paid to the Sub-Adviser upon the date of such approval by the Fund.
(b) If a majority of the Fund's outstanding voting securities
do not approve a contract with the Sub-Adviser, the Sub-Adviser will be paid,
out of the escrow account, the lessor of: (i) any costs incurred by the
Sub-Adviser in performing the services under the Interim Agreement (plus
interest earned on that amount while in escrow); or (ii) the total amount in the
escrow account (plus interest earned). The Trust shall be reimbursed the
remainder amount.
(c) The Escrow Agent shall release the Escrowed Funds as
instructed by a writing signed by the Trust, the Adviser and the Sub-Adviser
which instruction certified that an event in either (a) or (b) of this section
has occurred, and if (b) shall have occurred, such instruction shall certify the
amounts to be paid under such subsection (b).
6. Suspension of Performance; Disbursement Into Court. If, at any
time, there shall exist any dispute among the Trust, the Adviser and the
Sub-Adviser with respect to the holding or disposition of any portion of the
Escrow Funds or any other obligations of Escrow Agent hereunder, or if at any
time the Escrow Agent is unable to determine, to the Escrow Agent's sole
satisfaction, the proper disposition of any portion of the Escrow Funds or the
Escrow Agent's proper actions with respect to its obligations hereunder, or if a
successor Escrow Agent has not been appointed within 30 days of the furnishing
by the Escrow Agent of a notice of resignation pursuant to Section 7 hereof,
then Escrow Agent may, in its sole discretion, take either or both of the
following actions:
(a) suspend the performance of any of its obligations
(including without limitation any disbursement obligations) under this Escrow
Agreement until such dispute or uncertainty shall be resolved to the sole
satisfaction of Escrow Agent or until a successor Escrow Agent shall have
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been appointed (as the case may be); provided however, that Escrow Agent shall
continue to invest the Escrow Funds in accordance with Section 3 hereof; and/or
(b) petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction for instructions with
respect to such dispute or uncertainty, and to the extent required by law, pay
into such court, for holding and disposition in accordance with the instructions
of such court, all funds held by it in the Escrow Funds, after deduction and
payment to Escrow Agent of all fees and expenses (including court costs and
reasonable attorneys' fees) payable to, incurred by, or expected to be incurred
by Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder.
The Escrow Agent shall have no liability to the , Trust, the Adviser, the
Sub-Adviser, their respective shareholders or any other person with respect to
any such suspension of performance or disbursement into court, specifically
including any liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the disbursement of funds
held in the Escrow Funds or any delay in or with respect to any other action
required or requested of Escrow Agent.
7. Resignation and Removal of Escrow Agent. The Escrow Agent may
resign from the performance of its duties hereunder at any time by giving ten
(10) days' prior written notice to the Trust, the Adviser and the Sub-Adviser,
or may be removed, with or without cause, by the Trust, the Adviser and the
Sub-Adviser acting jointly by furnishing written notice to the Escrow Agent, at
any time by the giving of ten (10) days' prior written notice to the Escrow
Agent. Such resignation or removal shall take effect upon the appointment of a
successor Escrow Agent as provided herein. Upon any such notice of resignation
or removal, the Trust, the Adviser and the Sub-Adviser jointly shall appoint a
successor Escrow Agent hereunder, which shall be a bank. Upon the acceptance in
writing of any appointment as Escrow Agent hereunder by a successor Escrow
Agent, such successor Escrow Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Escrow Agent,
and the retiring Escrow Agent shall be discharged from its duties and
obligations under this Escrow Agreement, but shall not be discharged from any
liability for actions taken as Escrow Agent hereunder prior to such succession.
After any retiring Escrow Agent's resignation or removal, the provisions of this
Escrow Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Escrow Agent under this Escrow Agreement. The
retiring Escrow Agent shall transmit all records pertaining to the Escrow Funds
and shall pay all funds held by it in the Escrow Funds to the successor Escrow
Agent, after making copies of such records as the retiring Escrow Agent deems
advisable and after deduction and payment to the retiring Escrow Agent of all
fees and expenses (including court costs and attorneys' fees) payable to,
incurred by, or expected to be incurred by the retiring Escrow Agent in
connection with the performance of its duties and the exercise of its rights
hereunder.
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8. Liability of Escrow Agent.
(a) The duties of the Escrow Agent hereunder are entirely
administrative and not discretionary. The duties and responsibilities of the
Escrow Agent hereunder shall be determined solely by the express provisions of
this Escrow Agreement. The Escrow Agent undertakes to perform only such duties
as are expressly set forth herein and no further duties or responsibilities
shall be implied. The Escrow Agent is obligated to act only in accordance with
written instructions received by it as provided in this Escrow Agreement, is
authorized hereby to comply with any orders, judgments or decrees of any court
or arbitration panel and shall not incur any liability as a result of its
compliance with such instructions, orders, judgments or decrees.
