EXHIBIT 10.4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into this day of ___, 2003, by and
among Great Lakes Capital Acceptance, LLC, an Illinois limited liability company
("Great Lakes"), and U.S. Bank National Association, a national banking
association (the "Bank" or the "Escrow Agent");
WITNESSETH THAT:
WHEREAS, Great Lakes proposes to issue and sell up to 1,000,000 units of
Series A Cumulative Redeemable Preferred Membership Interests (the "Preferred
Units"), at a subscription price of $25.00 per unit, directly on a best efforts
basis.
WHEREAS, Great Lakes desires to establish an escrow account with the Escrow
Agent into which subscription proceeds and related documents will be deposited
promptly and held in escrow until the offering of Preferred Units is terminated
or until the minimum $1,000,000 of subscription proceeds in immediately
available funds (representing 400 Preferred Units) have been obtained from
subscribers whose subscriptions have been accepted by Great Lakes (herein, the
"Minimum Amount"); and
WHEREAS, Great Lakes also may enter into one or more agreements pursuant to
which various members of the National Association of Securities Dealers, Inc.
(collectively, the "Dealers") will offer the Preferred Units for sale for and on
behalf of Great Lakes on a best efforts basis; and
WHEREAS, if Great Lakes does so enter into on or more agreements with such
Dealers pursuant to which they will offer the Preferred Units for sale for and
on behalf of Great Lakes, said agreements will require the Dealers promptly to
deposit subscription proceeds and related documents into said escrow until the
offering of Preferred Units is terminated; and
WHEREAS, Great Lakes desires to have the Bank deposit such funds in an
escrow account until the termination of the offering of Preferred Units, and the
Bank has agreed to serve as Escrow Agent for such purpose.
NOW, THEREFORE, for and in consideration of the covenants and agreements
set forth below, the parties agree as follows:
l. APPOINTMENT OF ESCROW AGENT; DELIVERY OF FUNDS TO ESCROW ACCOUNT.
Great Lakes hereby appoints the Bank as Escrow Agent to receive and hold
all proceeds from the sale of Preferred Units for the term of this Escrow
Agreement, and to invest the same, along with all earned interest, in such
manner as it shall be directed to in writing by the Great Lakes, except that
prior to the Initial Disbursement (as hereinafter defined) of funds in
accordance with Section 3, all proceeds shall be cleared and held in a U.S. Bank
Business Money Market Account, which is FDIC insured. All subscription checks
must be payable to "U.S. Bank National Association -- Great Lakes Acceptance
Escrow Account #_______________." Great Lakes and the Dealers shall transmit all
subscription checks for Preferred Units to the Escrow Agent, or return
unaccepted checks to subscribers, as soon as practicable, but in any event by
the end of the second business day following receipt of such checks by the
Dealer.
2. IDENTITY OF SUBSCRIBERS: OWNERSHIP OF FUNDS DEPOSITED.
Great Lakes or the Dealers shall deliver to the Escrow Agent, with each
deposit of checks, a list that contains the names and addresses of all persons
who have subscribed for Preferred Units, the amount of money tendered by each
subscriber and the date on which the funds were received from each subscriber.
The Escrow Agent shall hold all funds received for the individual account of
each subscriber identified by Great Lakes or the Dealers. The funds, as well as
any interest or income earned thereon, shall remain the property of the
subscribers until released to Great Lakes as hereinafter provided, and shall not
be subject to any liens by the Escrow Agent or judgments or claims against Great
Lakes or the Dealers.
3. COLLECTED FUNDS; DISBURSEMENT OF FUNDS.
(a) No subscription proceeds shall be disbursed pursuant to this Section 3
until the Escrow Agent receives such subscription proceeds in immediately
available funds. If, upon presentment for payment, any payment instrument is
dishonored, the Escrow Agent shall immediately notify Great Lakes of such
dishonor and return such payment instrument to Great Lakes.
(b) If the Escrow Agent has not received, on or before the date designated
for the sale of the Minimum Amount, as set forth in Great Lakes' Registration
Statement on Form SB-2 filed with the Securities and Exchange Commission on
August __, 2003, as amended (the "Initial Closing Date"), then the Escrow Agent
shall refund to subscribers the face amount of payments made in subscription for
Preferred Units, together with his or her pro-rata share of interest or income,
if any, earned on the funds deposited in escrow. Unless instructed otherwise,
the Escrow Agent shall release all subscription proceeds held in the Escrow
Account to each Subscriber respectively, at the address given by such Subscriber
in the Subscription Agreement. All disbursements by the Escrow Agent pursuant to
this Section 3(a) shall be made by the Escrow Agent's usual escrow checks and
shall be mailed by first class United States Postal Service mail, postage
pre-paid, as soon as practicable but not later than the third business day after
the Termination Date.
(c) If the Escrow Agent has received the Minimum Amount on or before the
Initial Closing Date, all interest on funds held in the Escrow Account shall be
for the account of Great Lakes and the Escrow Agent shall disburse ("Initial
Disbursement") to Great Lakes, pursuant to written instruction from Great Lakes,
substantially in the form attached hereto as Exhibit A, all of the subscription
proceeds held in the Escrow Account in immediately available funds, together
with such interest.
