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EXHIBIT 10.1
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of November 25, 1996, among Captec Franchise
Capital Partners X.X. XX, a Delaware limited partnership (the "Partnership"),
and Captec Franchise Capital Corporation IV, the managing general partner of
the Partnership (the "Managing General Partner") and Michigan National Bank
(the "Escrow Agent"). Unless otherwise indicated, capitalized terms contained
herein shall have the meanings set forth in the Registration Statement on Form
S-11 as declared effective by the Securities and Exchange Commission (the
"SEC") on November ______, 1996, and as from time to time supplemented and/or
amended, (the "Registration Statement").
WHEREAS, the Partnership intends to enter into agreements (the
"Agreement(s)"), with one or more broker-dealers (the "Participating
Dealer(s)") who are members of the National Association of Securities Dealers,
Inc. (the "NASD"), pursuant to which such Participating Dealer(s) will
participate, on a "best efforts, part or none" basis, in an offering, pursuant
to the prospectus (the "Prospectus") included in the Registration Statement of
$30,000,000 of the Partnership's units of limited partnership interest
("Units") at $1,000 per unit, with the minimum required subscription being
$2,000 (2 Units).
WHEREAS, the Partnership desires that the Escrow Agent serve as its escrow
agent and the Escrow Agent is qualified to, and desires to, serve as escrow
agent of the Partnership according to the terms and conditions of this Escrow
Agreement;
NOW, THEREFORE, the parties agree as follows:
1. All funds received from subscribers for the Units will be delivered promptly
after receipt by the Participating Dealer(s) to the Escrow Agent. Checks for
such funds shall be made payable to "Michigan National Bank, Escrow Agent for
Captec Franchise Capital Partners X.X. XX" and sent to 00000 Xxxxxxx Xxxx, Mail
Code 10-90, Xxxxxxxxxx Xxxxx, XX 00000 together with a copy of the executed
Subscription Agreement. The Escrow Agent will forward copies of checks to the
Partnership via overnight mail on the date of receipt. The Partnership shall
review the Subscription Agreements for acceptability. If all of the
Subscription Agreement requirements are met, the Partnership shall execute and
fax a Deposit Letter (in substantially the form attached hereto as Exhibit A)
with Signature Pages to the Escrow Agent instructing the Escrow Agent to
deposit the accepted Subscribers funds.
The Escrow Agent will have one (1) business day after receipt of the Deposit
Letter to deposit the funds designated in each Deposit Letter.
Notwithstanding anything contained herein to the contrary, the Escrow Agent
shall have no responsibility in securing the proper amount of funds or missing
Subscription Agreement information. That will remain the sole responsibility
of the Partnership. Nor shall the Escrow Agent be responsible for the review
or legal determination of acceptability of any Subscription Agreement.
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Funds deposited with the Escrow Agent shall be held for the benefit of
subscribers in an escrow account to be established and maintained by the Escrow
Agent.
2. The Escrow Agent will hold all funds received by it pursuant to the terms
of this Agreement, subject to the following events:
(i) All funds received by the Escrow Agent prior to the earlier of (a)
the sale of not less than 2,000 Units ($2,000,000; hereinafter, the
"Minimum Number of Units") or (ii) one year after the effective date of
the Registration Statement (the "Termination Date"), are to be invested
by the Escrow Agent in such investments as the Managing General Partner
shall direct in writing, investments listed on Exhibit B or as
permitted by Rule 15c2-4 promulgated under the Securities Exchange Act
of 1934 ("Permitted Investments").
