EXHIBIT 10.1
ATEL CAPITAL EQUIPMENT FUND VIII, LLC
ESCROW AGREEMENT
___________, 1998
U. S. Bank
San Francisco, California
Gentlemen:
ATEL Capital Equipment Fund VIII, LLC, a California limited liability
company (the "Fund"), proposes to make a public offering through ATEL Securities
Corporation (the "Dealer Manager") and other registered broker-dealers (the
"Selected Dealers") of not to exceed 15,000,000 of its units of limited
liability company member interest (the "Units") at $10 per Unit. The offering
shall be conducted on a best-efforts all-or-none basis for the first 120,000
Units and thereafter on a best-efforts basis for the remaining Units. The
offering shall commence at such time as the Fund's registration statement on
Form S-1 with respect thereto (the "Registration Statement") is declared
effective by the Securities and Exchange Commission ("SEC") which is currently
expected to occur on or about ________________, 1998. We are requesting that you
consent to act as Depository in connection with the offering.
As Depository, you shall receive, hold in escrow and disburse
subscription funds in accordance with the terms and conditions set forth in this
letter and in the "Plan of Distribution" section of the prospectus included in
the Registration Statement, as amended or supplemented (such prospectus in the
form first filed with the SEC pursuant to Rule 424 under the Securities Act of
1933, as amended, and any supplement or amendment to such prospectus thereafter
so filed pursuant to such Rule 424 are hereinafter collectively called the
"Prospectus").
Upon request of ATEL Financial Corporation (the "Manager") or the
Dealer Manager, you shall provide reports to the Fund and the Dealer Manager as
to the number and amount of subscriptions received by you.
The terms and conditions of your engagement as Depository shall be as
follows:
1. On or before the date of commencement of the offering you shall
establish an interest-bearing escrow account which shall be entitled "ACEF VIII
Escrow Account" (the "Escrow Account"). The Dealer Manager and Selected Dealers
shall instruct subscribers to
atel8-1/esc.1
1
make checks payable to the order of the Depository. You shall return any checks
received that are made payable to a party other than the Depository to the
Dealer Manager or Selected Dealer who submitted the check.
2. The Dealer Manager and the Selected Dealers shall promptly deliver
all monies received for the payment of Units to the Depository for deposit in
the Escrow Account. You shall receive and hold deposits of subscription funds in
the amount of $10 per Unit. The minimum subscription shall be 200 Units ($2,000)
for IRAs and Xxxxx Plans (as those terms are defined in the Prospectus) and 250
Units ($2,500) for all others, subject, however, to such higher minimum
subscriptions as are described in the Prospectus as being applicable in certain
circumstances. Each deposit shall be accompanied by a Subscription Agreement in
the form of that attached as Exhibit C to the Prospectus identifying by name and
address the subscriber whose funds are deposited and the amount of the funds
deposited by such subscriber.
3. Deposits in the form of checks which fail to clear the bank upon
which they are drawn shall be returned by the Depository to the subscriber,
together with the copy of the Subscription Agreement. You shall concurrently
furnish to the Manager and the Dealer Manager a copy of any such Subscription
Agreement and check so returned. The Depository shall have no further liability
therefor.
If the Fund rejects any subscription for which the Depository has
already collected funds, the Depository shall promptly issue a refund check to
the rejected subscriber. If the Fund rejects any subscription for which the
Depository has not yet collected funds but has submitted the subscriber's check
for collection, the Depository shall promptly issue a check in the amount of the
subscriber's check to the rejected subscriber after the Depository has cleared
such funds. If the Depository has not yet submitted a rejected subscriber's
check for collection, the Depository shall promptly remit the subscriber's check
directly to the subscriber.
4. You shall place funds from the Escrow Account only in the following
interest-bearing accounts and short-term obligations as the Fund shall direct:
short-term United States government securities, including Treasury bills,
securities issued or guaranteed by United States government agencies,
certificates of deposit and time or demand deposits in banks and savings and
loan associations which are insured by United States government agencies or
deposits in members of the Federal Home Loan Bank System; provided, however,
that you shall not be required to place any such funds in a manner which is
inconsistent with the Prospectus. As Depository you shall not be liable for any
loss of interest in the event funds are withdrawn prior to maturity. Interest
accrued on subscription funds held in the Escrow Account shall not be an asset
of the Fund, but shall either (i) be paid to the respective
2
subscribers upon return of subscription proceeds to subscribers pursuant to
paragraph 5 of this Agreement in the event the Minimum Subscriptions (as defined
in paragraph 5) are not received prior to termination of the offering); or (ii)
be paid to the Fund upon release of subscription proceeds to the Fund for
disbursement by the Fund to subscribers, in either case to be divided among the
subscribers on a pro rata basis according to the respective numbers of days
between the time of deposit of their payments into the Escrow Account and the
release of such payments to the Fund or the return thereof to the subscribers,
and in either case with the amounts of interest allocated among subscribers to
be calculated by the Manager.
