ESCROW AGREEMENT
September 30, 1994
Chemical Bank
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxxxxx
Re: Xxxx Xxxxxx Spectrum Series Escrow Account
Gentlemen:
In accordance with arrangements made by Demeter Management
Corporation, a Delaware corporation (the "General Partner"), on behalf of Xxxx
Xxxxxx Spectrum Balanced L.P. ("Spectrum Balanced"), Xxxx Xxxxxx Spectrum
Strategic L.P. ("Spectrum Strategic"), and Xxxx Xxxxxx Spectrum Technical L.P.
("Spectrum Technical"), each a Delaware corporation (the "Partnerships" or,
individually, a "Partnership"), and Xxxx Xxxxxx Xxxxxxxx Inc., the selling agent
for the Partnerships (the "Depositor"; the Partnerships and the Depositor being
herein sometimes collectively referred to as the "Parties" or, individually, as
a "Party"), the Depositor shall: (i) deliver to you, as Escrow Agent, all
subscription funds (by the direct transfer of immediately available funds into a
non-interest bearing escrow account established by you for the Partnerships, for
investment in your interest bearing money market account) received by the
Depositor from each subscriber ("Subscriber" or, collectively, the
"Subscribers") during the "Initial Offering Period" and thereafter during the
"Continuing Offering" (as described in the Partnerships' Prospectus, as the same
may be updated, supplemented, and amended from time to time (the "Prospectus"))
in connection with the offering to the public of Units of Limited Partnership
Interest of the Partnerships (the "Units") and (ii) also promptly transmit to
the General Partner a complete report of all funds deposited with you during the
Initial Offering Period and Continuing Offering. You, as Escrow Agent, shall
hold such subscription funds together with any additions, substitutions, or
other financial instruments in which such funds may be invested or for which
such funds may be exchanged (collectively referred to herein as the "Fund"), IN
ESCROW upon the following terms:
1. (a) BOOKMARK NOT DEFINED. Following receipt by you of
written notice from the General Partner that the General Partner has rejected a
Subscriber's subscription, in whole or in part, during either the Initial
Offering Period or Continuing Offering, you shall transmit to the Depositor, as
soon as practicable but in no event later than three business days following
receipt by you of such notice, the amount of such Subscriber's subscription
funds that shall have been deposited with you hereunder and that the General
Partner shall have notified you have been rejected and any interest earned on
the Fund and allocated to the rejected amount of such subscription in accordance
with Section 2 hereof. You shall at the same time give notice to the Depositor
of the amount of aggregate subscription funds and/or interest so returned.
(b) On the second business day before the
scheduled day of each closing, the General Partner shall notify you of the
portion of the Fund that represents subscriptions to be accepted by the General
Partner for each Partnership. Upon receipt by you of joint written notice from
the General Partner and the Depositor on the date of each such closing to the
effect that all of the terms and conditions with respect to the release of
subscription funds from escrow set forth in the Prospectus have been fulfilled,
you shall promptly pay and deliver to each of the Partnerships that portion of
the Fund specified for such Partnership in the General Partner's prior
instructions (excluding any interest earned on the Fund and funds relating to
rejected subscription); provided, however, that in the case of the Initial
Closing (as defined in the Prospectus) you will only pay and deliver funds to
the Partnerships after a minimum of 400,000 Units of each of Spectrum Strategic
and Spectrum Technical and 200,000 Units of Spectrum Balanced (1,000,000 Units
in the aggregate) have been subscribed for in the aggregate and not rejected by
the General Partner and a minimum amount of $10,000,000 has cleared the U.S.
banking system (the subscription for each Unit to be $10.00 at the Partnerships'
Initial Closing and at each subsequent closing, if any, at 100% of the net asset
value per Unit as of the close of business on the day of the closing).
(c) On the date of each closing, or as soon
thereafter as practicable, you shall transmit to the Depositor an amount
representing: (i) for each Subscriber whose subscription shall be accepted by
the General Partner in whole or in part, any interest earned on the Fund and
allocated to the accepted portion of such Subscriber's subscription in
accordance with Section 2 hereof, and (ii) for each Subscriber whose
subscription shall have been rejected by the General Partner in whole or in part
but whose subscription funds shall not have been previously returned to the
Depositor by you in accordance with Section 1(a) hereof, such Subscriber's
subscription funds that shall have been deposited with you hereunder and that
shall have been rejected by the General Partner, and any interest earned on the
Fund and allocated to the rejected amount of such subscription in accordance
with Section 2 hereof. You shall at the same time give notice to the Depositor
of the aggregate amount of subscription funds and/or interest so returned.
