ESCROW AGREEMENT
Exhibit
10.2
THIS ESCROW AGREEMENT (the “Agreement”) is made and entered into as of May
11, 2009, by and among Commonwealth Income & Growth Fund VII, LP, a
Pennsylvania limited partnership (the “Company”),
and BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation (the “Escrow Agent”). This
Agreement shall be effective as provided in Paragraph 1
below.
WHEREAS,
Commonwealth Income & Growth Fund, Inc., a Pennsylvania corporation, is
serving as the general partner (the “General Partner”) of the
Company;
WHEREAS, the
Company proposes to offer and sell, on a
best-efforts basis through Commonwealth Capital Securities Corp. (the
“Placement Agent”) and selected broker-dealers who are registered with the Financial Industry
Regulatory Authority. or who are exempt from
broker-dealer registration (the Placement
Agent and such selected broker-dealers are hereinafter referred to
collectively as the “Soliciting Dealers”) up to
2,500,000 units of limited
partnership interest in the
Company at a Unit purchase price of
$20.00 (the “Units”) to investors
pursuant to the Company’s Prospectus,
dated
________, 2009; and
WHEREAS,
the Company has agreed that the
subscription price paid by subscribers for
Units will be refunded to such subscribers if an aggregate of 57,500
Units or more of the Company have not been sold and paid for on or before the
second anniversary of the effective date of the Company’s registration statement
registering the Units, (the “Closing Date”); and
WHEREAS,
in compliance with Rule 15c2-4 under the Securities Exchange Act of 1934, as
amended (“Rule 15c2-4”), the Company
desires to establish an escrow in which funds received from subscribers will be
deposited until the Closing Date or such earlier
date on which subscriptions for at least 57,500 Units have
been received, and the Escrow Agent is willing to serve as Escrow Agent
upon the terms and conditions herein set forth;
and
WHEREAS, in order to subscribe for Units, a subscriber
must deliver the full amount of its subscription, subject to volume discounts or
net of commission sales as applicable: (i) by check in U.S. dollars, (ii) by
wire transfer of immediately available funds in U.S. dollars, or
(iii) as otherwise agreed to by the Company (collectively, the
“Payment”).
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties covenant and agree as follows:
1.
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Establishment of
Escrow Account. On or prior to the commencement of the
offering of Units pursuant to the Memorandum, the Company shall establish
an escrow account with the Escrow Agent, which escrow account shall be
entitled “Escrow Account for the Benefit of Subscribers to Units of
Membership Interest of
CIGF7 (the
“Escrow Account”). This Agreement shall be effective on the
date monies and subscription documents received from subscribers for the
subscription of Units are first deposited into the Escrow Account. All monies deposited in the Escrow Account are
hereinafter referred to as the “Escrowed
Funds.” The Company will
cause the Soliciting Dealers to instruct
subscribers to make Payments for
subscriptions payable to the order of the Escrow Agent. Any
Payments received that are made
payable to a party other than the
Escrow Agent shall be returned to the Soliciting Dealer who submitted the
Payment. The Placement Agent may authorize certain Soliciting
Dealers which are “$250,000 broker-dealers” to instruct their customers to
make their Payments for Units subscribed for payable directly to the
Soliciting Dealer. In such case, the Soliciting Dealer will
collect the proceeds of the subscribers’ Payments and issue a Payment made
payable to the order of the Escrow Agent for the aggregate amount of the
subscription proceeds. The escrow period shall commence on
the effective date and shall terminate on the Closing
Date.
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2.
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Deposits into the
Escrow Account. The Company
will promptly deliver all monies received from subscribers for the payment of Units to the Escrow Agent for deposit in the Escrow Account. Until such time
that the Escrowed Funds are deliverable to the Company pursuant to the provisions of Paragraph 5(a) below, the Company or its designee also will deliver to the Escrow Agent a
written account of each sale, which account shall set forth, among other
things, the following information: (i) the
subscriber’s name and address, (ii)
the number of Units purchased by such
subscriber, and (iii) the amount paid by such subscriber for such
Units. The Company is aware and understands that, during the escrow period, it is not
entitled to any funds received into the Escrow Account, and no amounts
deposited in the Escrow Account shall become the property of the Company or any other entity, or be subject
to the debts of the Company or any
other entity.
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3.
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Collection
Procedure.
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(a)
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The
Escrow Agent is hereby authorized to forward each Payment for collection and, upon collection
of the proceeds of each Payment, to
deposit the collected proceeds in the Escrow
Account.
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(b)
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Any
Payment returned unpaid to the Escrow
Agent shall be returned to the Soliciting Dealer that submitted the
Payment. In such cases, the Escrow Agent will promptly notify the
Company of such
return.
