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ESCROW DEPOSIT AGREEMENT
THIS ESCROW DEPOSIT AGREEMENT is made and entered into as of the
_____ day of November, 1997 by and among COMMERCE BANK, N.A., a national
association, (the "Bank-Escrowee"), XXXXXX X. XXXXX & Co., L.P., a Missouri
limited partnership (the "Depositor-Agent"), and COMMUNITY INVESTMENT PARTNERS
III L.P., LLLP, a Missouri limited partnership registered as a Missouri limited
liability limited partnership (the "Issuer-Partnership").
RECITALS:
1. The Issuer-Partnership, a limited partnership organized under the
Missouri Revised Uniform Limited Partnership Act and registered as a limited
liability limited partnership under the Missouri Uniform Partnership Law and
the Missouri Revised Uniform Limited Partnership Act, to invest primarily in
venture capital and other investments, proposes to sell up to 200,000 units of
limited partnership interests in the Issuer-Partnership (the "Units") at a
price of $12.50 each (with each such Unit subject to the call of an additional
Capital Contribution in an amount not to exceed $12.50 per Unit) as described
in a Registration Statement on Form N-2 (No. 333-34363) filed with the
Securities and Exchange Commission (the "Commission") relating to the
Issuer-Partnership and the Units (the "Registration Statement").
2. In connection with the proposed sale of such Units, Xxxxxx X.
Xxxxx & Co., L.P., c/o 00000 Xxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx 00000 (the
"Depositor-Agent"), has been named as the proposed agent for the sale of such
Units.
3. The Depositor-Agent proposes to sell the Units on a "best efforts"
basis.
4. In compliance with an Agency Agreement among the
Issuer-Partnership, CIP Management, Inc., CIP Management L.P., LLLP (the
"Managing General Partner"), and the Depositor-Agent (the "Agency Agreement")
and Rule 15c2-4 under the Securities Exchange Act of 1934, the Partnership and
the Depositor-Agent desire that subscription payments from the sale of the
Units be deposited in escrow with the Bank-Escrowee until certain terms and
conditions have been satisfied.
5. The Bank-Escrowee desires to act as escrow agent in connection
with the subscription payments.
6. Such offering will terminate not later than March 31, 1998
(the "Offering Termination Date"). If subscriptions acceptable to the Managing
General Partner for 40,000 Units are not received by December 19, 1997, as
may be extended in the discretion of the Managing General Partner (but not to
be extended later than the Offering Termination Date), no units will be sold
and the subscribers' funds will be refunded promptly with any interest earned
thereon. If acceptable subscriptions for at least 40,000 Units have been
received by December 19, 1997 (or such later date to which it may be
extended), and certain other conditions are met, there will be at least one
closing of the sale of Units at such time and for the
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number of units as the Partnership and the Depositor-Agent determine (the
"Initial Closing"); provided, however, that the Initial Closing will take place
for no fewer than 40,000 Units.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ESCROW ACCOUNT
Section 1.1 Agent/Account. The Bank-Escrowee agrees to act as escrow
agent in receiving and disbursing any proceeds from the sale of the Units in
accordance with the terms of this Agreement and to establish an account for
such purposes (the "Escrow Account").
Section 1.2 Delivery of Subscription Payments. The Depositor-Agent
will deliver to the Issuer-Partnership all copies of the subscription
agreements and to the Bank-Escrowee the subscription payments for Units in the
form of checks drawn by the subscribers, payable to the order of Commerce Bank,
N.A./CIP III-Escrow Account". Each subscription payment shall be delivered by
the Depositor-Agent by noon of the next business day following its receipt by
the Depositor-Agent. The Bank-Escrowee shall promptly return to the Depositor-
Agent any checks made payable other than as stated above. Concurrently with the
delivery of the subscription payments, the Depositor-Agent shall deliver to the
Bank-Escrowee a statement of:
(a) the name and address of each subscriber whose payment is then
being delivered;
(b) the amount received from each such subscriber;
(c) the number of Units which each such person has agreed to
purchase; and
(d) the taxpayer identification number of such person.
Section 1.3 Collection and Deposit. The Bank-Escrowee shall accept
each subscription check for credit and forward such check for collection. Upon
collection of the proceeds of each such check, the Bank-Escrowee shall deposit
the collected proceeds in the Escrow Account and make a written account of the
subscriber's name and address, tax identification number, number of Units
purchased, and date of and amount of consideration received. Upon notice of
any change of address whether by notification by the subscriber or by return of
mail addressed to the subscriber, the Bank-Escrowee will notify the
Issuer-Partnership and Depositor-Agent of any change of address or lack of
correct address and likewise the Issuer-Partnership and Depositor-Agent shall
inform the Bank-Escrowee of any such information acquired by the
Issuer-Partnership or the Depositor-Agent. If any check is returned unpaid to
the Bank-Escrowee, the Bank-Escrowee shall promptly return such check along
with the respective subscription information to the Depositor-Agent and
simultaneously, notify the
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Issuer-Partnership and do such other things in respect thereto to effect
collection of such check as may be reasonably requested by the
Issuer-Partnership, provided the Issuer-Partnership indemnifies the
Bank-Escrowee for all expenses and liabilities incurred thereby.
