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CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT is made on November ____, 1997 between COMMUNITY
INVESTMENT PARTNERS III L.P., LLLP, a limited partnership organized under the
laws of Missouri and registered as a limited liability limited partnership (the
"Partnership"), and COMMERCE BANK, N.A., a national association ("Commerce").
WHEREAS, the Partnership desires that its Securities (as hereinafter
defined) and cash shall be hereafter held and administered by Commerce pursuant
to the terms of this Agreement:
NOW, THEREFORE, in consideration of the mutual promises set forth in this
Agreement, the Partnership and Commerce agree as follows:
ARTICLE I
GENERAL TERMS
Section 1.1 Definitions. The word "Securities" as used herein includes
stocks, shares, bonds, debentures, notes, mortgages or other obligations and
any certificates, receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or representing
any other rights or interests therein, or in any property or assets.
The words "Officer's Certificate" shall mean a request, direction or
certification in writing signed in the name of the Partnership by an officer of
a general partner, general partner or a designated employee of CIP Management
L.P., LLLP, the Partnership's management company (the "Management Company"),
whose name(s) and signature(s) are covered by the most recent certified
resolution and incumbency and signature certificate delivered by the
Partnership to Commerce pursuant to Section 1.4 hereof.
Section 1.2 Appointment. The Partnership hereby appoints Commerce as
custodian of all its Securities and cash, and Commerce agrees to act as such
upon the terms and conditions herein set forth.
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Section 1.3 Delivery. The Partnership will cause to be delivered to
Commerce all of its portfolio Securities and cash and will deliver or cause to
be delivered to Commerce from time to time all Securities and cash hereafter
acquired by the Partnership, which Securities Commerce shall keep safely as
custodian for the Partnership and which cash shall be deposited with Commerce
for the account of the Partnership. These Securities and cash held by Commerce
shall at all times be subject to the instructions of the Partnership as set
forth in an Officer's Certificate or an Officer's Certificate accompanied by a
certificate of a general partner of the Partnership pursuant to the terms of
this Agreement.
Section 1.4 Names, Titles and Signatures of the Management Company's
Officers. The Partnership will certify to Commerce a resolution indicating the
names and signatures of the persons authorized to sign under Section 1.1
hereof, together with any changes which may occur from time to time. In the
event that any person named in the most recent certification shall cease to be
an officer of a general partner, general partner or employee of the Management
Company, the Partnership will furnish Commerce with an Officer's Certificate
advising it to that effect. In the absence of such Officer's Certificate,
Commerce shall be entitled to rely, as aforesaid, upon the names and signatures
given in said most recent certification. ARTICLE II
RECEIPT AND DISBURSEMENT OF MONEY
Section 2.1 Accounts. Commerce shall open and maintain a separate
account or accounts in the name of the Partnership, subject only to draft or
order by Commerce acting pursuant to the terms of this Agreement. Commerce
shall hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Partnership.
Section 2.2 Disbursements. Commerce shall make payments of cash to, or
for the account of, the Partnership from such cash only:
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(a) upon the purchase of Securities for the portfolio of the
Partnership and the delivery of such Securities to Commerce, registered in the
name of the Partnership or of the nominee of Commerce referred to in Section
3.4 or in proper form for transfer;
(b) for the payment of interest, dividends, taxes, management or
supervisory fees or operating expenses (including, without limitation thereto,
fees and expenses for printing, legal, accounting and auditing services);
(c) for payments in connection with the conversion, exchange or
surrender of Securities owned or subscribed to by the Partnership held by or to
be delivered to Commerce;
(d) for deposit in a commercial account or accounts as may be
designated by the Partnership, and for subsequent withdrawal by the Partnership
or its disbursing agent or agents, available funds in amounts necessary for the
payment of such distributions to limited partners as may from time to time be
declared by the General Partners of the Partnership; or
(e) for other proper Partnership purposes.
Section 2.3 Officers' Certificates. Before making any such payment
Commerce shall receive (and may rely upon) an Officer's Certificate requesting
such payment and stating that it is for the purpose permitted under the terms
of items (a), (b), (c) or (d) of Section 2.2. In respect of item (e), Commerce
will take such action only upon receipt of an Officer's Certificate,
accompanied by a certificate of a general partner of the Partnership,
specifying the amount of such payment, setting forth the purpose for which such
payment is to be made (which may include the purchase of venture capital
investments), declaring such purpose to be a proper purpose of the Partnership,
and naming the person or persons to whom such payment is to be made.
Section 2.4 Checks, Drafts and Other Orders. Commerce is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by Commerce for the account of the Partnership.