(d) If the Escrow Agent receives additional subscription proceeds in
immediately available funds after the Initial Disbursement has been made, then
the Escrow Agent shall disburse the subscription proceeds to Great Lakes upon
written instruction from Great Lakes, substantially in the Form attached hereto
as Exhibit A. All subscription proceeds upon which acceptance remains pending
shall be held by the Escrow Agent for disbursement in accordance with the
direction contained in the next succeeding notice. If the Escrow Agent does not
receive notice from Great Lakes by the Termination Date with respect to any
subscriber's subscription proceeds, then the Escrow Agent shall refund to each
of those subscribers the face amount of payments made in subscription for his or
her Preferred Units, together with his or her pro-rata share of interest or
income, if any, earned on the funds deposited in escrow. Unless instructed
otherwise, the Escrow Agent shall release all subscription proceeds held in the
Escrow Account to each Subscriber respectively, at the address given by such
Subscriber in the Subscription Agreement. All disbursements by the Escrow Agent
pursuant to this Section 3(d) shall be made by the Escrow Agent's usual escrow
checks and shall be mailed by first class United States Postal Service mail,
postage pre-paid, as soon as practicable but not later than the third business
day after the Termination Date.
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4. TERM OF ESCROW.
This Escrow Agreement shall terminate two years following the effective
date of the registration statement relating to the Preferred Units or on such
earlier date as all funds are released to Great Lakes as provided in Section 3
above, provided, however, that if the Minimum Amount has not been received by
the Initial Closing Date, this Escrow Agreement shall terminate upon completion
of the Escrow Agent's disbursements to subscribers pursuant to Section 3(b).
Great Lakes also may terminate this Escrow Agreement at any time upon notice to
the Escrow Agent that Great Lakes has made a decision to terminate the offer and
sale of Preferred Units. As used in this Escrow Agreement, "Termination Date,"
shall mean the date in which this Agreement is terminate d in accordance with
this Section 5.
5. FEE OF ESCROW AGENT.
The Escrow Agent will receive a fee of $___ per year in exchange for its
services under this Agreement. If the conditions of this Agreement are not
promptly fulfilled, or if the Escrow Agent renders any service not provided for
in this Agreement, or if Great Lakes requests a substantial modification of its
terms, or if any controversy arises, or if the Escrow Agent is made a party to,
or intervenes in, any litigation pertaining to this escrow or its subject
matter, the Escrow Agent shall be reasonably compensated for such extraordinary
services and reimbursed for all costs, attorney's fees, and expenses occasioned
by such default, delay, controversy or litigation, and the Escrow Agent shall
have the right to retain all documents and/or things of value at any time held
by the Escrow Agent in this escrow until such compensation, fees, costs and
expenses are paid, up to the amount of such compensation, fees, costs and
expenses. Unless otherwise provided, the Escrow Agent may deduct such sums from
the funds deposited in the Escrow Account if the funds are to be disbursed to
Great Lakes.
6. REPRESENTATIONS OF ESCROW AGENT.
The Escrow Agent represents and warrants that:
(a) subscription proceeds deposited will be insured by the Federal Deposit
Insurance Corporation to the maximum extent and
(b) it will distribute to subscribers within the time period prescribed by
the Internal Revenue Code of 1986, as amended, reports of all interest income
earned on escrowed funds.
Except as provided in this Section 7, the sole duty of the Escrow Agent shall be
to receive funds from the sale of the Preferred Units and hold them for release
in accordance with the terms of this Escrow Agreement.
7. LIABILITY OF ESCROW AGENT.
The Escrow Agent may conclusively rely upon and shall have no duty to
verify any statement, certificate, notice, request, consent, order or other
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Escrow Agent shall be under no obligation to
institute or defend any action, suit or proceeding in connection with this
Escrow Agreement unless first indemnified to its satisfaction by Great Lakes.
The Escrow Agent may consult counsel with respect to any question arising under
this Escrow Agreement, and the Escrow Agent shall not be liable for any action
taken or omitted in good faith on advice of such counsel. All funds held by the
Escrow Agent pursuant to this Escrow Agreement shall constitute trust property
for the purposes for which they are held.
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8. CONTROVERSIES.
If any controversy arises between the Parties to this Agreement, or with
any other Party, concerning the subject matter of this Agreement, its terms or
conditions, the Escrow Agent will not be required to determine the controversy
or to take any action regarding it. The Escrow Agent may hold all documents and
funds and may wait for settlement of any such controversy by final appropriate
legal proceedings or other means as, in the Escrow Agent's discretion, the
Escrow Agent may require, despite what may be set forth elsewhere in this
Agreement. In such event, the Escrow Agent will not be liable for interest or
damage. Furthermore, the Escrow Agent may at its option file an action of
interpleader requiring the Parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and funds held in escrow, except all costs, expenses,
charges and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action and which the Company agrees to pay. Upon initiating such
action, the Escrow Agent shall be fully released and discharged of and from all
obligations and liability imposed by the terms of this Agreement.
