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BA3DOCS1\26809
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Agreement") is made and
entered into this 30th day of November, 1995, by and between DEM,
INC. a corporation organized under the laws of the state of
Maryland (the "Company"), THE XXXXXXX COMPANY, a corporation
organized under the laws of the state of Maryland (the
"Underwriter") and UMB BANK, N.A., a national banking association
organized and existing under the laws of the United States of
America (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Company is a corporation and registered
investment company under the Investment Company Act of 1940, as
amended (the "Act"), formed under the laws of the state of
Maryland;
WHEREAS, the Company desires to offer for sale a
minimum of 333,334 and a maximum of 1,000,000 shares of its
common stock, $.00001 par value per share, (the "Shares");
WHEREAS, the Company has filed a Registration Statement
on Form N-2 (the "Registration Statement") under the Securities
Act of 1933, as amended, and the Act and has made filings with
certain state securities commissions under applicable state "blue
sky" laws relating to the issuance and sale of the Shares;
WHEREAS, in compliance with the terms of the proposed
offering set forth in the Prospectus and Statement of Additional
Information contained in the Registration Statement as in effect
from time to time (collectively the "Prospectus"), the Company
will establish a segregated escrow account with the Escrow Agent
(the "Escrow Account") into which subscription application
payments (the "Subscription Proceeds" or "Subscriptions")
submitted by subscribers to purchase Shares (the "Applicants")
will be deposited;
WHEREAS, the offering period for Subscriptions will
begin on the initial date of offering of the Shares to the
public, which date will be certified in writing to the Escrow
Agent by the Underwriter, and will terminate sixty (60) days
thereafter, unless the Underwriter, at its sole discretion, shall
decide to extend the termination date of the offering for an
additional period of up to thirty (30) days, (the initial
offering period and any extension thereof hereinafter referred to
as the "Offering Period");
WHEREAS, upon the receipt by the Escrow Agent of not
less than the minimum amount of Subscription Proceeds the Escrow
Agent shall notify the Underwriter and deliver the
Subscription Proceeds to the order of the Company. The Escrow
Agent shall continue to receive and deliver any Subscription
Proceeds to the Company until the end of the Offering Period, on
which date the Escrow Account shall terminate (the "Closing
Date"); and
WHEREAS, the Escrow Agent has agreed to act as escrow
agent in connection with and under this Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained, the parties
hereto hereby agree as follows:
l. Until the Closing Date, the Escrow Agent shall act as
escrow agent hereunder and agrees to receive and hold the
Subscriptions in accordance with this Agreement.
2. All Subscriptions received and not rejected by the
Underwriter on behalf of the Company pursuant to the
Prospectus during the Offering Period shall be transmitted
directly to the Escrow Agent by 12:00 p.m. (noon) of the next
business day after the receipt thereof by the Underwriter,
and shall be deposited by the Escrow Agent in the Escrow
Account. In addition, the Underwriter shall deliver to the
Escrow Agent names, addresses and a Form W-9 for each
Applicant and such other information regarding any Applicant
as the Escrow Agent may from time to time request in writing.
The Escrow Agent shall provide the Underwriter a statement of
the assets held and transactions of the Escrow Account as the
Underwriter shall from time to time request in writing. In
the event that any Subscription is delivered to the Escrow
Agent prior to the receipt of such by the Underwriter, the
Escrow Agent shall deliver the same to the Underwriter.
3. Notwithstanding the provisions of Paragraph 2 hereof,
if at any time the Underwriter shall provide written notice
to the Escrow Agent that any Subscription is invalid or
unacceptable, in whole or in part, or that any Subscription
deposited with the Escrow Agent cannot be lawfully accepted,
in whole or in part, the Escrow Agent shall promptly (within
not more than ten (10) days) deliver to the Applicant
submitting such Subscription, without deduction but with
income thereon as earned, if any, the Subscription Proceeds
(or portion thereof) which has been rejected.
4. Upon acceptance of any Subscription and the deposit of
the related Subscription Proceeds into the Escrow Account,
the Underwriter shall provide prompt written notice to the
Applicant of such acceptance.
5. Promptly upon the Escrow Agent's receipt of
Subscription Proceeds from the Underwriter, the Escrow Agent
shall proceed to collect upon such payment instrument(s).
All such collection efforts shall be subject to the Escrow
Agent's usual collection procedures; provided, however, that
if any payment instrument at any time delivered to Escrow
Agent hereunder shall be returned to Escrow Agent as being
uncollectable, Escrow
Agent shall attempt a second time to collect such item before
returning such item to Underwriter as uncollectable. Subject
to the foregoing, Escrow Agent shall promptly give written
notice to Underwriter of any uncollected item delivered to
Escrow Agent under this Agreement. Escrow Agent shall not be
required or have a duty to take legal action to enforce
payment of any uncollected item delivered to it under this
Agreement. The Escrow Agent shall have no duty or obligation
to collect (except for collection in the ordinary course of
its banking business) any amounts at any time due in respect
of any Subscriptions, and shall not be responsible for any
defaults thereunder or hereunder by any other party, or for
the application of any funds received by it from the
Applicants after payment of such funds by it to the Company
as herein provided. In the event that Escrow Agent shall
have disbursed Subscription Proceeds to the Company or
returned such monies to the Applicant in accordance with this
Agreement with respect to any payment instrument and
subsequently it shall be determined that such item shall be
uncollectable, the Company shall upon Escrow Agent's demand
reimburse it for the amount so disbursed.