Without an Officer's Certificate from the Partnership, Commerce shall make cash
disbursements for expenses in handling Securities, including stamp taxes, and
other similar items in
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connection with its duties under this Agreement and including the reimbursement
of Commerce for its out-of-pocket expenses incurred in the performance of its
duties hereunder and Commerce shall advise the Partnership once each business
day of disbursements so made.
ARTICLE III
SECURITIES
Section 3.1 Receipt of Securities. Commerce shall hold in a separate
account, pursuant to the provisions hereof, all Securities received by it from
or for the account of the Partnership. All such Securities are to be held or
disposed of by Commerce for, and subject at all times to the instructions of the
Partnership as set forth in an Officer's Certificate pursuant to the terms of
this Agreement.
Section 3.2 Transfer, Exchange, Redelivery, Etc. of Securities. Commerce
shall have sole power to release or deliver any Securities of the Partnership
held by it pursuant to this Agreement. Commerce agrees to transfer, exchange or
deliver Securities held by it hereunder only:
(a) upon sales of such Securities for the account of the Partnership
and simultaneous receipt by Commerce of payment thereof;
(b) when such Securities are called, redeemed or otherwise become
payable;
(c) for examination by any broker selling any such Securities in
accordance with "street delivery" custom;
(d) in exchange for or upon conversion into other Securities alone or
other Securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or otherwise;
(e) upon conversion of such Securities pursuant to their terms into
other Securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
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(g) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities; or
(h) for other proper Partnership purposes.
As to any deliveries made by Commerce pursuant to items (b), (d), (e), (f)
and (g), Securities or cash receivable in exchange therefor shall be
deliverable to Commerce.
Section 3.3 Officer's Certificates. Before making any such transfer,
exchange or delivery Commerce shall receive (and may rely upon) an Officer's
Certificate requesting such transfer, exchange or delivery and stating that it
is for a purpose permitted under the terms of items (a), (b), (c), (d), (e),
(f) or (g) of Section 3.2 and also in respect of item (h) Commerce will take
such action only upon receipt of an Officer's Certificate, accompanied by a
certificate of a General Partner of the Partnership, specifying the Securities
to be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper Partnership purpose, and naming the
person or persons (each of whom shall be stated in such certificate to be an
officer or employee of the Management Company or one of its general partners)
to whom delivery of such Securities shall be made.
Section 3.4 Registration of Securities. Except as otherwise directed by
an Officer's Certificate, Commerce shall register all Securities, except such as
are in bearer form, in the name of the Partnership in care of the custodian and
shall execute and deliver all such certificates in connection therewith as may
be required by such laws or regulations or under the laws of any State.
Commerce shall use its best efforts to the end that the specific Securities
held by it hereunder shall be at all times identifiable in its records.
The Partnership shall from time to time furnish to Commerce appropriate
instruments to enable Commerce to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any Securities which it
may hold for the account of the Partnership and which may from time to time be
registered in the name of the Partnership.
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Section 3.5 Voting and Other Action. Neither Commerce nor any nominee of
Commerce shall vote any of the Securities held hereunder by or for the account
of the Partnership, except in accordance with the instructions contained in an
Officer's Certificate. Commerce shall promptly deliver, or cause to be
promptly executed and delivered, to the Partnership all notices, proxies and
proxy soliciting materials with relation to such Securities, such proxies to be
executed by the registered holder of such Securities (if registered otherwise
than in the name of the Partnership), but without indicating the manner in
which such proxies are to be voted.
Section 3.6 Transfer Tax and Other Disbursements. The Partnership shall
pay or reimburse Commerce from time to time for any transfer taxes payable upon
transfers of Securities made hereunder, and for all other necessary and proper
disbursements and expenses made or incurred by Commerce in the performance of
this Agreement.
Commerce shall, at the direction of the Partnership, execute and deliver
such certificates as are provided the Partnership in connection with Securities
delivered to it or by it under this Agreement as may be required under the
provisions of the Internal Revenue Code and any regulations of the Treasury
Department issued thereunder, or under the laws of any State, to exempt from
taxation any exemptible transfers and/or deliveries of any such Securities.