(ii) In the event that the Escrow Agent has deposited funds representing
subscriptions from the sale of the Minimum Number of Units prior to the
close of business on the Termination Date, all checks for the payment
thereof have been cleared through the banking system, and shall have
received a certificate executed by an officer of the Partnership
stating that the Minimum Number of Units has been sold, the Escrow
Agent will deliver, on the Initial Closing Date, which shall occur not
later than the first business day after subscriptions for the Minimum
Number of Units have been received, or such later date as the
Partnership shall designate, all of the funds which have cleared the
banking system (including all income from investments) then being held
in escrow by the Escrow Agent to the Partnership; provided, however,
that the Escrow Agent shall have no duty to inquire into or follow the
use of such distributed funds once paid over to the Partnership as
aforesaid. Once the Minimum Number of Units have been subscribed for
and subsequent to the Initial Closing Date, funds deposited with the
Escrow Agent through further sales of Units shall be held for the
benefit of the Partnership only and the Escrow Agent shall transfer all
funds in the escrow account to the Partnership's checking account as
directed by the Partnership. While funds are held pending such
transfer, the Managing General Partner may also direct the Escrow Agent
to continue to invest subscription proceeds in Permitted Investments or
it may avail itself of investment management services offered by the
Escrow Agent. Upon distribution by the Escrow Agent of the foregoing
items and receipt by the Escrow Agent of the fees and expenses to which
it is entitled, this Escrow Agreement shall terminate.
(iii) In the event that the Escrow Agent has not received funds representing
subscriptions from the sale of the Minimum Number of Units prior to the
close of business on the Termination Date, then, upon receipt of
written instructions from the Partnership, the Escrow Agent shall
promptly, after it receives such instructions (including instructions
as to the division of interest hereinafter referred to and a list of
the subscribers, the amount of Units subscribed for and the cash
contribution of each subscriber), remit to subscribers the respective
amounts which subscribers have paid, together with interest earned on
such subscription amounts from the first business day of the week
following the date on which each subscriber's proceeds were
deposited with the Escrow Agent through the date of the release of
proceeds (less amounts withheld pursuant to the back-up withholding
rules imposed on payments of interest). The Managing General Partner
will provide written instructions to the Escrow Agent as to the
disposition of the interest earned on each such subscriber's deposited
funds and assume responsibility for preparing and filing any required
tax forms. Upon distribution to subscribers by the Escrow Agent of all
subscription funds together with all interest earned on such
subscription amounts,
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and receipt by the Escrow Agent of the fees and expenses to which it is
entitled, this Escrow Agreement shall terminate.
(iv) Funds received by the Escrow Agent which are directed by the
Partnership to be invested shall be so invested by the Escrow Agent as
funds clear. All investments shall be made by the Escrow Agent in a
name clearly designating Michigan National Bank as Escrow Agent for
the Partnership.
(v) Upon receipt by the Escrow Agent of notification from the
Partnership that a subscription has been rejected, withdrawn or
reduced, or that a subscriber's funds include an amount in excess of
the subscription price (and, in the case of a withdrawal or reduction,
a written direction from the subscriber or his broker-dealer), the
Escrow Agent shall promptly refund the subscription proceeds or the
excess amount, as the case may be, without interest, to the
subscriber.
3. (i) Notwithstanding anything to the contrary contained in this
Agreement, the Escrow Agent shall not be liable for any of the
following, except in the event of gross negligence or willful
misconduct on the part of the Escrow Agent: the failure of any of the
conditions of this Agreement or damage caused by the exercise of its
discretion in any particular manner, or for any reason; the failure of
the Escrow Agent to ascertain the terms or conditions, or to comply
with any of the provisions of any agreement, contract or other
document filed herewith or referred to herein, nor shall the Escrow
Agent be liable or responsible for forgeries or false impersonation.
(ii) The Escrow Agent's duties shall be only such as are herein
specifically provided, being purely ministerial in nature, and the
Escrow Agent shall incur no liability except for willful misconduct or
gross negligence so long as the Escrow Agent has acted in good faith.
The Escrow Agent shall neither be responsible for, nor chargeable with
knowledge of, the terms and conditions of any other agreement,
instruments, or document between the other parties hereto, in
connection herewith, including, without limitation, the prospectus
referred to in the preamble or the body of this Agreement and shall be
required to act only pursuant to the terms and provisions of this
Agreement. This Agreement sets forth all matters pertinent to the
escrow contemplated hereunder and no additional obligations of the
Escrow Agent shall be implied from the terms of this Agreement or any
other agreement.
(iii) The parties agree to indemnify and hold harmless the Escrow
Agent for any loss, liability, or expense (including reasonable
attorneys' fees), except for willful misconduct or gross negligence,
arising in connection with carrying out any of the provisions of this
Agreement, including litigation. The Escrow Agent shall not be
required to any act or thing which in its opinion might subject it to
any liability unless it shall have received an indemnity satisfactory
to it, have no responsibility or liability for any diminution in value
of any assets held hereunder which may result from any investments or
reinvestments made in accordance with any provision which may be
contained herein.