(d) Notwithstanding Section 1(a) hereof, upon
receipt by you of written notice from the General Partner that a Subscriber has
been rejected or because such Subscriber has provided bad funds in the form of a
bad check, draft, or otherwise to the Depositor), you shall transmit to the
Depositor, within three business days following receipt by you of such notice,
the amount of subscription funds deposited with you hereunder relating to that
amount (the portion of such Subscriber's subscription for which good funds have
not been provided) together with any interest earned on the Fund and allocated
to such portion of such a subscription in accordance with Section 2 hereof to
the date of such return, and shall immediately notify the General Partner of the
return of such funds.
2. You shall hold the Fund (including any interest earned
thereon) for the account of the Partnerships pending delivery to either the
Partnerships or the Depositor, pursuant to Paragraphs 1 or 3 hereof, as the case
may be. On each day that subscription funds are transferred to you hereunder in
immediately available funds and receipt is confirmed before 2:00 P.M., New York
City time, you shall immediately invest such subscription funds solely in your
interest bearing money market account. If subscription funds are transferred to
you in immediately available funds and receipt is confirmed after 2:00 P.M., New
York City time, you shall so invest such funds on the next day. Interest earned
on the Fund shall be allocated by the Depositor among the Subscribers
proportionately based on (A) the amount of their respective subscriptions on
deposit in the Fund and (B) the period of time from the date that their
respective subscriptions shall have been deposited in the Fund to the earlier of
the delivery of the Fund to the Partnerships at a closing or the Depositor in
accordance with Sections 1 or 3 hereof, as the case may be.
3. If, during the Partnerships' Initial Offering Period, you
are notified in writing jointly by the Parties that subscriptions for fewer than
400,000 Units of each of Spectrum Strategic and Spectrum Technical and 200,000
Units of Spectrum Balanced (1,000,000 Units in the aggregate) have been
subscribed for and not rejected by the General Partner, that the offering of
Units has been terminated, and that no Initial Closing will be held, you shall
transmit to the Depositor, as soon as practicable but in no event later than
three business days after receipt by you of such notice, an amount representing
the full amount of all subscription funds that shall have been deposited with
you hereunder, together with any interest earned on the Fund in accordance with
Section 2 hereof. You shall at the same time give notice to the Depositor of the
aggregate amounts of subscription funds and/or interest so returned.
4. The Parties further agree with you as follows:
(a) Your duties and responsibilities shall be
limited solely to those expressly set forth in this Agreement and are
ministerial in nature. You shall neither be subject to nor obliged to recognize
any other agreement between, or other direction or instruction of, any or all of
the Parties or any Subscriber even though reference thereto may be made herein;
provided, however, that with your written consent, this Agreement may be amended
at any time or times by an instrument in writing signed by the Parties.
(b) You are authorized, in your sole
discretion, to disregard any and all notices or instructions given by any of the
Parties or by any other person, firm, or corporation, except only such notices
or instructions as are hereunder provided for and orders or process of any court
entered or issued with or without jurisdiction. If the Fund or any part thereof
is at any time attached, garnished, or levied upon under any court order or in
case the payment, assignment, transfer, conveyance, or delivery of the Fund
shall be stayed or enjoined by any court order, or in case any order, judgment,
or decree shall be made or entered by any court affecting the Fund or any part
thereof, then and in any such event you are authorized, in your sole discretion,
to rely upon and comply with any such order, writ, judgment, or decree that you
are advised by legal counsel of your own choosing is binding upon you, and if
you comply with any such order, writ, judgment, or decree you shall not be
liable to any of the Parties or to any other person, firm, or corporation by
reason of such compliance even though such order, writ, judgment, or decree may
be subsequently reversed, modified, annulled, set aside, or vacated.
(c) You shall be fully protected in relying
upon any written notice, demand, certificate, document, or instrument believed
by you in good faith to be genuine and to have been signed or presented by the
proper person or persons or Party or Parties. The Parties shall provide you with
a list of officers and employees who shall be authorized to deliver instructions
hereunder. You shall not be liable for any action taken or omitted by you in
connection herewith in good faith and in the exercise of your own best judgment.
(d) Should any dispute arise with respect to
the delivery, ownership, right of possession, and/or disposition of the
subscription funds deposited with you hereunder, or should any claim be made
upon any such subscription funds by a third party, you, upon receipt of written
notice of such dispute by any of the Parties or by a third party, are authorized
and directed to retain in your possession all or any of such subscription funds
until such dispute shall have been settled either by mutual agreement of the
parties involved or by final order, decree, or judgment of any court in the
United States.