ARTICLE II
INVESTING OF FUNDS
Section 2.1 Investments. From time to time after the first deposit
of any funds pursuant to Article I hereof and until such time as all funds in
the Escrow Account have been disbursed pursuant to Article III hereof, the
Depositor-Agent shall instruct the Bank-Escrowee in writing to, and the
Bank-Escrowee thereupon shall, invest such funds being then held by the
Bank-Escrowee in any of the following securities:
(a) short-term direct obligations of the United States of America
or any instrumentality thereof for the payment of which the full faith and
credit of the United States of America is pledged;
(b) short-term bank time deposits or certificates of deposit of
banks or trust companies (including the Bank-Escrowee) organized under
the laws of the United States of America or any state thereof and having
combined capital and surplus of at least $5,000,000, provided, that the
maturity date of any such deposit or certificate does not extend beyond
the anticipated contingency occurrence date, unless such instrument can
be readily sold or otherwise disposed of for cash by the time the
contingency occurs without any dissipation of the offering proceeds
invested; and/or
(c) bank money market accounts, which are invested in the
foregoing.
Except as provided above, the Bank-Escrowee is under no duty to invest funds
deposited in the Escrow Account. If no investment instructions are received by
the Bank-Escrowee, the Bank-Escrowee shall invest in bank money market
accounts.
Section 2.2 Redemption or Sale. The Bank-Escrowee shall present for
redemption any obligation so purchased or sell such obligation upon the
direction of the Depositor-Agent.
Section 2.3 Part of Escrow Account. Obligations so purchased as an
investment of funds of the Escrow Account shall be deemed at all times to be a
part of the Escrow Account, and the interest accruing thereon shall be credited
to the Escrow Account for the account of the subscriber whose funds were thus
invested. If the Depositor-Agent so directs, the Bank-Escrowee shall make any
and all investments permitted by this paragraph through its own bond or
investment department.
Section 2.4 Loss. Neither the Bank-Escrowee nor the
Issuer-Partnership will be responsible for any loss suffered from any
investment.
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ARTICLE III
DISTRIBUTION OF FUNDS
Section 3.1 Closing. In the event that at least 40,000 Units have
been subscribed for prior to the Initial Closing and payments in the amount of
$12.50 for each Unit subscribed for shall have been deposited in the Escrow
Account in collected funds, the parties hereto shall proceed as follows:
a. Notice of Closing. The Depositor-Agent shall advise the
Bank-Escrowee in writing that all conditions precedent as to closing by
named subscribers have been satisfied, and the Depositor-Agent shall
arrange for a closing as to such named subscribers in accordance with the
Agency Agreement (a "Closing" or a "Closing Time"). The Depositor-Agent
shall give verbal notice of Closing Time, followed by written notice, to
the Bank-Escrowee at least three business days prior to such Closing
Time.
b. Application of Funds. At each Closing Time, the Bank-Escrowee
shall disburse to the Issuer-Partnership the cash representing collected
funds then being held in the Escrow Account for the account of the
subscribers for whose purchase of Units such Closing is being held in
accordance with the written direction of the Depositor-Agent, at which
time such amounts so applied shall no longer be a deposit or deposits
under this Agreement. In the event the funds have been invested on
behalf of the subscribers pursuant to Section 2.1, the interest income
shall be disbursed in accordance with Section 3.4.
For purposes of this Section 3.1, the term "collected funds" shall
mean all funds received by the Bank-Escrowee which have cleared normal banking
channels and are in the form of cash.
Section 3.2 No Closing. In the event that on or prior to fifteen
(15) business days after the Offering Termination Date, no Closing contemplated
by Section 3.1 above shall have been consummated, then the Depositor-Agent shall
promptly so advise in writing the Bank-Escrowee ("Notice of No Closing") and
authorize and direct in writing the Bank-Escrowee to return as promptly as
practicable, the funds held in the Escrow Account to or for the accounts of all
of the subscribers at their respective addresses provided pursuant to Section
1.2. In each case the Bank-Escrowee shall return such funds with interest, if
any, allocated as provided in Section 3.4.