4. (i) It is further agreed that if any controversy arises between the
parties hereto (other than the Escrow Agent) or with any third party
with respect to the subject matter of this Agreement, its terms or
conditions, the Escrow Agent shall not be required to determine the
same or take any action in the premises, but the Escrow Agent may
await the settlement of any such controversy by final appropriate
legal proceedings or otherwise as the Escrow Agent may require,
notwithstanding anything in this Agreement to the contrary, and in
such event the Escrow Agent shall not be liable for interest or
damages prior to such settlement.
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(ii) The Escrow Agent shall not be required to institute legal
proceedings of any kind in connection with the escrowed funds. In the
event of its participation in any such legal proceeding, the Escrow
Agent shall be reasonably compensated for its services and expenses as
provided in Section 7 hereof. The Escrow Agent shall have no
responsibility for the genuineness or validity of any document or
other item deposited with it, and the Escrow Agent shall be fully
protected in acting in accordance with any written instruction given
to it hereunder and believed by it to have been signed or given by the
proper parties as designated by the Partnership.
(iii) The Escrow Agent may consult with legal counsel, who may also
be counsel to any of the parties to this agreement, in the event of
any dispute or question as to the construction of the terms of this
Agreement or with respect to the Escrow Agent's duties under this
Agreement, and the Escrow Agent shall incur no liability and shall be
fully protected for acting in good faith in accordance with the
opinion and instructions of such counsel.
5. (i) Notwithstanding anything to the contrary contained in this
Agreement, the Escrow Agent (a) may resign from its duties under this
Escrow Agreement by giving sixty (60) days prior written notice of
such resignation to the other parties hereto and (b) may be discharged
from its duties under this Agreement upon the receipt from the other
parties hereto of sixty (60) days prior written notice of such
discharge. Upon the resignation or discharge of the Escrow Agent, the
funds along with all records, certificates, affidavits and other
documents maintained by the Escrow Agent in connection with such funds
shall be returned to the Partnership or delivered to a substitute
escrow agent that the Partnership shall retain to perform the
functions thereof performed by the Escrow Agent under this Agreement,
as the Partnership shall direct the Escrow Agent in writing.
(ii) Should the parties not designate a successor agent within sixty
(60) days of the Escrow Agent's resignation, or should any dispute
arise with respect to the agreement or the escrowed property, the
Escrow Agent may deposit the property in the Circuit Court for Oakland
County, Michigan and interplead such dispute and the parties will hold
the Escrow Agent harmless and indemnify it against all consequences
and expenses which may be incurred.
6. The Escrow Agent shall receive as compensation for its services
each year, or any part of a year, payable in advance, the fees set
forth on the attached schedule, Exhibit C, and all fees will be paid
by the Partnership. The Escrow Agent shall also be entitled to be
reimbursed for actual out-of-pocket expenses, including reasonable
legal fees and expenses.
It is understood that the fees and charges agreed upon for the
Escrow Agent's services shall be considered compensation for its
ordinary services as contemplated by this Agreement, and, in the event
it renders any service not provided for in this Escrow Agreement or
there is any modification, or any controversy arises, or Escrow Agent
is made a party to, or intervenes in, any litigation pertaining to
this Agreement or the subject matter thereof, the Escrow Agent shall
be reasonably compensated by the parties for such extraordinary
services and reimbursed for all reasonable cost and expenses incurred.
7. The Escrow Agent shall have no duty or responsibility to
pay any federal, state or local income taxes on any escrowed property
or to make or file any tax returns or other governmental reports. The
escrowed property shall be considered to be the property of
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the respective investors for all tax purposes. The Escrow
Agent is authorized to file Forms 1099 with the Internal Revenue
Service if required.
8. In the event legal action is instituted between the parties
hereto to enforce this Escrow Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and actual costs incurred in
connection with such action.
