FORM OF
ESCROW AGREEMENT
THIS AGREEMENT is made as of December 1, 2002, by and among Mercantile
Absolute Return Fund LLC, a Delaware limited liability company (the "Company"),
Mercantile Capital Advisors, Inc., a Maryland corporation (the "Manager"), and
SEI Investments Mutual Funds Services, a Delaware business trust ("SEI" or
"Escrow Agent").
WITNESSETH
WHEREAS, the Company has retained SEI to provide certain administration,
accounting and investor services pursuant to a Sub-Administration Agreement
dated as of December 1, 2002; and
WHEREAS, the Company desires that SEI also provide services as escrow agent
for the purpose of receiving payments from potential subscribing members in the
Company (the "Potential Members") and SEI 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" mean written instructions received by the Escrow
Agent and signed by the Manager or any other person duly authorized by the
Manager to give such instructions on behalf of the Company. 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
Manager of the Fund shall file from time to time with the Escrow Agent an
updated copy of the list of persons who are permitted to give Written
Instructions. Such list shall include certified signatures of such persons
authorized to give Written InstructionsThis shall constitute conclusive evidence
of the authority of the signatories designated therein to act. Such list 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
Manager to the contrary. The Escrow
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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 limited liability company agreement
(the "Limited Liability Company Agreement") or this Agreement or of any vote,
resolution or proceeding of the Company'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 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 Manager
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 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 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 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 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 the Escrow Agent
pursuant to this Agreement. Notwithstanding anything in this Agreement to the
contrary, the Company shall not be liable to the Escrow Agent for any
consequential, special or indirect losses or damages which the Escrow Agent may
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incur or suffer, whether or not the likelihood of such losses or damages was
known by the Company. 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 Manager 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 Administration,
Accounting and Investor Services Agreement between the Company and SEI
Investments Mutual Funds Services.
4. DEPOSIT OF ESCROW FUND. The Escrow Agent shall establish an account in the
name of Mercantile Absolute Return Fund LLC, Escrow Account for the Benefit of
Members (the "Subscription Account") and an account in the name of Mercantile
Absolute Return Fund LLC Repurchase Account (the "Repurchase Account") and
together with the Subscription Account, (the "Accounts"). The Escrow Agent shall
promptly deposit in the Subscription Account checks remitted by Potential
Members and made payable to the Company. Potential Members also may deposit
monies in the Subscription Account by wire transfer pursuant to instructions
provided to them by the Company. 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 Company, 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
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the closing date with respect to each closing. In the event that a Potential
Member who has escrow funds in the Subscription Account is not admitted into the
Company, upon Written Instructions, the Escrow Agent shall promptly issue
refunds to the Potential Member in the amount of the principal balance with
accrued interest. Such refunds shall be made by wire.
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 or wire form to each Potential Member based on his or her individual
balance in the Subscription Account along with a cover letter and to the Manager
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 Company from time to time may wire balances to the
Repurchase Account in connection with periodic repurchases of interests by the
Company from its members. Upon Written Instructions, the Escrow Agent shall
issue promptly repurchase payments from the Repurchase Account by wire to the
repurchasing member or to the Manager, 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
Company.
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 Company,
Manager or Potential Member, as applicable.
10. COMPENSATION. The fee of the Escrow Agent for the Company as hereunder shall
pay its services 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.
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
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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 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
Mercantile Absolute Return Fund LLC
c/o:
Attn: Trearsurer
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
(b) If to the Escrow Agent
SEI Investments Mutual Funds Services
Attn: General Counsel
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, XX 00000
(c) If to the Manager Mercantile Capital Advisors, Inc. c/o:
Attn: General Counsel
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, 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 affected thereby.
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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.
Mercantile Absolute Return Fund LLC
By: _______________________
Name: _____________________
Title: _____________________
Mercantile Capital Advisors, Inc.
By: ____________________
Name: _________________
Title: __________________
SEI Investments Mutual Funds Services
By: ___________________
Name: _________________
Title: __________________
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