Exhibit 24(2)(k)(2)
ESCROW AGREEMENT
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THIS AGREEMENT is made as of March 5, 2002, by and among GAM AVALON
MULTI-MARKET NEUTRAL, LLC, a Delaware limited liability company ("Fund"), GLOBAL
ASSET MANAGEMENT (USA) INC. ("Adviser"), as Adviser of the Fund and PFPC INC., a
Massachusetts corporation (the "Escrow Agent").
WITNESSETH
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WHEREAS, the Fund is registered as a closed-end, non-diversified management
investment company under the Investment Company Act of 1940 ("1940 Act"), and
WHEREAS, the Fund has retained PFPC Inc. to provide certain administration,
accounting and investor services pursuant to an Administration, Accounting and
Investor Services Agreement dated as of __________, 2002.
WHEREAS, the Fund desires that PFPC Inc. also provide certain services as
escrow agent, as described herein, 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 depository 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 (i) any document
furnished to the Escrow Agent or (ii) any asset deposited with it.
(b) "Written Instructions" mean written instructions received by the Escrow
Agent and signed by Global Asset Management (USA) Inc. as Adviser of the
Fund or any other person duly authorized by the Adviser or by the directors
of the Fund (as defined under the limited liability company agreement of
the Fund) to give such instructions on behalf of 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 Fund shall from time to time file with the Escrow Agent a copy
(certified by the Adviser) of each resolution of the Adviser or directors
authorizing the person or persons to give Written Instructions. Such
resolution shall include certified signatures of such persons authorized to
give Written Instructions, and 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 Adviser 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 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 limited liability company agreement or
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this Agreement or of any vote, resolution or proceeding of the Fund's
general partner or directors or of the Fund's members, 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 of its failure to perform its duties under this Agreement to
the extent such damages arise out of its willful misfeasance, 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 nor the Fund, nor the Adviser shall be
liable for any consequential, special or indirect losses or damages which
the Fund may incur or suffer by or as a consequence of the Escrow Agent's
or any 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 or the Fund or the Adviser.
(e) Without limiting the generality of the foregoing or of any other
provision of this 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.
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(f) The Fund agrees 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 Fund or (ii) upon Oral Instructions or 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 Fund shall 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 Escrow Agent pursuant to this
Agreement. These indemnities shall survive the resignation of the Escrow
Agent or the termination of this Escrow 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 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 promptly notify the Adviser of any discrepancy
between the amounts set forth on any remittance advice received by Escrow
Agent and the sums delivered to it therewith.
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3. DEFINITIONS. Except as specifically set forth herein, the terms used in
this Agreement shall have the same meaning as set forth in the Administration,
Accounting and Investor Services Agreement between the Fund and PFPC Inc.
4. DEPOSIT OF ESCROW FUND. The Escrow Agent shall establish accounts in the
name of "Potential Investors of GAM Avalon Multi-Market Neutral, LLC"
(hereinafter the "Subscription Account") and "GAM Avalon Multi-Market Neutral,
LLC. Repurchase Account" (hereinafter the "Repurchase Account") (collectively
the "Accounts"). The Accounts shall be established at PNC Bank, Delaware (the
"Bank) which shall be appointed by the Escrow Agent to hold the assets of such
Accounts. The Bank is authorized to invest assets of the Accounts in high
quality, short-term investments. The investments in which the Bank may invest
the Accounts may include shares of registered money market funds, including
funds which are advised by the Bank or one of its affiliates, or for which the
Bank or an affiliate of the Bank provides other services (such as TempFund or a
similar investment vehicle). The Escrow Agent shall promptly deposit the
Subscription Account checks remitted by persons subscribing to purchase units in
the Fund ("Potential Investors") and made payable to GAM Avalon Multi-Market
Neutral, LLC. Potential Investors may also deposit monies in the Subscription
Account by wire transfer pursuant to instructions provided to them by the Fund.
Balances on deposit in the Subscription Account will earn interest at prevailing
market rates pursuant to instructions from the Fund.
5. STATEMENTS. During the term of this Agreement, Escrow Agent shall
provide the Fund with monthly statements containing the beginning balance in
each of the Accounts as well as all principal and income transactions for the
statement period and with a daily summary of amounts deposited and status of
available funds. The Fund shall be responsible for reconciling
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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 Fund shall, within 180
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 units in the Fund, the Escrow Agent will wire principal
balances on deposit in the Subscription Account to the Fund's account at the
Fund's custodian. Such Written Instructions shall be sent to the Escrow Agent by
2:00 pm. 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 check form in the amount of
the principal balance with accrued interest.
7. INTEREST/EARNINGS. All interest earned on the escrow funds deposited in
the Accounts hereunder shall be added to and held in the Accounts. Upon 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 individual balance in the
Subscription Account along with a cover letter and to the Adviser 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 to all
persons who have received distributions of earnings reflecting their respective
shares of such earnings.
8. REPURCHASES. The Fund may from time to time wire balances to the
Repurchase Account in connection with periodic repurchases of units by the Fund
from its members. Upon Written Instructions, the Escrow Agent shall promptly
issue repurchase payments from the
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Repurchase Account in check form to the repurchasing member or to the Adviser,
as the case may be. Upon Written Instructions, the Escrow Agent will withhold
specified amounts from repurchase payments made to partners and any interest
earned thereon will be credited to the account 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,
Adviser or Potential Investor, as applicable.
10. COMPENSATION. The fee of the Escrow Agent for its services hereunder
shall be paid by the Fund as may be mutually agreed to in writing by the Fund
and Escrow Agent.
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. The Escrow Agreement shall continue until terminated by
the Fund on sixty (60) days' prior written notice to PFPC Inc. or by PFPC Inc.
on ninety days' prior written notice to the other party. Upon the termination of
this Agreement and upon the delivery of the balance of the Accounts by the
Escrow Agent to a successor escrow agent or such other person as may be
designated by Written Instructions, the Escrow Agent shall be relieved of any
and all further obligations hereunder and it shall be released and discharged
from all further obligations hereunder, other than such obligations arising
under Section 2(e) above as may then exist.
If no successor Escrow Agent or other person has been designated pursuant
to Written Instructions to receive the balance of the Accounts at the expiration
of the relevant period, the Escrow Agent shall have no further obligation
hereunder except to hold the escrow funds as a
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depositary, except as explicitly stated in the previous paragraph. Upon Written
Instructions of the appointment of the successor, the Escrow Agent shall
promptly deliver the balance of the Accounts to such successor.
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 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, facsimile or mailed by first class, registered mail, return receipt
requested, postage prepaid, and addressed as follows:
(a) If to the Fund:
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
(b) If to the Escrow Agent:
PFPC Inc., Attn: Xxxx Xxxxxxx
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 Accounts, 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.
GAM AVALON MULTI-MARKET NEUTRAL, LLC
By:
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Title:
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GLOBAL ASSET MANAGEMENT (USA) INC., as Adviser
By:
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Title:
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PFPC INC.
By:
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Title:
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