(b) The Escrow Agent may rely and shall be protected in acting
upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein, which the Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by the persons or parties purporting
to sign the same and to conform to the provisions of this Escrow Agreement. The
Escrow Agent shall be under no duty to inquire into or investigate the validity,
accuracy or content of any such instrument.
(c) The Trust, the Adviser and the Sub-Adviser hereby waive
any suit, claim, demand or cause of action of any kind which any of them may now
or hereafter have to assert against the Escrow Agent arising out of or relating
to the execution or performance by the Escrow Agent of this Escrow Agreement,
unless such suit, claim, demand or cause of action is based upon the willful
misappropriation of funds by the Escrow Agent or unless a court of competent
jurisdiction determines that the Escrow Agent's gross negligence was the primary
cause of a loss to the Trust, the Adviser or the Sub-Adviser.
(d) The Escrow Agent shall have no duty to solicit any
payments that may be due to it hereunder. The Escrow Agent shall not incur any
liability for following the instructions herein contained or expressly provided
for or written instructions given by the Trust, the Adviser and the Sub-Adviser.
In the administration of this Escrow Agreement and the Escrow Fund hereunder,
the Escrow Agent may execute any of its powers and perform its duties hereunder
directly or through agents or attorneys and may consult with counsel,
accountants and other skilled persons to be selected and retained by it. The
Escrow Agent shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons.
9. Indemnification of Escrow Agent. The Trust, the Adviser and the
Sub-Adviser, jointly and severally, hereby indemnify and hold harmless the
Escrow Agent and each director, officer, employee, attorney, agent and affiliate
of the Escrow Agent (the "Indemnitees") against any and all actions, claims,
losses, damages, liabilities, fines, penalties, costs and expenses of any kind
or nature whatsoever (including, without limitation, reasonable attorneys' fees,
costs and expenses and the reasonable allocated costs and expenses of in-house
counsel) ("Losses") incurred by or asserted against
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any of them from and after the date hereof, whether direct, indirect or
consequential, as a result of or arising from or in any way relating to any
claim, demand, suit, action, proceeding or investigation by any person,
including without limitation the Trust, the Adviser or the Sub-Adviser, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
against any person under any statute or regulation, or common law or equitable
cause or otherwise arising from or in connection with the negotiation,
preparation, execution, performance or failure of performance of this Escrow
Agreement or any transaction contemplated herein; except for any such Losses
arising from any liability resulting solely from the gross negligence or willful
misconduct of the party claiming indemnification or from a breach of this Escrow
Agreement by the Escrow Agent. In addition to and not in limitation of the
immediately preceding sentence, the Trust, the Adviser and the Sub-Adviser,
jointly and severally, also hereby indemnify and hold harmless the Indemnitees
and each of them from and against any and all Losses that may be imposed on,
incurred by, or asserted against the Indemnitees or any of them for following
any instruction or other direction upon which the Escrow Agent is authorized to
rely pursuant to the terms of this Escrow Agreement. The provisions of this
Section 9 shall survive the termination of this Escrow Agreement and the
resignation or removal of the Escrow Agent for any reason. Anything in this
Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of such loss or damage and regardless of the form of
action.
10. Fees and Expenses of Escrow Agent. The Trust, the Adviser and
the Sub-Adviser shall compensate the Escrow Agent for its services hereunder in
accordance with Schedule A attached hereto and, in addition, shall reimburse the
Escrow Agent for all of its reasonable out-of-pocket expenses, including
attorneys' fees, travel expenses, telephone and facsimile transmission costs,
postage (including express mail and overnight delivery charges), copying charges
and the like. All of the compensation and reimbursement obligations set forth in
this section shall be payable by the Trust, the Adviser and the Sub-Adviser,
jointly and severally, upon demand by the Escrow Agent. The obligations of the
Trust, the Adviser and the Sub-Adviser under this section shall survive any
termination of this Escrow Agreement and the resignation or removal of the
Escrow Agent.
The Escrow Agent is authorized to, and may, disburse to itself
from the Escrow Funds, from time to time, the amount of any compensation and
reimbursement of out-of-pocket expenses due and payable hereunder (including any
amount to which the Escrow Agent or the Indemnitees are entitled to seek
indemnification pursuant to Section 9 hereof.) The Escrow Agent shall notify the
Trust, the Adviser and the Sub-Adviser of any disbursement from the Escrow Funds
to itself or the Indemnitees in respect of any compensation or reimbursement
hereunder and shall furnish to the Trust, the Adviser and the Sub-Adviser copies
of all related invoices and other statements. The Trust, the Adviser and the
Sub-Adviser hereby grant to the Escrow Agent and the Indemnitees a security
interest in and lien upon the Escrow Funds and all funds therein to secure all
obligations hereunder to the Escrow Agent and the Indemnitees, and the Escrow
Agent and the Indemnities shall have the right to offset the amount of any
compensation or reimbursement due any of them hereunder (including any claim for
indemnification pursuant to Section 9 hereof) against the Escrow Funds. If for
any reason
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funds in the Escrow Funds are insufficient to cover such compensation and
reimbursement, the Trust, the Adviser and the Sub-Adviser shall promptly pay
such amounts to the Escrow Agent or the Indemnitees upon receipt of an itemized
invoice.