6. Escrow Agent shall invest all Subscription Proceeds
deposited with it hereunder, and earnings thereon, if any, in
obligations of the United States Government or any agency
thereof or in bank money market deposits or funds as the
Company shall from time to time direct in writing, without
liability or responsibility to the Escrow Agent therefor.
7.The Underwriter agrees to certify in writing to the
Escrow Agent the initial date of offering of the Shares to
the public. The Offering Period may be extended for a period
of up to thirty (30) days at the sole discretion of the
Underwriter, and such extension shall be effective upon
receipt by the Escrow Agent of a written notice of the
Underwriter, provided the receipt of such notice is prior to
the termination of the Escrow Account.
8. If Subscriptions for not less than Five Million
Dollars ($5,000,000.00) of Shares are received andaccepted by
the Underwriter and not less than Five Million Dollars
($5,000,000.00) in Subscription Proceeds have been delivered
to the Escrow Agent, have cleared the banking system and are
on deposit in available funds with the Escrow Agent , the
Escrow Agent will notify the Underwriter and pay over to the
order of the Company all of the Subscription Proceeds then on
deposit in the Escrow Account, together with all interest or
other income, if any, earned on the Subscription Proceeds
held hereunder. Following such payment the Escrow Agent
shall continue to receive Subscription Proceeds as provided
in Paragraph 2 hereof, and upon receipt of available funds on
or before the Closing Date, shall deliver such Subscription
Proceeds, from time to time, to the order of the Company. On
the Closing Date all duties and responsibilities of the
Escrow Agent shall cease and terminate, including without
limitation, the obligation to receive Subscription Proceeds
and deliver same to the Company.
9. If Subscription Proceeeds for not less than the Five
Million Dollars ($5,000,000.00) of Shares have not been
received by the Escrow Agent in available funds
by 5:00 p.m. Central Time on the final day of the Offering
Period, Subscription Proceeds held hereunder by the Escrow
Agent will be returned by the Escrow Agent to the Applicants
with interest thereon as earned, if any, promptly following
the expiration of the Offering Period.
10. Prior to delivery to it of the Subscription Proceeds,
the Company shall have no title, right, claim, lien or any
other interest in the funds held in escrow hereunder, and
such funds shall under no circumstances be available to the
Company or its creditors for payment or reimbursement for
liabilities or indebtedness.
11. It is understood and agreed, further, that the Escrow
Agent shall:
A. be under no duty to deliver any
Subscription, or to pay and transfer any monies
hereunder, unless the same shall have been first
received by the Escrow Agent pursuant to the provisions
of this Agreement;
B. be under no duty to enforce payment of
any Subscription which is to be paid to and held by it
hereunder;
C. be under no duty to accept any
information from any person or entity other than the
Underwriter and the Company, or their designated
agents, and then only to the extent and in the manner
expressly provided for in this Agreement;
D. act hereunder as a depository only and
be protected in acting upon any Subscription and the
information contained therein without responsibility to
determine the validity or sufficiency of the same, and
be protected in acting upon any other notice, opinion,
request, certificate, approval, consent or other paper
delivered to it and represented to it to be genuine and
to be signed by the proper party or parties;
E. be deemed conclusively to have given and
delivered any notice required to be given or delivered
hereunder if the same is in writing, signed by any one
of its authorized officers and (1) mailed, by
registered or certified mail, postage prepaid, or (2)
by hand delivery, in a sealed wrapper, addressed to the
Underwriter (with a copy mailed to the Company at the
address set forth in Paragraph 11 hereof) and manually
receipted for by the Underwriter;
F. be indemnified and held harmless by the
Company and the Underwriter, jointly and severally,
against any claim made against it by reason of its
acting or failing to act in connection with any of the
transactions contemplated hereby and against any loss,
liability, cost, suit or expense, including the expense
of defending itself against any claim of liability it
may sustain in carrying out the
terms of this Agreement except such claims which
are occasioned by its gross negligence or willful
misconduct;
G. have no liability or duty to inquire
into the terms and conditions of the Prospectus,
Subscription Agreement, Subscription or any of the
exhibits annexed thereto, and that its duties and
responsibilities shall be limited to those expressly
set forth under this Agreement and are purely
ministerial in nature;
H. be permitted to consult with counsel of
its choice, including in-house counsel, and shall not
be liable for any action taken, suffered or omitted by
it in good faith in accordance with the advice of such
counsel, provided, however, that nothing contained in
this Subparagraph H, nor any action taken by the Escrow
Agent, or of any such counsel, shall relieve the Escrow
Agent from liability for any claims which are