5. If and at such time as amounts in collected funds representing
subscriptions for not less than 120,000 Units shall have been deposited with you
under this Agreement (the "Minimum Subscriptions"), you shall so notify the
Manager and the Dealer Manager and upon receipt of written instructions from
each of the Fund and the Dealer Manager, you shall disburse to the Fund all
subscription funds held by you. If the offering is terminated prior to receipt
of collected funds representing the Minimum Subscriptions, or if collected funds
representing the Minimum Subscriptions have not been received on or before the
date which is one year from the date that the Registration Statement is declared
effective by the SEC, you shall promptly disburse all subscription funds to the
subscribers who transmitted them without deduction, penalty or expense to the
subscriber, and you shall advise the Fund and the Dealer Manager that you have
done so. The subscription funds returned to each subscriber shall be free and
clear of any and all claims of the Fund or any of its creditors. In any case,
all interest earned on subscription proceeds held by you shall be disbursed to
subscribers as provided in paragraph 4, with the Manager providing the
Depository with the calculation of interest payable to each subscriber. After
all disbursements under this Agreement have been completed, the escrow shall be
terminated; provided, however, that an agreement with a branch of Depository
will be effective upon escrow holder notifying the branch that the Minimum
Subscriptions have been reached and escrow is closed. The branch will agree to
facilitate transfers of subscription funds to the Fund in the event subscribers
make checks payable to the Depository after the date Minimum Subscriptions have
been received. The branch's sole function in such event shall be to endorse any
such subscription checks to the account of the Fund.
For purposes of the foregoing, the term "collected funds" shall mean
all funds received by the Depository which have cleared normal banking channels
and are in the form of cash.
Notwithstanding the foregoing, any and all subscription proceeds from
Pennsylvania investors deposited with the Depositary will be maintained in a
separate escrow account entitled "ACEF VIII Pennsylvania Escrow Account." The
terms of the escrow for
3
Pennsylvania subscriptions will be the same as provided for all subscription
proceeds under this Agreement, except as expressly stated in the following
paragraphs.
The amount of subscription proceeds held in the Pennsylvania Escrow
Account will not be counted in determining the Minimum Subscriptions defined
above in this Section 5, unless the Pennsylvania Minimum (as defined below) is
reached prior to the date that the amount of the Minimum Subscriptions is
received from non-Pennsylvania subscribers. The funds in the Pennsylvania Escrow
Account will be retained in such account, and will not be released to the Fund
upon the release of other escrowed funds at the time the Minimum Subscriptions
are reached under the Agreement unless the conditions for release of
Pennsylvania subscriptions set forth in this paragraph are first satisfied. If
and at such time as the Fund and the Dealer Manager deliver to the Depositary a
certificate, together with any other documentation that the Depositary may
reasonably require, which demonstrates that the Fund has received a total amount
in collected funds which, when added to the total amount held in the
Pennsylvania Escrow Account, represent aggregate subscriptions for not less than
750,000 Units (the "Pennsylvania Minimum"), and upon receipt of written
instructions from each of the Fund and the Dealer Manager, the Depositary shall
disburse to the Fund all subscription funds held in the Pennsylvania Escrow
Account.
If the offering is terminated prior to receipt of collected funds
representing the Pennsylvania Minimum, or if collected funds representing the
Pennsylvania Minimum have not been received on or before the date which is 120
days after the date hereof, the Fund and the Dealer Manager will notify each
Pennsylvania investor whose subscription proceeds are held in the Pennsylvania
Escrow Account within 10 calendar days following the end of such period that
such investor has the right to have the escrowed subscription proceeds returned
to the investor by notifying the Depositary that such return is desired within
10 calendar days after receipt of such notification of the right to such return.
The subscription proceeds held for investors so requesting a return, together
with any interest accrued thereon, will be promptly forwarded to such investors,
but in no event later than 15 calendar days following receipt by the Depositary
of the notice requesting such return.
Any subscription proceeds from Pennsylvania investors which remain in
the escrow after the expiration of the periods described in the foregoing
paragraph will be held until the earlier of the satisfaction of the Pennsylvania
Minimum condition or the termination of the offering; provided that at the end
of each subsequent 120-day period of the escrow, the investors whose
subscription proceeds remain in the escrow will be offered the return rights
described in the foregoing paragraph; and provided further that, if the
Pennsylvania Minimum is not satisfied within one year from the date that the
Registration Statement is declared
4
effective by the SEC, the Depositary shall promptly disburse all subscription
funds in the Pennsylvania Escrow Account to the subscribers who transmitted them
without deduction, penalty or expense to the subscriber, and the Depositary
shall advise the Fund and the Dealer Manager that the Depositary has done so.