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(c)
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In the event
that the Company, the
General Partner or any agent acting on behalf of the
Company rejects any subscription for Units
and the Escrow Agent has already collected funds for such subscription, the Escrow Agent
shall promptly issue a refund Payment
to the drawer of the Payment submitted by or
on behalf of the rejected or
withdrawing subscriber. If the Escrow Agent has not yet
collected funds for such subscription
but has submitted the Payment
relating to such subscription for collection, the Escrow Agent
shall promptly issue a Payment in the
amount of such Payment to the
rejected or withdrawing subscriber
after the Escrow Agent has cleared such funds. If the Escrow Agent has not yet submitted
the Payment relating to the subscription of
the rejected or withdrawing subscriber, the Escrow Agent shall
promptly remit such Payment directly to the drawer of the Payment
submitted by or on behalf of the
subscriber.
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4.
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Investment of
Escrowed
Funds. The Escrow Agent, immediately upon receipt of
each Payment remitted to it, shall deposit such Payment in the Federated U.S. Treasury Cash Reserve Fund
#632, provided, however, that
any deposits must be made into permissible investments under Rule 15c2-4,
i.e., either (1) bank accounts, (2) bank money-market accounts, (3) short
time certificates of deposit issued by a bank, or (4) short-term
securities issued or guaranteed by the US Government. Interest and dividends earned on
such investments shall be similarly reinvested. Following the
distribution of Escrowed Funds to the Company pursuant to Paragraph 5
below, any funds remaining in the Escrow Account shall be invested in
Federated U.S. Treasury Cash Reserve Fund
#632.
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5.
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Distribution of
Escrowed
Funds. The Escrow Agent shall release from the Escrow Account to the Company any
and all Escrowed Funds therein together with all interest earned thereon,
upon written request of an officer of the
Company.
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(a)
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Subject to the last sentence of this Paragraph
5(a), if at any time on or prior to the Closing Date, an aggregate
of 57,500 Units of the Company have been sold, then upon the
happening of such event, the Escrow Agent shall deliver the Escrowed Funds to the Company. An affidavit or
certification from an officer of the General Partner of the Company stating 57,500 Units
have been timely sold, shall constitute sufficient evidence for the
purpose of this Agreement that such
event has occurred. Thereafter, the Escrow Agent shall release
from the Escrow Account to the Company any and all Escrowed Funds therein, together with all
interest earned thereon, upon the written request from an officer of the General Partner of the Company as listed on the incumbency
certificate provided to the Escrow
Agent by the Company.
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(b)
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If
the Escrowed Funds do not, on or
prior to the Closing Date, become deliverable to the Company pursuant to subparagraph (a) above,
the Escrow Agent shall return the Escrowed Funds to the respective subscribers
in amounts equal to the subscription amount theretofore paid by each of
them, together with interest calculated as described in paragraph 6 below and without deduction,
penalty or expense to the subscriber. The Escrow Agent shall
notify the Company of any such return
of subscription
amounts. The purchase
money returned to each subscriber shall be free and clear of any
and all claims of the Company or any
of its creditors.
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6.
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Distribution of
Interest. If the Escrowed Funds become deliverable to
subscribers pursuant to Paragraph 5(b) above, the Escrow Agent shall
compute and distribute to each investor a pro rata share of the investment
earnings of the Escrowed Funds. Each subscriber’s pro rata share of investment earnings
shall be computed as follows:
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Individual Subscription Amount x days
held
Investment
Earnings x Total subscription amounts x days
held
Such pro
rata share of investment earnings shall be distributed to each subscriber with
the return of their subscription
amounts.
7.
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Liability of Escrow
Agent.
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(a)
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In
performing any of its duties under this Agreement, or upon the claimed
failure to perform its duties hereunder, the Escrow Agent shall not be
liable to anyone for any damages, losses, or expenses which it may incur
as a result of the Escrow Agent so acting, or failing to act; provided,
however, the Escrow Agent shall be liable for damages arising out of its
willful default or misconduct or its gross negligence under this
Agreement. Accordingly, the Escrow Agent shall not incur any
such liability with respect to (i) any action taken or omitted to be taken
in good faith upon advice of its counsel or counsel for the Company which is given with respect to any
questions relating to the duties and responsibilities of the Escrow Agent
hereunder, or (ii) any action taken or omitted to be taken in reliance
upon any document, including any written notice or instructions provided
for in this Escrow Agreement, not only as to its due execution and to the
validity and effectiveness of its provisions but also as to the truth and
accuracy of any information contained therein, if the Escrow Agent shall
in good faith believe such document to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the provisions of
this Agreement.
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(b)
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The
Company hereby agrees to indemnify
and hold harmless the Escrow Agent against any and all losses, claims,
damages, liabilities and expenses, including, without limitation,
reasonable costs of investigation and counsel fees and disbursements which
may be incurred by it resulting from any act or omission of the Company; provided, however, that the Company shall not indemnify the Escrow
Agent for any losses, claims, damages, or expenses arising out of the
Escrow Agent’s willful default,
misconduct, or gross negligence under
this Agreement.
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(c)
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If
a dispute ensues between any of the parties hereto which, in the opinion
of the Escrow Agent, is sufficient to justify its doing so, the Escrow
Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction, including the Circuit Court of Orange
County, Florida, all money or property in its hands under the terms of
this Agreement, and to file such legal proceedings as it deems
appropriate, and shall thereupon be discharged from all further duties
under this Agreement. Any such legal action may be brought in
any such court as the Escrow Agent shall determine to have jurisdiction
thereof. The Company shall
indemnify the Escrow Agent against its reasonable court costs and
attorneys’ fees incurred in filing such legal
proceedings.
