EXHIBIT 10.6
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of the 20th
day of June, 1998, by and among First American Bank, Fort Dodge, Iowa (the
"Escrow Agent"), Vacation Investors, Inc., an Iowa corporation (the
"Underwriter"), and Portfolio Boost II, L.P., an Iowa limited partnership (the
"Partnership").
RECITALS
A. The Partnership proposes to offer for sale to investors up to $25,000,000
of units of limited partnership interest (the "Securities") at an initial
offering price of $1,000 per unit.
B. The Underwriter intends to sell the Securities as the Partnership's agent
on a best-efforts part-or-none basis for 500 units, and on a best-efforts
basis for the remaining Securities (the "Offering").
C. The Partnership and the Underwriter desire to establish an escrow account
with the Escrow Agent in which funds received from subscribers will be
deposited pending completion of the Escrow Period (as defined below), and
First American Bank, Fort Dodge, Iowa desires to serve as Escrow Agent, all
in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the Recitals and the mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Establishment of Escrow Account. On or prior to the date of the
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commencement of the Offering, the parties shall establish an interest-bearing
escrow account with the Escrow Agent, which escrow account shall be entitled the
Portfolio Boost II, L.P. Escrow Account (the "Escrow Account"). During the
Escrow Period (as defined below), the Underwriter will instruct subscribers to
make checks for subscriptions payable to "First American Bank--Escrow Agent for
XX XX." Any checks received that are made payable to a party other than the
Escrow Agent shall be returned to the Underwriter.
2. Escrow Period. The escrow period shall begin with the commencement
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of the Offering and shall terminate upon the earlier to occur of the following
dates (the "Escrow Period"):
A. the date upon which the Escrow Agent confirms that it has received in
the Escrow Account gross proceeds of $500,000 in collected funds (the
"Minimum");
B. The expiration of nine (9) months from the date of the Prospectus
initially utilized by the Partnership in offering the Securities; or
C. The date upon which a determination is made by the Partnership and the
Underwriter to terminate the offering prior to the sale of the
Minimum.
During the Escrow Period, the Partnership is aware and understands that it is
not entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Partnership or any other entity,
or be subject to the debts of the Partnership or any other entity.
3. Deposits into the Escrow Account. The Partnership and the Underwriter
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agree that they shall promptly (and in all events by 12:00 noon of the next
business day after receipt by them) transmit all monies received from
subscribers during the Escrow Period for the payment of Securities to the Escrow
Agent for deposit in the Escrow Account together with a written account of each
sale, which account shall set forth, among other things, the subscriber's name
and address, the number of Securities purchased, the amount paid therefor, and
whether the consideration received was in the form of a check, draft, or money
order. All monies so deposited in the Escrow Account are hereinafter referred
to as the "Escrow Funds."
4. Disbursements from the Escrow Account. In the event the Escrow Agent
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does not receive deposits totaling the Minimum prior to the termination of the
Escrow Period, the Escrow Agent shall, within 10 business days of the
termination of the Escrow Period, refund to each subscriber the amount received
from the subscriber, without deduction, penalty, or expense to the subscriber,
along with each subscriber's pro-rata share of any interest earned on the Escrow
Funds, and the Escrow Agent shall notify the Partnership and the Underwriter of
its distribution of the Escrow Funds. The purchase money returned to each
subscriber shall be free and clear of any and all claims of the Partnership or
any of its creditors.
Although checks for the Minimum may have been tendered prior to or on the
close of the Escrow Period, in no event will the Escrow Funds be released to the
Partnership until the Minimum is received by the Escrow Agent in collected
funds. For purposes of this Agreement, the term "collected funds" shall mean
all funds received by the Escrow Agent which have cleared normal banking
channels and are in the form of cash.
5. Collection Procedure. The Escrow Agent is hereby authorized to
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forward each check for collection and, upon collection of the proceeds of each
check, deposit the collected proceeds in the Escrow Account. As an alternative,
the Escrow Agent may telephone the bank on which the check is drawn to confirm
that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Underwriter. In such cases, the Escrow Agent will promptly notify the
Partnership of such return.
If the Partnership rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check to
the rejected subscriber. If the Partnership rejects any subscription for which
the Escrow Agent has not yet collected funds but has submitted the subscriber's
check for collection, the Escrow Agent shall promptly issue a check in the
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amount of the subscriber's check to the rejected subscriber after the Escrow
Agent has cleared such funds. If the Escrow Agent has not yet submitted a
rejected subscriber's check for collection, the Escrow Agent shall promptly
remit the subscriber's check directly to the subscriber.
6. Investment of Escrow Funds. The Escrow Agent may invest the Escrow
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Funds only in Premier Savings, which is Escrow Agent's highest yielding savings
account.
7. Compensation of Escrow Agent. As the Escrow Agent's total
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compensation for the performance of its escrow services, Escrow Agent shall
receive an aggregate fee (the "Escrow Agent Fee") of the greater of (i) $300.00;
or (ii) an amount determined by multiplying the total number of checks received
by Escrow Agent or issued by the Escrow Agent pursuant to this Agreement, by
$5.00. The Escrow Agent Fee shall be payable by the Partnership within fifteen
(15) days of the close of the Escrow Period. None of the Escrow Agent Fee, any
indemnification for any damages incurred by the Escrow Agent, or any monies
whatsoever shall, however, be paid out of or chargeable to the funds on deposit
in the Escrow Account.
