Exhibit (k)(3)
FORM OF ESCROW AGREEMENT
THIS AGREEMENT is made as of June 26, 2002, by and among DB HEDGE
STRATEGIES FUND LLC, a Delaware limited liability company (the "Fund"), DB
INVESTMENT MANAGERS, INC., a Delaware corporation (the "Company"), and PFPC
INC., a Massachusetts corporation ("Escrow Agent").
WITNESSETH
WHEREAS, (i) the Company has retained PFPC Inc. to provide certain
sub-administration and accounting services to the Fund pursuant to a
Sub-Administration and Accounting Services Agreement dated as of June 26, 2002
and (ii) the Fund has retained PFPC Inc. to provide certain investor services to
the Fund pursuant to an Investor Services Agreement dated as of June 26, 2002;
and
WHEREAS, the Company and the Fund desire that PFPC Inc. also provide
services as escrow agent for the purpose of receiving payments from potential
subscribing members in the Fund (the "Potential Investors") and PFPC Inc. wishes
to provide such services.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. ACCEPTANCE BY ESCROW AGENT. The Escrow Agent hereby accepts the
appointment as escrow agent hereunder and agrees to act on the terms
and conditions hereinafter set forth.
2. RIGHTS AND RESPONSIBILITIES OF ESCROW AGENT. The acceptance by the
Escrow Agent of its duties hereunder is subject to the following terms
and conditions, which the parties to
this Agreement hereby agree shall govern and control the Escrow Agent's
rights, duties, liabilities and immunities.
(a) The Escrow Agent shall act hereunder as a depositary only, and
in its capacity as such, it shall not be responsible or
liable in any manner whatever for the sufficiency,
correctness, genuineness or validity of any document furnished
to the Escrow Agent or any asset deposited with it.
(b) "Written Instructions" means written instructions received by
the Escrow Agent and signed by the Company or the Fund
or any other person duly authorized by the Company or the
Fund to give such instructions on behalf of the Company or
the Fund. The instructions may be delivered by hand, mail,
facsimile, cable, telex or telegram; except that any
instruction terminating this Agreement may be given only by
hand or mail. The Company or the Fund, as applicable, shall
file from time to time with the Escrow Agent a certified
copy certified by the Company of each resolution of the
Company authorizing the person or persons to give Written
Instructions. Such resolution shall include certified
signatures of such persons authorized to give Written
Instructions. This shall constitute conclusive evidence of
the authority of the signatories designated therein to act.
Such resolution shall be considered in full force and effect
with the Escrow Agent fully protected in acting in reliance
thereon unless and until it receives written notice from the
Company or the Fund to the contrary.
The Escrow Agent may rely upon and shall be protected for any
action or omission it takes pursuant to Written Instructions
if it, in good faith, believes such
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Written Instructions to be genuine. Unless otherwise
provided in this Agreement, the Escrow Agent shall act only
upon Written Instructions. The Escrow Agent shall be
entitled to assume that any Written Instruction received
hereunder is not in any way inconsistent with the provisions
of the Fund's certificate of incorporation (the "Charter")
or this Agreement or of any vote, resolution or proceeding
of the Company's directors or of the Fund, unless and until
the Escrow Agent receives Written Instructions to the
contrary.
(c) The Escrow Agent shall be obligated to exercise care and
diligence in the performance of its duties hereunder, to act
in good faith and to use its best efforts, within reasonable
limits, in performing services provided for under this
Agreement. The Escrow Agent shall be liable for any damages
arising out if its failure to perform its duties under this
Agreement to the extent such damages arise out of its willful
misfeasance, fraud, bad faith, gross negligence or reckless
disregard of such duties.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Escrow Agent nor its affiliates shall be liable to
the Company or the Fund or any other party for any
consequential, special or indirect losses or damages which the
Company may incur or suffer by or as a consequence of the
Escrow Agent's or its affiliates' performance of the services
provided hereunder, whether or not the likelihood of such
losses or damages was known by the Escrow Agent or its
affiliates.