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ARTICLE IV
OTHER RIGHTS AND OBLIGATIONS
Section 4.1 Reorganization or Liquidation, Etc. of the Partnership. In
the case of the following transactions, not in the ordinary course of business,
namely the merger or consolidation or similar reorganization of the Partnership
and another business development or investment company or other entity; the
sale by the Partnership of all, or substantially all of its assets to another
business development or investment company or other entity; or the liquidation
or dissolution of the Partnership and distribution of its assets; Commerce shall
deliver the Securities held by it under this Agreement and disburse cash only
upon receipt of an Officer's Certificate together with advice of counsel
reasonably satisfactory to Commerce (who may be counsel for the Partnership) to
the effect that all necessary Partnership action theretofore has been taken,
or, concurrently with Commerce action, will be taken. In no event, however,
shall Commerce as custodian be deemed to be the agent of the Partnership for
purposes of merger, consolidation, reorganization, sale of assets, liquidation
or dissolution.
Section 4.2 Commerce Acts Not Requiring Officer's Certificate.
(a) Unless and until Commerce receives an Officer's Certificate to
the contrary, Commerce shall:
(i) Present for payment all coupons and other income items
held by it for the account of the Partnership which call for
payment upon presentation and hold the cash received by it upon
such payment for the account of the Partnership;
(ii) Hold for the account of the Partnership hereunder all
stock dividends, rights and similar Securities issued with respect
to any Securities held by it hereunder; and
(iii) At the direction of the Partnership, execute as agent
on behalf of the Partnership all necessary ownership certificates
as are provided by the Partnership required by the Internal Revenue
Code or the income tax regulations of the United States Treasury
Department or under the laws of any State now or hereafter in
effect, inserting the Partnership's name on such certificates as
the owner of the Securities covered thereby, to the extent it may
lawfully do so.
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(b) With respect to Securities of foreign issue, while Commerce will
use its best efforts to collect any moneys which may to its knowledge become
collectible arising from such Securities, including dividends, interest and
other income, and to notify the Partnership of any call for redemption, offer
of exchange, right of subscription, reorganization or other proceedings
affecting such Securities, it is understood that Commerce shall be under no
responsibility for any failure or delay in effecting such collections or giving
such notices, whether or not relevant information is published in any financial
service available to it.
(c) Commerce shall not be under any obligation or duty to take
action to effect collection of any amount, if the Securities (domestic or
foreign) upon which such amount is payable are in default and payment is
refused after due demand or presentation. Commerce will, however, promptly
notify the Partnership in writing of such default and refusal to pay.
Section 4.3 No Obligation.
(a) Commerce shall be under no duty or obligation to inquire into and
shall not be liable for:
(i) the validity of the issue of any Securities purchased by
or for the Partnership, the legality of the purchases thereof or
the propriety of the amount paid therefor;
(ii) the legality of any sale of any Securities by or for the
Partnership or the propriety of the amount for which the same are
sold;
(iii) the legality of an issue or sale of any units of
limited partnership interest of the Partnership or the sufficiency
of the amount to be received therefor;
(iv) the legality of the repurchase of any units of limited
partnership interest of the Partnership or the propriety of the
amount to be paid therefor;
(v) the legality of the declaration of any distribution by
the Partnership or the legality of the issue of any Securities held
by the Partnership as a payment in kind of such distribution; and
(vi) any property or moneys of the Partnership unless and
until received by it, and any such property or moneys delivered or
paid by it pursuant to the terms hereof.
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(b) Commerce shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account
of the Partnership are such as may properly be held by the Partnership under
the provisions of its Agreement of Limited Partnership, as amended or restated
from time to time, any federal or state statutes or any rule or regulation of
any governmental agency.
Section 4.4 Reports by Commerce. Commerce shall furnish the Partnership
quarterly, or on such other basis, whether daily, weekly, or monthly, as the
Partnership may request, with advice of all transactions and entries for the
account of the Partnership, reflected on a daily basis. Commerce shall furnish
the Partnership, at the close of each quarter of the Partnership's fiscal year
(which is December 31), with a list of the Securities held by it for the
Partnership hereunder. The books and records of Commerce pertaining to its
actions under this Agreement shall be open to inspection and audit at
reasonable times by officers of and auditors employed by the Partnership, its
general partners or their partners.
Section 4.5 Compensation. The Partnership shall pay to Commerce
compensation for its services under this Agreement in accordance with the
schedule of charges heretofore agreed upon and attached hereto as Exhibit A, or
in accordance with any amended schedule of charges which may in the future be
substituted therefore by mutual agreement.
In the event of any advance of cash for any purpose made by Commerce
pursuant to an Officer's Certificate as hereinabove specified, or in the event
that Commerce or its nominee shall incur or be assessed any taxes, charges,
expenses (including counsel fees), assessments, claims or liabilities in
connection with the performance of this Agreement, the Partnership shall
indemnify and reimburse Commerce therefor and any property at any time held for
the account of the Partnership shall be security therefor.