(e) If for any reason funds are deposited in
the escrow account other than by transfer of immediately available funds, you
shall proceed as soon as practicable to collect checks, drafts, and other
collection items at any time deposited with you hereunder. All such collections
shall be subject to the usual collection agreement regarding items received by
your commercial banking department for deposit or collection; provided, however,
that if any check, draft, or other collection item at any time deposited with
you hereunder is returned to you as being uncollectable (except by reasons of an
account closing), you shall attempt a second time to collect such item before
returning such item to the Depositor as uncollectable. Subject to the foregoing,
you shall promptly notify the Parties of any uncollectable check, draft, or
other collection item deposited with you hereunder and shall promptly return
such uncollectable item to the Depositor, in which case you shall not be liable
to pay any interest on the subscription funds represented by such uncollectable
item. In no event, however, shall you be required or have a duty to take any
legal action to enforce payment of any check or note deposited hereunder.
(f) You shall not be responsible for the
sufficiency or accuracy of the form, execution, validity, or genuineness of
documents now or hereafter deposited with you hereunder, or for any lack of
endorsement thereon or for any description therein, nor shall you be responsible
or liable in any respect on account of the identity, authority, or rights of the
persons executing or delivering or purporting to execute or deliver any such
document, or endorsement or this Agreement. You shall not be liable for any loss
sustained as a result of any investment made pursuant to the instructions of the
Parties or as a result of any liquidation of an investment prior to its maturity
or the failure of the Parties to give you any instructions to invest or reinvest
the Fund or any earnings thereon.
(g) All notices required or desired to be
delivered hereunder shall be in writing and shall be effective when delivered
personally on the day delivered, or when given by registered or certified mail,
postage prepaid, return receipt requested, on the day of receipt, addressed as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to a Partnership, the Partnerships or the General Partner:
Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xx. Xxxx X. Xxxxxx
President
if to the Depositor:
Xxxx Xxxxxx Xxxxxxxx Inc.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx X. Xxxxxx
Senior Vice-President
in either case with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
if to you:
Chemical Bank
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx Xxxxxxxx
Whenever, under the terms hereof, the time for giving a notice or performing an
act falls on a Saturday, Sunday, or legal holiday, such time shall be extended
to the next business day.
(h) The Depositor agrees to indemnify, defend,
and hold you harmless from and against, any and all loss, damage, tax,
liability, and expense that may be incurred by you arising out of or in
connection with your duties hereunder, except as caused by your gross
negligence, bad faith, or willful misconduct, including the legal costs and
expenses of defending yourself against any claim or liability in connection with
your performance hereunder.
(i) You shall be paid by the Depositor for
your services a fee of $3,000 in advance for each Fee Period (as defined below)
and such other fees relating to the administration of the Fund that shall be
agreed upon by you and the General Partner, including, but not limited to, a fee
for (a) investment of funds and (b) transmission of funds due to a rejection of
a Subscriber pursuant to Section 1(d) hereof. "Fee Period" shall mean each
consecutive twelve month period during the term of this Agreement with the first
such period beginning from the date of this Agreement.
(j) It is understood that you may at any time
resign hereunder as Escrow Agent by giving written notice of your resignation to
the Parties at their address set forth above at least 20 days prior to the date
specified for such resignation to take effect, and upon the effective date of
such resignation, all property then held by you hereunder shall be delivered by
you to such person as may be designated jointly by the Parties in writing,
whereupon all your obligations hereunder shall cease and terminate. If you shall
resign prior to the conclusion of any Fee Period you shall pay to the Depositor
an amount equal to the product of $3,000 and a fraction, the numerator of which
shall be the number of days remaining in the Fee Period and the denominator of
which shall be 365. If no successor Escrow Agent has been appointed or has
accepted such appointment by such date, all your obligations hereunder shall
nevertheless cease and terminate. Your sole responsibility thereafter shall be
to keep safely all property then held by you and to deliver the same to a person
designated by the Parties hereto or in accordance with the directions of a final
order or judgment of a court of competent jurisdiction.
5. This Agreement shall be governed by and construed in
accordance with the law of the State of New York and any action brought
hereunder shall be brought in the courts of the State of New York, sitting in
the County of New York.
6. The undersigned Escrow Agent hereby acknowledges and agrees
to hold, deal with, and dispose of, the Fund (including any interest earned
thereon) and any other property at any time held by the Escrow Agent hereunder
in accordance with this Agreement.
If the foregoing Agreement is satisfactory to you, please so indicate by signing
at the place provided below.
Sincerely,
XXXX XXXXXX SPECTRUM BALANCED L.P.
By: Demeter Management Corporation
By: /s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
President
XXXX XXXXXX SPECTRUM STRATEGIC L.P.
By: Demeter Management Corporation
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
President
XXXX XXXXXX SPECTRUM TECHNICAL L.P.
By: Demeter Management Corporation
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
President
XXXX XXXXXX XXXXXXXX INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
Senior Vice-President
Accepted:
CHEMICAL BANK
By: /s/ X.X. Xxxxxxxx
-------------------------
X.X. Xxxxxxxx
Vice President