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8.
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Inability to
Deliver. In the event that Payments for subscriptions delivered to the
Escrow Agent by the Company pursuant
to this Agreement are not cleared through normal banking channels within 5
days after such delivery, the Escrow Agent shall deliver such uncleared
Payments to the Company, unless the Escrowed Funds are returned to subscribers
pursuant to Paragraph 5(b) above, in which case the Escrow Agent shall be
reimbursed by the Company for the amount of all uncleared
payments.
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9.
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Notice. All
notices, requests, demands and other communications or deliveries required
or permitted to be given hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally, given by facsimile confirmed by telephone call or deposited for mailing,
first class, postage prepaid, registered or certified mail, as
follows:
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If
to the subscriber for Units:
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To
their respective addresses as
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Specified
in their Subscribtion Apreements.
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If
to the Company:
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Commonwealth
Capital Corp.
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Attn:
Investor Services Manager
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000
Xxxxxxxxx Xxxxxx, 0xx
Xxxxx
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Xxxxxxxxxx,
XX 00000
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Ph:
000-000-0000
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Fax:
000-000-0000
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If
to the Escrow Agent:
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000
Xxxx Xxxx Xxxxxx
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Xxxxxx,
XX 00000
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Attention:
Corporate Trust Services
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10.
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Fees to Escrow
Agent. In consideration of the services to be provided
by the Escrow Agent hereunder, the Company agrees to pay the fees to the
Escrow Agent as outlined in ATTACHMENT
(I).
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11.
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General.
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(a)
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This
Agreement shall be interpreted,
construed and enforced in all respects in
accordance with the laws of the Commonwealth of
Pennsylvania applicable to contracts to
be made and performed entirely in said
state.
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(b)
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The
section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Agreement.
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(c)
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This
Agreement sets forth the entire agreement and understanding of the parties
with regard to this escrow transaction and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof.
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(d)
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This
Agreement may be amended, modified, superseded or cancelled, and any of
the terms or conditions hereof may be waived, only by a written instrument
executed by each party hereto or, in the case of a waiver, by the party
waiving compliance. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver
in any one or more instances by any party of any condition, or of the
breach of any term contained in this Agreement, whether by conduct or
otherwise, shall be deemed to be, or construed as, a further or continuing
waiver of any such condition or breach, or a waiver of any other condition
or of the breach of any other terms of this
Agreement.
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(e)
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This
Agreement may be executed simultaneously 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.
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(f)
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This
Agreement shall inure to the benefit of the parties hereto and their
respective administrators, successors, and
assigns.
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12.
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Representation of the
Company. The
Company hereby acknowledges that the
status of the Escrow Agent with respect to the offering of the Units is that of agent only for the limited
purposes herein set forth, and hereby agrees it will not represent or
imply that the Escrow Agent, by serving as the Escrow Agent hereunder or
otherwise, has investigated the desirability or advisability of an
investment in the Units, or has
approved, endorsed or passed upon the merits of the Units, nor shall the Company use the name of the Escrow Agent in
any manner whatsoever in connection with the offer or sale of the Units, other than by acknowledgement that
it has agreed to serve as Escrow Agent for the limited purposes herein set
forth.
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13.
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Resignation of Escrow
Agent. If, at any time, any attempt is made to modify this Agreement in a manner that
would increase the duties and responsibilities of the Escrow Agent, or to
modify the Escrow Agreement in any manner that the Escrow Agent shall deem
undesirable, the Escrow Agent may resign by notifying the
Company. Such resignation shall become effective on the earlier
to occur of (i) the acceptance by a successor Escrow Agent or (ii) sixty
(60) days following the date upon which notice was
mailed. Until such time as the Escrow Agent has resigned in
accordance herewith, the Escrow Agent shall perform its duties hereunder
in accordance with the terms of this Escrow
Agreement.
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14.
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Force
Xxxxxx. The Escrow Agent
shall not be responsible for any failure or delay in the performance of
its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including
without limitation, acts of God, earthquakes, fires, floods, wars, civil
or military disturbances, sabotage, epidemics, riots, interruptions, loss
or malfunctions of utilities, computer (hardware or software) or
communication service, accidents, labor disputes, acts of civil or
military authority, or governmental
actions.
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IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
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“Company”
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Commonwealth
Income & Growth Fund VII, LP
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By:
Commonwealth Income & Growth Fund, Inc., its General
PArtner
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By: /s/ Xxxxxxxx X.
Xxxxxxxxxxx-Xxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxxx-Xxxxxx | ||
Title: CEO
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“Excrow
Agent”
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BRANCH
BANKING AND TRUST COMPANY
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By: /s/ Xxxx X. Xxxxxx | ||
Name: Xxxx X. Xxxxxx | ||
Title: Vice President | ||