11. Notices. Any notice required or permitted hereunder shall be in
writing and shall be deemed duly given if (and then two business days after) it
is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
(a) If to Trust:
PBHG Funds
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxx Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to Adviser:
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
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(c) If to Sub-Adviser:
NWQ Investment Management Company 0000
Xxxxxxx xxxx Xxxx, 0xx Xxxxx Xxx Xxxxxxx, XX
00000 Attn:
Facsimile:
With a copy to:
or
the Adviser and the Trust, at the addresses set forth
above, if the notice is from the Escrow Agent
(d) If to the Escrow Agent:
First Union National Bank, as Escrow Agent
000 Xxxxx Xxxxx Xxxxxx, XX-0000
Corporate Trust Administration, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: _______________
Facsimile: (000) 000-0000
With a copy to:
the Adviser and the Sub-Adviser, at the addresses set
forth above, if the notice is from the Trust
or
the Trust and the Sub-Adviser, at the address set forth
above, if the notice is from the Adviser
Any party may send any notice required or permitted hereunder to the intended
recipient at the address set forth above using any other means of communication
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail or electronic mail), but no such notice shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices required or
permitted hereunder are to be delivered by giving the other parties notice in
the manner herein set forth.
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12. Miscellaneous.
(a) This Escrow Agreement and the Interim Agreement set forth the
entire understanding of the parties with respect to the subject matter hereof.
All of the terms and provisions of this Escrow Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the parties
hereto.
(b) 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.
(c) The Escrow Agent, the Adviser and the Sub-Adviser agree that any
and all liabilities of the Trust under the terms of this Escrow Agreement for
the payment of money, including any obligation of the Trust under Section 9,
shall be discharged solely from the assets of the Fund and shall not be an
obligation of any other series portfolio of the Trust.
13. Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Pennsylvania or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
Commonwealth of Pennsylvania.
14. Consent to Jurisdiction and Venue. In the event that any party
hereto commences a lawsuit or other proceeding relating to or arising from this
Agreement, the parties hereto agree that the United States District Court for
the Commonwealth of Pennsylvania shall have the sole and exclusive jurisdiction
over any such proceeding. If all such courts lack federal subject matter
jurisdiction, the parties agree that the Superior Court Division of the General
Court of the Commonwealth of Pennsylvania shall have sole and exclusive
jurisdiction. Any of these courts shall be proper venue for any such lawsuit or
judicial proceeding and the parties hereto waive any objection to such venue.
The parties hereto consent to and agree to submit to the jurisdiction of any of
the courts specified herein and agree to accept service or process to vest
personal jurisdiction over them in any of these courts.
15. Amendments. No amendment to any provision of this Escrow
Agreement shall be valid unless it is in writing and signed by the Trust, the
Adviser, the Sub-Adviser and the Escrow Agent.
16. Counterparts. This Escrow Agreement may be signed in
counterparts, each of which shall be an original and all of which shall
constitute one instrument.
17. Termination. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds pursuant to Section 5, or the disbursements of all
amounts in the Escrow Funds into court pursuant to Section 6 hereof, this Escrow
Agreement shall terminate and the Escrow Agent shall
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have no further obligation or liability whatsoever with respect to this Escrow
Agreement or the Escrow funds.
18. Dealings. The Escrow Agent and any stockholder, director,
officer or employee of the Escrow Agent may buy, sell, and deal in any of the
securities of the Trust, the Adviser or the Sub-Adviser and become pecuniarily
interested in any transaction in which the Trust, the Adviser or the Sub-Adviser
may be interested, and contract and lend money to the Trust, the Adviser or the
Sub-Adviser and otherwise act as fully and freely as though it were not Escrow
Agent under this Agreement. Nothing herein shall preclude the Escrow Agent from
acting in any other capacity for the Trust, the Adviser or the Sub-Adviser or
for any other entity.
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IN WITNESS WHEREOF, this Escrow Agreement has been executed as of
the date and year first above written.
PBHG FUNDS
By: __________________________________
Name: ________________________________
Title: _______________________________
PILGRIM XXXXXX & ASSOCIATES, LTD.
By: __________________________________
Name: ________________________________
Title: _______________________________
NWQ INVESTMENT MANAGEMENT COMPANY
By:
Name:
Title:
FIRST UNION NATIONAL BANK
By: __________________________________
Name: ________________________________
Title: _______________________________
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SCHEDULE A
Fees Payable to Escrow Agent