Any such disbursements to Pennsylvania investors will be on the same terms as
all disbursements under this Agreement.
6. All fees, costs, and charges of the Depository shall be paid by the
Fund. Escrow fees shall be as set forth in Exhibit A hereto. No fees, costs,
charges, indemnification for damages suffered by the Depository or any monies
whatsoever shall be paid out of or chargeable to the funds on deposit in the
Escrow Account.
7. The Fund and the Dealer Manager hereby represent and warrant that
neither they nor any of their affiliates has made, nor will any such person
make, any representation which might imply that you in any way endorse or
recommend an investment in Units or guarantee any obligations relating to the
Units except those expressly undertaken as Depositary under this Agreement.
In consideration of your acting as Depository herein, it is agreed that
you shall in no case or event be liable for the failure of any of the conditions
of this Agreement or damage caused by the exercise of your discretion in any
particular manner, or for any other reason, except gross negligence or willful
misconduct with reference to the Escrow Account, and you shall not be liable or
responsible for your failure 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 you be liable or responsible for
forgeries or false personation.
It is further agreed that if any controversy arises between the parties
hereto or with any third person with respect to the subject matter of this
Agreement, or its terms or conditions, you are entitled at your option to refuse
to comply with any claim or demand, so long as such controversy continues and in
so doing you shall not be or become liable for damages or interest to any party
for your failure or refusal to comply with any conflicting or adverse demands.
You shall be entitled to continue so to refrain and refuse so to act until:
A. The rights of the adverse claimants have been finally
adjudicated in a court assuming and having jurisdiction of the parties
and the money, papers and property involved herein or affected hereby;
and/or
B. All differences shall have been adjusted by agreement and
you shall have been notified thereof in writing by all of the persons
interested.
5
In the event of any such controversy, you, in your discretion, may file
a suit in interpleader for the purpose of having the respective rights of the
claimants adjudicated, and deposit with the court all documents and property
held hereunder, and the Fund agrees to pay all costs and counsel fees incurred
by you in such action and said costs and fees shall be included in the judgment
in any such action.
You shall not be required to take or be bound by notice of any default
of any person, or to take any action with respect to such default involving any
expense or liability, unless notice of such default is given to you in writing
by the Manager and unless you are indemnified in a manner satisfactory to you
against such expense or liability.
You shall be protected in acting upon any notice, request, waiver,
consent, receipt or other paper or document reasonably believed by you to be
signed by the proper party or parties.
You may consult with legal counsel if any controversy arises, and you
shall incur no liability and shall be fully protected in acting in accordance
with the opinion and instructions of counsel.
In the event that you perform any service not specifically provided
hereinabove, or there is any assignment or attachment of any interest in the
subject matter of this Agreement or modification thereof, or any controversy
arises hereunder, or you are named a party to, or are required to intervene in,
any litigation pertaining to this escrow or the subject matter thereof, you
shall be reasonably compensated therefor and reimbursed for all costs and
expenses, including attorney's fees, occasioned thereby.
8. The Depository may resign upon the giving of 30 days' written notice
to the Manager and the Dealer Manager. The Depository may be removed by the
Manager and the Dealer Manager, acting jointly, upon 30 days' prior written
notice to the Depository. In such event, it shall be the obligation of the
Manager, with the consent of the Dealer Manager, to appoint a successor
Depository. The Depository shall turn over to such successor, at the direction
of the Fund, all funds, accounts and records held by the Depository pursuant to
this Agreement.
Any change in the aforesaid terms and conditions shall require the
consent of the Dealer Manager. In the event that any questions arise as to the
interpretation of such terms and conditions, you shall be authorized to rely
upon telegraphic or written instructions from the Dealer Manager and the
Manager.
If you consent and agree to act as Depository on the terms and
conditions set forth above, please so signify by causing a duly authorized
officer or employee to sign the enclosed copy of this letter as indicated below
and return it to the undersigned,
6
whereupon the terms and conditions of this letter shall constitute an agreement
between us. This agreement may be signed in separate counterparts, each of which
when so executed and delivered shall be an original for all purposes, but all
such counterparts shall constitute one and the same instrument.
Very truly yours,
ATEL CAPITAL EQUIPMENT FUND VIII, LLC,
a California limited liability company
By: ATEL Financial Corporation,
a California corporation,
Manager
By: ___________________________
X.X. Xxxx,
Chairman of the Board
ATEL SECURITIES CORPORATION,
a California corporation, Dealer Manager
By: ___________________________
Xxxx X. Xxxx,
President
We hereby consent to act as Depository on the terms and conditions set forth
above. Executed this ___ day of ________, 1998.
U. S. Bank
By: ____________________________
____________________________
(Name and Title)
7