occasioned by its gross negligence or willful
misconduct, all as provided in Subparagraph F above;
I. not be bound by any amendment or
revocation of this Agreement, unless the same shall be
in writing and signed by all of the parties to this
Agreement;
J. be entitled to refrain from taking any
action other than to keep all property held by it in
escrow hereunder until it shall be directed otherwise
in writing by the Underwriter and the Company, or by a
final judgment by a court of competent jurisdiction,
provided that it shall be uncertain as to its duties
and rights hereunder (including, without limitation,
the receipt of conflicting instructions or directions
from any of the parties hereto);
K. have no liability for following the
instructions herein contained or expressly provided
for, or written instructions given, by the Underwriter
or the Company;
L. have the right, at any time, to resign
hereunder by giving written notice of its resignation
to the Underwriter at its address as set forth in
Paragraph 11 hereof, at least thirty (30) days before
the date specified for such resignation to take effect,
and upon the effective date of such resignation:
(l) all cash and other funds and all
other property then held by the Escrow Agent
hereunder shall be delivered by it to such successor
Escrow Agent as may be designated in writing by the
Sponsor, whereupon the Escrow Agent's obligations
hereunder shall cease and terminate;
(2) if no such successor Escrow Agent has
been designated by such date, all obligations of the
Escrow Agent hereunder shall, nevertheless, cease
and
terminate, and the Escrow Agent's sole
responsibility thereafter shall be to keep all
property then held by it and to deliver the same to
a person designated in writing by the Underwriter or
in accordance with the directions of a final order
or judgment of a court of competent jurisdiction;
yet, if no such designation, order or judgment is
received by Escrow Agent within thirty (30) days
after its giving such resignation notice, it is
unconditionally and irrevocably authorized and
empowered to petition a court of competent
jurisdiction for directions.
M. be reimbursed by the Company at the
termination of the escrow for all reasonable costs,
fees, charges, expenses, disbursements and advances
(including, but not limited to, acceptance and
administration fees and expenses as provided in Exhibit
B hereto, as well as legal, consultant and advisor fees
and charges) incurred or made by it in accordance with
any provision of this Agreement, or as a result of the
acceptance of this Agreement.
12. All deliveries and notices to the Escrow Agent shall be
effective upon receipt by the Escrow Agent and shall be in
writing and sent or delivered to:
UMB BANK, N.A.
ATTN: Corporate Trust Division
000 Xxxxx Xxxxxx
P. O. Xxx 000000
Xxxxxx Xxxx, XX 00000-0000
Any notice given on behalf of the Company or the
Underwriter shall be signed by one or more of the officers of
the Company or the Underwriter, as the case may be, and shall
be sufficient for all purposes hereunder.
All deliveries and notices hereunder to the Company and
the Underwriter shall be in writing and shall be sent or
delivered to:
The Company at:
DEM, Inc.
ATTN: Xxxxxx X. Xxxxxxx, Xx.
The World Trade Center - Baltimore
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
The Underwriter at:
The Xxxxxxx Company
ATTN: Xxxxxx X. Xxxxxxx, Xx.
The World Trade Center - Baltimore
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
A copy of each delivery, notice and/or report, whether
given by the Underwriter, the Company or the Escrow Agent,
shall be simultaneously sent or delivered to each of the
other parties to this Agreement.
13. Nothing in this Agreement is intended to or shall
confer upon anyone other than the parties hereto any legal or
equitable right, remedy or claim. This Agreement shall be
construed in accordance with the laws of the State of
Missouri and may be amended or resolved only by a writing
executed by the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by or
on behalf of each of the parties hereto as of the day and
year first above written.
DEM, INC., the Company
By:/s/ XXXXXX X. XXXXXXX, XX.
Title:
President___________________
THE XXXXXXX COMPANY,
the Underwriter
By:/s/ XXXXXX X. XXXXXXX, XX.
Title: President__________________
UMB BANK, N.A., Escrow Agent
By: /s/ XXXXX BRAMWELL_______
Title: Vice
President_______________
fdds0005
EXHIBIT B
Acceptance and Annual Fee - review
escrow agreement and establish and
maintain account $1,000.00
Transaction Fees
(a) per subscriber deposit
2.00
(b) per subscriber interest payment
3.00
(c) per subscriber return of
subscription amount if
minimum amount not sold
2.00
(d) per subscriber subscription rejection
10.00
(e) per returned check
10.00
(f) per Form 1099 (Int., B or Misc.)
1.00
In addition to the specified fees, all expenses related to the
administration of the Agreement and the Escrow Account (other
than normal overhead expenses of the regular staff) such as, but
not limited to, travel, postage, shipping, courier, telephone,
facsimile, supplies, legal fees, accounting fees, etc., will be
reimbursable. The acceptance and annual fee will be payable by
DEM, Inc. at the termination of the escrow. Other fees and
expenses will be billed as incurred or at the termination of the
escrow.