(e) Without limiting the generality of the foregoing or of any
other provision of this
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Agreement, the Escrow Agent shall not be liable for losses
beyond its control, provided it has acted in accordance
with the standard of care set forth above; and the Escrow
Agent shall not be liable for delays or errors or loss
of data occurring by reason of circumstances beyond its
control, including acts of civil or military authority,
national emergencies, labor difficulties, fire, flood,
catastrophe, acts of God, insurrection, war, riots or
failure of the mails, transportation, communication or power
supply.
(f) The Company and the Fund agree, jointly and severally, to
indemnify the Escrow Agent and hold it harmless from and
against any tax, charge, loss, liability, expense (including
reasonable attorneys fees and expenses), claim or demand
arising directly or indirectly from any action or omission
to act which the Escrow Agent takes (i) at the request or on
the direction of or in reliance on the advice of the Company
or (ii) upon Written Instructions; provided, however, that
neither the Escrow Agent, nor any of its affiliates, shall
be indemnified against any liability (or any expenses
incident to such liability) arising out of the Escrow
Agent's or its affiliates own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties
and obligations under this Agreement. The Company and the
Fund shall, jointly and severally, indemnify and hold
harmless the Escrow Agent against and in respect of any
liability for taxes and for any penalties or interest in
respect of taxes attributable to the investment of funds
held in escrow by the Escrow Agent pursuant to this
Agreement. Notwithstanding anything in this Agreement to the
contrary, the Company and the Fund shall not be liable to
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the Escrow Agent for any consequential, special or indirect
losses or damages which the Escrow Agent may incur or
suffer, whether or not the likelihood of such losses or
damages was known by the Company or the Fund. These
indemnities shall survive the resignation of the Escrow
Agent or the termination of this Agreement.
(g) The Escrow Agent shall have no duties except those
specifically set forth in this Agreement.
(h) The Escrow Agent shall have the right at any time it deems
appropriate to seek an adjudication in a court of competent
jurisdiction as to the respective rights of the parties
hereto and shall not be held liable by any party hereto for
any delay or the consequences of any delay occasioned by such
resort to court.
(i) The Escrow Agent shall notify promptly the Company of any
discrepancy between the amounts set forth on any remittance
advice received by Escrow Agent and the sums delivered to it
therewith.
3. DEFINITIONS. Except as specifically set forth herein, the terms used
in this Agreement shall have the same meaning as set forth in the
Sub-Administration and Accounting Services Agreement between the
Company and PFPC Inc. and in the Investor Services Agreement between
the Fund and PFPC Inc.
4. DEPOSIT OF ESCROW FUND. The Escrow Agent shall establish an account
in the name of DB Hedge Strategies Fund LLC, Escrow Account for the
Benefit of Investors (the "Subscription Account") and an account in the
name of DB Hedge Strategies Fund LLC, Repurchase Account (the
"Repurchase Account" and together with the Subscription
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Account, the "Accounts"). The Escrow Agent shall promptly deposit in
the Subscription Account checks remitted by Potential Investors and
made payable to the Fund. Potential Investors also may deposit monies
in the Subscription Account by wire transfer pursuant to instructions
provided to them by the Company or the Fund. Balances on deposit in
the Subscription Account will earn interest at prevailing market rates
pursuant to arrangements approved by the Company.
5. STATEMENTS. During the term of this Agreement, the Escrow Agent shall
provide the Company with (a) monthly statements containing the
beginning balance in each Account as well as all principal and income
transactions for the statement period and (b) a daily summary of
amounts deposited and the status of available funds. The Company shall
be responsible for reconciling such statements. The Escrow Agent shall
be forever released and discharged from all liability with respect to
the accuracy of such statements, except with respect to any such act or
transaction as to which the Company shall, within 90 days after the
furnishing of the statement, file written objections with the Escrow
Agent.
6. DISTRIBUTIONS AND CLOSINGS. Upon Written Instructions, at each closing
of each offering of interests in the Fund, the Escrow Agent will wire
principal balances on deposit in the Subscription Account to the
account designated by the Company. Such Written Instructions shall be
sent to the Escrow Agent by 2:00 p.m. on the closing date with respect
to each closing. In the event that a Potential Investor who has escrow
funds in the Subscription Account is not admitted into the Fund, upon
Written Instructions, the Escrow Agent shall promptly issue refunds to
the Potential Investor in the amount of the principal balance with
accrued interest. Such refunds shall be made in check form.