8. Obligations of Escrow Agent. Escrow Agent shall be obligated only
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for the performance of such duties as are specifically set forth in this
Agreement, and no additional duties shall be inferred herefrom or implied
hereby. The Escrow Agent may rely and shall be protected in acting or refraining
from acting on any instrument believed by it to be genuine and to have been
signed or presented by the proper party or parties.
9. Controversies. Should any controversy arise among the undersigned
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with respect to this Agreement, or with respect to the right to receive all or
part of the Escrow Funds, including accrued interest thereon, Escrow Agent shall
have the right to institute an interpleader action in any court of competent
jurisdiction to determine the rights of the parties. Should such an action be
instituted, or should Escrow Agent become involved in litigation in any manner
on account of this Agreement or the Escrow Funds (not involving willful
misconduct, fraud, gross negligence or bad faith on the part of Escrow Agent),
the Partnership shall pay to Escrow Agent the reasonable attorneys' fees
incurred by Escrow Agent, together with any other expenses, losses, costs and
damages suffered by Escrow Agent, in connection with and resulting from such
litigation.
10. Other Terms and Provisions. Escrow Agent shall have no liability
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under, or duty to inquire into, the terms and provisions of any other document
or instrument utilized in connection with the Offering, and it is agreed that
the duties of Escrow Agent are purely ministerial in nature, and that Escrow
Agent shall incur no liability whatsoever under this Agreement, except for acts
or omissions of the Escrow Agent involving or constituting willful misconduct,
fraud, gross negligence or bad faith.
Escrow Agent may consult with and rely on its attorneys with respect to any
matter related to this Agreement or Escrow Agent's obligations or rights
hereunder, and the indemnification referred to in Section 12 of this Agreement
shall include all reasonable and necessary attorneys' fees of Escrow Agent in
connection with such consultation.
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11. Resignation. Escrow Agent may, at any time, resign hereunder by
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giving written notice of its resignation to the other parties hereto, at their
respective addresses set forth below, at least ten (10) days prior to the date
specified for such resignation to take effect, and upon the effective date of
such resignation the Escrow Funds, including all accrued interest, shall be
delivered by Escrow Agent to the person designated in writing by the Underwriter
and the Partnership, whereupon all of Escrow Agent's obligations hereunder shall
cease and terminate (except as hereinafter provided in this Section 11). If no
such person shall have been designated prior to the effective date of such
resignation, all obligations of Escrow Agent hereunder shall, nevertheless,
cease and terminate (except as hereinafter provided in this Section 11). Escrow
Agent's sole responsibility thereafter shall be to hold the Escrow Funds until
such time as the Escrow Agent delivers the Escrow Funds and accrued interest to
a person designated by the Partnership and the Underwriter or by a court of
competent jurisdiction. Notwithstanding the foregoing, nothing in this Section
11 releases Escrow Agent or relieves it of any of its obligations that existed
prior to the effective date of Escrow Agent's resignation, including, without
limitation, liability for willful misconduct, fraud, gross negligence or bad
faith.
12. Indemnification. The Underwriter and the Partnership agree to
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indemnify, defend and hold Escrow Agent harmless from and against any and all
loss, damage, tax, liability and expense that may be incurred by Escrow Agent
and arising out of or in connection with its acceptance of appointment as escrow
agent hereunder, including reasonable attorneys' fees and other legal costs and
expenses of defending itself against any claim or liability in connection with
its performance hereunder, except in the case of willful misconduct, fraud,
gross negligence or bad faith on the part of Escrow Agent. The Partnership and
the Underwriter shall each pay one-half (1/2) of the cost of any indemnification
of the Escrow Agent pursuant to this Section 12. The provisions of this Section
12 shall survive the termination of this Agreement.
13. Notices. Any notice or demand desired or required to be given
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hereunder shall be in writing and deemed given when personally delivered
(including delivery by commercial overnight courier service), or when deposited
in the United States mail, postage prepaid, sent certified or registered, and
addressed as follows:
(a) If to the Partnership, to:
Portfolio Boost II, L.P.
Cornerstone at Cantera
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx, President of
Portfolio Boost, L.L.C.
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(b) If to the Underwriter, to:
Vacation Investors, Inc.
Cornerstone at Cantera
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx, President
(c) If to the Escrow Agent, to:
First American Bank
0000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxx 00000
or to such other address or person as hereafter shall be designated in writing
by the applicable party.
14. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Iowa, but without regard to provisions
thereof relating to conflicts of law.
15. Titles or Captions. The titles or captions of sections and
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paragraphs in this Agreement are provided for convenience of reference only and
shall not be considered a part hereof for purposes of interpreting or applying
this Agreement, and such titles or captions do not define, limit, extend,
explain or describe the scope or extent of this Agreement or any of its terms or
conditions.
16. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.
17. Amendments. No amendment, modification, supplement, termination or
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waiver of or to any provision of this Agreement, nor consent to any departure
therefrom, shall be effective unless the same shall be in writing and signed by
or on behalf of each of the parties to this Agreement.
18. Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns.
19. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto pertaining to the subject matters hereof and
supersedes all negotiations, preliminary agreements and all prior or
contemporaneous discussions and understandings of the parties hereto in
connection with the subject matters hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PORTFOLIO BOOST II, L.P. FIRST AMERICAN BANK
By: Portfolio Boost, L.L.C.,
General Partner By: /s/ Xxxxx X. Xxxxxxxx, Vice President
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and Trust Officer
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Title
By: /s/ Xxxxxxx X. Xxxx By: /s/ XxxxxXxx X. Xxxxxx, Trust Officer
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Xxxxxxx X. Xxxx, President Title
and Secretary
VACATION INVESTORS, INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, President
and Secretary
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