9. The Escrow Agent shall submit any check or instrument under
this agreement for collection once. The Escrow Agent shall inform the
Partnership in writing within two (2) business days after the check or
instrument has been entered for collection by it hereunder and is
uncollectible and payment of the funds represented by such check or
instrument has been made pursuant to the terms of this Escrow
Agreement, then the Escrow account will be charged by the Escrow Agent
to reimburse the Escrow Agent for such payment, and the Escrow Agent
shall deliver the returned check or instrument to the Partnership;
provided, however, that nothing contained herein shall require the
Escrow Agent to invest or pay out funds which it has reason to believe
are uncollectible.
10. Unless otherwise directed by the Partnership by telephonic
communication, all distributions by the Escrow Agent pursuant to this
Agreement shall be in the form of a check or internal bank transfer to
another Michigan National Bank account.
11. All notices, communications and instructions required or
desired to be given under this Escrow Agreement shall be in writing
and shall be deemed to be duly given if hand delivered or sent by
registered or certified mail, return receipt requested, or commercial
overnight courier, to the following addresses or to such other address
as may be furnished to the other parties as herein provided:
To the Escrow Agent:
Michigan National Bank
00000 Xxxxxxx Xxxx
Mail Code 00-00
Xxxxxxxxxx Xxxxx, XX 00000
To the Partnership: Copy to:
Captec Franchise Capital Partners X.X. XX Jaffe, Raitt, Heuer & Xxxxx
c/o Captec Franchise Capital Corporation IV One Xxxxxxxx Avenue
24 Xxxxx Xxxxx Xxxxxx Drive Suite 2400
X.X. Xxx 000 Xxxxxxx, Xxxxxxxx 00000
Xxx Xxxxx, XX 00000 Attn: Xxxx Xxxxxx, Esq.
Attn: Xxxxxxx X. Beach
12. (i) This Escrow Agreement shall not be amended, modified or rescinded,
except as provided herein or by a written instrument signed by all of
the parties to this Agreement.
(ii) This Escrow Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
13. This Escrow Agreement, the rights and obligations of the parties
hereunder and all performance hereunder shall be governed and construed in
accordance with the laws of
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the State of Michigan, and shall inure to and be binding on the parties and
their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as
of the date first above written.
By: CAPTEC FRANCHISE CAPITAL PARTNERS X.X. XX
By: Captec Franchise Capital Corporation IV,
as General Partner
By: _________________________________
W. Xxxx Xxxxxx
Senior V.P. and Chief Financial Officer
By: MICHIGAN NATIONAL BANK
By: _________________________________
Xxxxxx X. Xxxxx
Vice President
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EXHIBIT A
DEPOSIT LETTER
DEPOSIT LETTER
Date: ______________________
A) Please deposit the total sum of $____________________ in the escrow
account for the subscribers listed on the _______ attached Subscription
Agreement Signature pages.
B) Please hold the following checks:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
C) Please return the following checks accompanied by the Subscription
Correction Form:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
CAPTEC FRANCHISE CAPITAL PARTNERS X.X. XX
By: ______________________________________
Its: ______________________________________
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EXHIBIT B
PERMITTED INVESTMENTS
At the sole written direction of the Partnership, Escrow Agent will invest the
deposits to the escrow account and any income earned thereon, to the extent
practicable, in money market funds, for which Michigan National Bank serves in
any advisor capacity and/or other money market funds with which the Escrow
Agent has an existing relationship the assets of which are made up of direct
obligations of the instruments issued by the U.S. government, its agencies or
instrumentalities, and are fully guaranteed as to principal and interest by the
United States.
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EXHIBIT C
FEE SCHEDULE
ACCEPTANCE FEE $400.00
SEMI-ANNUAL FEE $1,500.00
For maintenance of account and routine administrative activities.
ACTIVITY FEES
RECEIPT OF ESCROW DEPOSITS AND SUBSCRIBER INFORMATION: $10.00 PER
DEPOSIT LETTER
RETURN OF FUNDS TO SUBSCRIBERS
By check $10.00 per check
By wire transfer $25.00 per wire
REIMBURSEMENT OF OUT-OF-POCKET EXPENSES
Including, but not limited to, postage, overnight courier costs, travel and
lodging, fees and disbursements of legal counsel and agents.
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