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ARTICLE V
DURATION AND TERMINATION
Section 5.1 Termination. This Agreement may be terminated at any time
without penalty by written notice delivered by either party to the other.
Section 5.2 Effective Date. The effective date of termination shall be
as specified in such notice, except that at the option of Commerce or the
Partnership, the effective date of the termination may be postponed to a date
not more than sixty (60) days from the date of the delivery of such notice in
order to give Commerce an opportunity to prepare for the transfer of the
Partnership's assets, or to give the Partnership an opportunity to make
suitable arrangements for a successor custodian.
Section 5.3 Acts Upon Termination. Upon termination of this Agreement,
Commerce shall deliver at its office all Securities and cash held by it to such
bank or trust company eligible to serve as custodian as the Partnership may
designate, unless the Partnership shall have furnished to Commerce an Officer's
Certificate advising that a successor custodian cannot be found willing and
able to act upon reasonable and customary terms and that there has been
submitted to the limited partners of the Partnership the question of whether
the Partnership shall be liquidated. In that event the said Securities and
cash shall be delivered subject as aforesaid, in accordance with such action as
has been approved by the requisite vote of limited partners upon receipt of a
copy of the minutes of the meeting of limited partners at which such action was
taken, certified by a General Partner of the Partnership.
Section 5.4 Eligibility of Custodian. A bank or trust company shall be
deemed eligible to serve as custodian for the purpose of this paragraph if it
is authorized under the laws of the United States, or the State in which it has
its corporate existence, to act as custodian and it has a reported capital,
surplus and undivided profits aggregating not less than $4,000,000 with respect
to which Commerce shall be entitled to rely upon the certificate of an officer
of such bank or trust company.
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ARTICLE VI
MISCELLANEOUS
Section 6.1 Indemnification and Liability. Commerce shall not incur
liability to anyone and shall be indemnified and held harmless by the
Partnership from and against all liability, claims, demands, actions, suits,
costs or expense (including the fees of its counsel) for anything done or
suffered by Commerce in good faith in accordance with an Officer's Certificate
or pursuant to the terms of this Agreement. Commerce may apply for and obtain
the advice and opinion of counsel to the Partnership or its own counsel with
respect to questions of law and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice or
opinion. In the performance of its duties hereunder, Commerce shall be held
only to the exercise of reasonable care and diligence. Commerce shall be
protected in any action taken or omitted by it in reliance upon an Officer's
Certificate, notice, request, certificate or other instrument reasonably
believed by it to be genuine.
Section 6.2 Notice. Any notice or other instrument in writing authorized
or required by this Agreement to be given to either party hereto shall be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below:
In the case of the Partnership:
Community Investment Partners III L.P., LLLP
00000 Xxxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
In the case of Commerce:
Commerce Bank, N.A.
Corporate Trust Department, 6th Floor
922 Walnut, TBMZ-6
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxx
or at such other place as such party may from time to time designate in
writing.
Section 6.3 Assignment. This Agreement shall be binding upon and shall
insure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that this
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Agreement shall not be assignable by the Partnership without the written
consent of Commerce or by Commerce without the written consent of the
Partnership.
Section 6.4 Governing Law. This Agreement shall be construed and
governed in accordance with the laws of the State of Missouri.
Section 6.5 Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed to be an original and such
counterparts together shall constitute but one instrument.
Section 6.6 Additional Provisions. The terms and provisions of Exhibit B
are hereby incorporated herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Custody Agreement
to be executed and the corporate seal of Commerce to be affixed hereto as of the
date first above written by their respective officers thereunder duly
authorized.
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP
By: CIP Management L.P., LLLP, its Managing
General Partner
By: CIP Management, Inc., its Managing
General Partner
By:
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
COMMERCE BANK, N.A.
By:
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
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EXHIBIT A
SCHEDULE OF CHARGES
Acceptance and Set-up Fee $ 0
Custody Fee - annual fee
No Assets $ 500
1-3 assets $1,000
4-6 assets $1,500
7-9 assets $2,000
10 or more assets $2,500
Registrar $2.50/Name/year
Transfers $2.25/each
Payments/Distributions $.75/check
Book entry only No Charge
Labels $50/set
Escrow $1,000/account
OTHER FEES AND CHARGES
Investments
Moneys invested in any of our "money market funds" are subject to an annual
fee of .25% of the amount deposited. This fee is accounted for as a
charge against money market fund earnings posted to the account each month.
The daily interest rate we quote is the actual net interest rate in effect for
that day. The interest rate on each of our money market funds is variable and
is subject to adjustment daily.