Section 3.3 Rejected Subscription. In the event that before a
Closing Time with respect to any subscriber the Bank-Escrowee shall have
received written advice from the Depositor-Agent that such named subscriber has
been rejected by the Partnership, or that prior to such Closing Time it is
determined by the Partnership that such named subscriber does not meet the
suitability standards required by the Partnership for investment in the Units,
the Bank-Escrowee shall, upon receipt of the written direction of the
Depositor-Agent ("Notice of Rejection"), return funds deposited pursuant to
Section 1.2 to such subscribers at their respective
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addresses provided pursuant to Section 1.2. The Bank-Escrowee shall return
such funds without deduction and with interest earned to the date such notice
is received by the Bank-Escrowee in accordance with Section 3.4.
Section 3.4 Interest Allocation. In the event that the funds have
been invested on behalf of the subscribers pursuant to Section 2.1, the
Bank-Escrowee shall at Closing Time, or after receipt of Notice of No Closing
or Notice of Rejection return to such subscribers a pro rata portion (allocated
as set forth below) of the interest or income earned thereon, and within three
(3) business days thereafter send to the Issuer-Partnership a check register
indicating the amounts disbursed and the payees. Such interest and income
shall be allocated among the subscribers referred to in the preceding sentence
in proportion to the amounts of their respective subscription funds and the
lengths of time their subscription amounts were on deposit. The Bank-Escrowee
shall provide to each subscriber, before January 31, 199___, a Form 1099
indicating the interest or income earned on such investment during 199___.
ARTICLE IV
LIABILITIES AND FEES
Section 4.1 Liabilities.
(a) In the event that the Bank-Escrowee has disbursed funds in
accordance with Article III, then, as to each such named subscriber, the
Bank-Escrowee shall be relieved of all liabilities in connection with the
escrow deposits provided for herein with respect to such named
subscriber.
(b) In any event, the obligations and liabilities of the
Bank-Escrowee hereunder will terminate as of the Offering Termination
Date, and as to any funds remaining in the Escrow Account the
Bank-Escrowee shall be entitled to refrain from taking any action until
it has been directed otherwise in writing by the Depositor-Agent, or by a
final judgment of a court of competent jurisdiction.
Section 4.2 Fees. The Bank-Escrowee shall not receive any fee in
connection with its services rendered under this Escrow Deposit Agreement,
except for such fees specified in the letter from the Bank-Escrowee dated
_______, 1997. Payments to be made pursuant to this section shall be made by
the Issuer-Partnership, in accordance with the provisions of such letter. In
the event that the funds are returned to the subscribers because at least
40,000 Units were not subscribed for by the Initial Closing, as contemplated by
Section 3.2 above, the Bank-Escrowee's fee will be paid to the Bank-Escrowee on
behalf of the Issuer-Partnership, by the Managing General Partner of the
Issuer-Partnership on or prior to five business days after the Initial Closing.
ARTICLE V
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MISCELLANEOUS
Section 5.1 Duties of Bank-Escrowee. It is understood and agreed,
further, that the Bank-Escrowee shall:
(a) be under no duty to enforce payment of any purchase price
which is to be paid to and held by it hereunder;
(b) be under no duty to accept information from any person other
than the Issuer-Partnership and the Depositor-Agent and then only to the
extent and in the manner provided in this Agreement;
(c) be protected in acting upon any notice, opinion, request,
certificate, approval, consent or other paper believed by it to be
genuine and to be signed by the proper party or parties;
(d) 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 (i) mailed, by
registered or certified mail, postage prepaid, or (ii) hand delivered, in
a sealed wrapper, manually receipted for by the Depositor-Agent or the
Issuer-Partnership, addressed to the Depositor-Agent or the
Issuer-Partnership, respectively, at the following address:
Depositor-Agent:
Xxxxxx X. Xxxxx & Co., L.P.
00000 Xxxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Issuer-Partnership:
Community Investment Partners III L.P., LLLP
c/o Xxxxxx Xxxxx
00000 Xxxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
(e) have no liability, or duty to inquire into the terms and
conditions of this Agreement, the Agency Agreement, the Registration
Statement or any of the exhibits annexed thereto, and that its duties
under this Agreement are purely ministerial in nature;
(f) be entitled to refrain from taking any action other than
to keep all property held by it in escrow until it shall be directed
otherwise in writing by the Depositor-Agent, or by a final judgment by a
court of competent jurisdiction, provided that it shall be uncertain as
to its duties and rights hereunder;
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(g) have no liability for following the instructions herein
contained or expressly provided for, or written instructions given by the
Depositor-Agent.
Section 5.2 Indemnification. Depositor-Agent agrees to indemnify and
hold harmless the Bank-Escrowee for 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 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 bad faith, gross negligence, willful misconduct or any other
breach of fiduciary duty.