9. INDEMNIFICATION OF ESCROW AGENT.
The Company and its successors and assigns agree jointly and severally to
indemnify and hold the Escrow Agent harmless against any and all losses, claims,
damages, liabilities, and expenses, including reasonable costs of investigation,
counsel fees, including allocated costs of in-house counsel and disbursements
that may be imposed on the Escrow Agent or incurred by the Escrow Agent in
connection with the performance of its duties under this Agreement, including
but not limited to any litigation arising from this Agreement or involving its
subject matter. The Escrow Agent shall have a first lien on the property and
papers held under this Agreement for such compensation and expenses.
10. INSPECTION OF RECORDS.
Great Lakes may, at any time during regular business hours, inspect the
records of the Escrow Agent, insofar as they relate to this Escrow Agreement,
for the purpose of determining that the Escrow Agent is acting in compliance
with the provisions of this Escrow Agreement.
11. RESIGNATION OR REMOVAL OF ESCROW AGENT
The Escrow Agent may resign at any time upon giving at least thirty (30)
days written notice to Great Lakes. Great Lakes may remove the Escrow Agent,
with or without cause, at any time upon giving ten (10) days prior written
notice to the Escrow Agent. However, such resignation or removal shall not
become effective until the appointment of a successor escrow agent, which shall
be accomplished as follows: Great Lakes shall use its best efforts to obtain a
successor escrow agent within thirty (30) days after receiving a resignation
notice or giving a removal notice. If Great Lakes fails to appoint a successor
escrow agent within such time, the Escrow Agent shall have the right to appoint
a successor escrow agent. The resignation shall take effect upon the appointment
of a successor escrow agent, the successor escrow agent executing and delivering
an instrument accepting such appointment, and upon receipt, to their reasonable
satisfaction, by Great Lakes and the successor escrow agent, of a full
accounting of all funds held and disbursed by the Escrow Agent hereunder. Upon
the occurrence of the above and without further acts, the successor escrow agent
shall be vested with all the estates, properties rights, powers, and duties of
the predecessor escrow agent as if originally named as escrow agent. The
predecessor escrow agent shall be discharged from its duties and obligations
under this Escrow Agreement, but shall not be discharged from any liability
hereunder for actions taken as escrow agent hereunder prior to such succession.
After any predecessor escrow agent's resignation or removal, the provisions of
this Escrow
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Agreement shall continue to apply as to any actions taken or omitted to be taken
by it while acting as escrow agent under this Escrow Agreement.
12. AUTOMATIC SUCCESSION.
Upon Great Lakes' consent, any company into which the Escrow Agent may be
merged or with which it may be consolidated, or any company to whom the Escrow
Agent may transfer substantially all of its assets, shall be the successor to
the Escrow Agent without the execution or filing of any paper or any further act
on the part of any of the Parties, anything herein to the contrary
notwithstanding. The successor escrow agent shall be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as escrow agent.
13. BINDING EFFECT.
The terms and conditions of this Escrow Agreement shall be binding upon the
parties hereto and their respective creditors, transferees, successors in
interest and assigns, whether by operation of law or otherwise.
14. MISCELLANEOUS.
(a) GOVERNING LAWS. This Agreement is to be construed and interpreted
according to Illinois law.
(b) FACSIMILE LANGUAGE. This Agreement may be executed in one or more
counterparts and all such executed counterparts may be delivered by
facsimile transmission, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
(c) NOTICES. All instructions, notices, and demands herein provided for
shall be in writing and shall be mailed postage prepaid, first class
mail, delivered by courier, or telecopies as follows:
If to the Escrow Agent:
U.S. Bank National Association
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇-▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(phone) ▇▇▇-▇▇▇-▇▇▇▇
(facsimile) ▇▇▇-▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date first above written.
Great Lakes Capital Acceptance, LLC
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇, Chief Executive Officer and Manager
U.S. BANK NATIONAL ASSOCIATION
By:
Its:
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EXHIBIT A
FUND DISBURSEMENT INSTRUCTIONS
The undersigned certifies that he, she or it is duly authorized to execute
and deliver this Escrow Notice on behalf of Great Lakes Capital Acceptance, LLC
(the "Company"). Pursuant to the Escrow Agreement dated ____________, 2003 (the
"Escrow Agreement") by and among the Company and U.S. Bank and Trust (the
"Escrow Agent"), the Company hereby requests that the Escrow Agent remit, in
immediately available funds, $_________________ from the Escrow Account to the
following parties as follows:
PARTY AMOUNT
----- ------
Great Lakes Capital Acceptance, LLC $
[Dealers] $
TOTAL $_____
IN WITNESS WHEREOF, the undersigned have executed this Fund Disbursement
Instruction as of the date set forth below.
Great Lakes Capital Acceptance, LLC
Dated: ___________________
By: ________________________________________
Its: _________________________________
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