For each "outside" money market fund utilized, an annual maintenance fee of
$250 will be charged. This fee is in addition to any fee imposed by the fund
itself.
If collateralized Repurchase agreements (Repos) or guaranteed investment
contracts (GIC) are used and we are required to take possession of the
collateral under the terms of the Repo or GIC, there will be an annual custody
fee or $350 per collateral account required. If a third party will hold the
collateral, this fee will not apply. No transaction fee will be charged.
Purchases, sales, processing maturities or calls of obligations of the United
States or any of its agencies or obligations of the State or any of its
political subdivisions are included in the administration fee, so there will be
no additional charge for those transactions.
Out-of-pocket expenses
All out-of-pocket expenses, including but not limited to, attorneys'
accountants' and other professional advisor's fees, supplies, shipping,
postage, overnight safekeeping, travel and
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lodging, and long distance telephone charges will be in addition hereto. WE DO
NOT ANTICIPATE THAT IT WILL BE NECESSARY TO RETAIN OUTSIDE COUNSEL FOR THIS
ISSUE.
Extraordinary services
Fees for extraordinary services not specifically contemplated in this schedule
will be based on the activity involved and will be charged at our regular
hourly rates. We reserve the right to impose additional fees or adjustments
when called upon to undertake additional duties or responsibilities.
Term of this fee schedule
The administration fee shall remain in effect for a minimum of three years.
Fees will be subject to adjustment thereafter. Transaction charges, if any,
will be based on the cost of providing the specific services and will not be
subject to a cap.
Termination fee
If the account is terminated for any reason a termination fee of $500, plus
expenses, will be charged.
Possession of funds included
The various incidental benefits available to our bank from the possession of
funds have been considered in determining the fees set out in this proposal.
Payment policy
Unless otherwise agreed upon in writing, immediately available funds must be
received actually and finally by Fed Funds wire no later than 10:00 a.m. the
business day prior to each distribution date. Payments made by check should
arrived at the office designated by us at lease five (5) days prior to each
distribution date. A late fee of at least $100 will be charged for all
payments received after our processing deadline. Payment amounts, rates and
any other information necessary to calculate distributions must be delivered at
least five days prior to any distribution date.
Conditions of acceptance
Acceptance of all new accounts is subject to
1. Receipt and review of governing documents;
2. Formal acceptance by the appropriate Trust Committee.
Fee payment dates
Fees will be billed semi-annually.
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EXHIBIT B
GENERAL TERMS AND CONDITIONS FOR CUSTODY AGREEMENT
The following provisions shall be part of the Custody Agreement to which
this Exhibit is attached:
1. The duties of Commerce shall be as expressed under the
Agreement and Commerce shall have no implied duties. The
permissive right or power to take any action shall not be
construed as a duty to take action under any circumstances and
Commerce shall not be liable except in the event of its
negligence or willful misconduct.
2. Commerce shall not be obligated to risk its own funds in the
administration of the account and shall have a lien against any funds,
securities or other property in its possession or control for its fees,
expenses and advancements. Commerce need not take any action under the
Agreement which may involve it in any expense or liability until
indemnified to its satisfaction for any expense or liability it
reasonably believes it may incur.
3. Any recitals contained in the Agreement shall be deemed to be
those of the Partnership and not those of Commerce.
4. Unless specifically required by the Agreement, Commerce shall
not be required to give any bond or surety or report to any Court
despite any statute, custom or rule to the contrary.
5. In the event Commerce becomes involved in litigation by reason of
the administration of this agreement, it is hereby authorized to deposit
with the Clerk of the Court in which the litigation is pending any and
all funds, securities, or other property held by it under the Agreement,
less its fees, expenses and advances, and shall stand fully relieved and
discharged of any further duties. Also, in the event Commerce is
threatened with litigation by reason of the Agreement, it is hereby
authorized to file an interpleader action in any court of competent
jurisdiction and to deposit with the Clerk of such Court any funds,
securities, or other property held by it, less its fees, expenses and
advances, and thereupon shall stand fully relieved and discharged of any
further duties.
6. Unless specifically required by the terms of the Agreement,
Commerce need not take notice of or enforce, any other document or
relationship, including, without limiting the generality of the
foregoing, any contract, settlement, arrangement, plan, assignment,
pledge, release, decree or the like, but its duties shall be solely as
set out in the Agreement.
7. Commerce shall not be liable in any respect on account of
identity, authority or rights of persons executing or delivering, or
purporting to deliver, any Officer's, Certificate, notice, request,
certificate, document or other instrument.
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