Section 5.3 Advice of Counsel. The Bank-Escrowee shall be permitted
to consult with counsel of its choice, who may be counsel to the Depositor-Agent
or Issuer-Partnership or who may be 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 Section, nor any action taken by the Bank-Escrowee, or of any counsel,
shall relieve the Bank-Escrowee from liability for any claims which are
occasioned by its bad faith, gross negligence or willful misconduct or any
other breach of its fiduciary duty, all as provided in Section 5.2 above.
Section 5.4 Modification etc. This Agreement cannot be modified or
amended except in a writing signed by the parties hereto. In addition, the
Bank-Escrowee is not bound by any termination, cancellation, rescission or
supersession of this Agreement, unless the same shall be in writing and signed
by the parties hereto.
Section 5.5 Resignation. The Bank-Escrowee shall have the right,
at any time, to resign hereunder by giving written notice of its resignation
to the Depositor-Agent at its address set forth above, at least 30 business
days prior to the date specified for such resignation to take effect, and upon
the effective date of such resignation:
(a) all cash and other payments and all other property then
held by the Bank-Escrowee hereunder shall be delivered by it to
such person as may be designated in writing by the Depositor-Agent,
whereupon the Bank-Escrowee's obligations hereunder shall cease and
terminate;
(b) if no such person has been designated by such date, all
obligations of the Bank-Escrowee hereunder shall, nevertheless, cease and
terminate; and
(c) the Bank-Escrowee'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 Depositor-Agent or in accordance with
the directions of a final order or judgment of a court of competent
jurisdiction and the provisions of Sections 5.1(f), 5.2 and 5.6 shall
remain in effect.
Section 5.6 Expenses. The Bank-Escrowee shall be reimbursed by the
Depositor-Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provisions of this
Agreement except any such
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expenses, disbursements or advances as may be attributable to its gross
negligence, willful misconduct or bad faith or any other breach of fiduciary
duty.
Section 5.7 Continuation of Offer. In the event the
Issuer-Partnership and the Depositor-Agent shall agree to extend the Initial
Closing beyond the close of business on December 19, 1997, the Depositor-Agent
shall notify the Bank-Escrowee of such fact in writing specifying the date and
time to which the Offering Period shall be continued, which date shall be no
later than March 31, 1998.
Section 5.8 Notices. All requests, notices, advices or other
communications hereunder to the Bank-Escrowee required to be in writing shall
be given either (a) by first class mail, postage prepaid, or (b) by hand
delivery in a sealed envelope, in each case addressed as follows:
Commerce Bank, N.A.
Corporate Trust Department, 6th Floor
000 Xxxxxx, XXXX-0
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention : Xxx Xxxxxxxx
Section 5.9 Third Party Rights/Governing Law. 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
governed by, and its provisions construed in accordance with, the laws of the
State of Missouri and may be modified only in writing.
Section 5.10 Additional Provisions. The terms and provisions of
Exhibit A are hereby incorporated herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Deposit
Agreement to be executed as of the date first above written by their respective
officers thereunder duly authorized.
COMMERCE BANK, N.A.
Bank-Escrowee
By
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Name: Xxxxxxx X. Xxxx
Title: Vice President
XXXXXX X. XXXXX & CO., L.P.
Depositor-Agent
By
------------------------------
Name:
-------------------------
Title:
-------------------------
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP
By: CIP Management L.P., LLLP
Managing General Partner
By: CIP Management, Inc.
its Managing General Partner
By:
------------------------
Xxxxxx X. Xxxxxxxxx
President
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EXHIBIT A
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GENERAL TERMS AND CONDITIONS FOR ESCROW AGREEMENT
The following provisions shall be part of the Escrow Agreement to
which this Exhibit is attached:
1. The duties of the Bank-Escrowee shall be as expressed under the
Agreement and the Bank-Escrowee 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 the Bank-Escrowee shall
not be liable except in the event of its gross negligence or willful
misconduct.
2. The Bank-Escrowee 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 (the
"Escrow Account") for its fees, expenses and advancements. The
Bank-Escrowee 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 principal and not those of the Bank-Escrowee.
4. Unless specifically required by the Agreement, the
Bank-Escrowee 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. Any notice to or demand upon the Bank-Escrowee shall be given
by being deposited, certified mail, postage prepaid, in the United States
mail, addressed (until another address is filed in writing) to the
Bank-Escrowee as follows:
Commerce Bank, N.A.
Corporate Trust Department, 6th Floor
000 Xxxxxx, XXXX-0
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxx
6. The Bank-Escrowee may execute any of the duties under the
Agreement by or through agents or receivers.
7. The Bank-Escrowee shall not be required to take notice or be
deemed to have notice of any default or other fact or event under the
Agreement unless the Bank-Escrowee shall be specifically notified in
writing of the default, fact or event.
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8. In the event the Bank-Escrowee 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 the
Bank-Escrowee 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.
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