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7. INTEREST. All interest earned on the escrow funds deposited in the
Accounts hereunder shall be added to and held in the Accounts. With
respect to each closing, pursuant to Written Instructions, within 5
business days of the crediting of such Interest the Escrow Agent shall
issue interest payments in check form to each Potential Investor based
on his or her individual balance in the Subscription Account along with
a cover letter and to the Company based upon its balance in the
Subscription Account along with a cover letter. The Escrow Agent will
prepare and send notifications on Form 1099 for each calendar year.
8. REPURCHASES. The Fund from time to time may wire balances to the
Repurchase Account in connection with periodic repurchases of interests
by the Fund from its members. Upon Written Instructions, the Escrow
Agent shall issue promptly repurchase payments from the Repurchase
Account in check form to the repurchasing member or to the Company, as
the case may be. Upon Written Instructions, the Escrow Agent will
withhold specified amounts from repurchasing members. Any interest
earned thereon will be credited to the accounts of the Fund.
9. TAX IDENTIFICATION NUMBER. All deposits to the Accounts shall be
subject to the Escrow Agent's receipt of a valid tax identification
number for the Fund, Company or Potential Investor, as applicable.
10. COMPENSATION. The fee of the Escrow Agent for its services hereunder
shall be paid by the Company as may be mutually agreed to in writing
by the Company and Escrow Agent. Notwithstanding the foregoing,
standard account transaction charges will be billed to the Company as
an out-of-pocket expense.
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11. AMENDMENT. This Agreement may not be amended or supplemented, and no
provision hereof may be modified or waived, except by an instrument in
writing, signed by all of the parties hereto.
12. TERMINATION. This Agreement shall continue until terminated by
either party on 60 days' prior written notice. Upon the termination of
this Agreement and upon the delivery of the balance of the Accounts to
a successor escrow agent or such other person as may be designated by
Written Instructions, the Escrow Agent shall be released and
discharged of any and all further obligations hereunder. If no
successor Escrow Agent has been designated pursuant to Written
Instructions to receive the balance of the Accounts at the expiration
of the 60-day period, the Escrow Agent shall have no further
obligation hereunder except to hold the escrow funds as a depositary.
Upon written notification by the Company of the appointment of the
successor, the Escrow Agent shall promptly deliver the balance of the
Accounts to such successor, and the duties of the resigning Escrow
Agent shall thereupon in all respects terminate, and it shall be
released and discharged of any and all further obligations hereunder.
13. EXECUTION. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but such counterparts
together shall constitute one and the same instrument.
14. MISCELLANEOUS. All covenants and agreements contained in this Agreement
by or on behalf of the parties hereto shall bind and inure to the
benefit of such parties and their respective heirs, administrators,
legal representatives, successors and assigns, as the case
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may be. The headings in this Agreement are for convenience of
reference only and shall neither be considered as part of this
Agreement, nor limit or otherwise affect the meaning thereof. This
Agreement shall be construed and enforced in accordance with the laws
of Delaware without regard to principles of conflicts of law.
15. NOTICES. All instructions, notices and other communications hereunder
must be in writing and shall be deemed to have been duly given if
delivered by hand or facsimile or mailed by first class, registered
mail, return receipt requested, postage prepaid, and addressed as
follows:
(a) If to the Company
DB Investment Managers, Inc.
c/o: 00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
(b) If to the Fund
DB Hedge Strategies Fund LLC
c/o: 00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
(c) If to the Escrow Agent
PFPC Inc.
Attn: _______________
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
16. PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be
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affected thereby.
17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof; provided that,
the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties and instructions.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
DB INVESTMENT MANAGERS, INC.
By:
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Name: Xxxxxxx X. Xxxxx
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Title: Managing Director
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DB HEDGE STRATEGIES FUND LLC
By:
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Name: Xxxxxxx Xxxxxxxxx
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Title: Vice President
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PFPC INC.
By:
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Name: Xxxx X. Xxxxxxx
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Title: Senior Vice President and Senior Managing Director
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