EXHIBIT 10.04
ESCROW AGREEMENT
TO: The Bank of New York
101 Barclay Street
New York, New York 10286
The following property is to be deposited with you as "Escrow Agent":
all proceeds of the subscriptions for the Units of Limited Partnership Interest
(referred to herein as the "Units") of ML PRINCIPAL PROTECTION L.P., (formerly,
ML Principal Protection Plus L.P.), a Delaware limited partnership being offered
pursuant to a continuous public offering of the Units, received by MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED and certain of its affiliates, as
selling agent ("Selling Agent") for ML PRINCIPAL PROTECTION L.P., which are
accepted by MERRILL LYNCH INVESTMENT PARTNERS INC. (formerly ML Futures
Investment Partners Inc.), the general partner ("General Partner") of ML
PRINCIPAL PROTECTION L.P., Escrow Account No. 328436. The Unit price will be
$100. Such subscriptions may be deposited in the Escrow Account established
under this Escrow Agreement either by certified or clearinghouse check, or
Federal Funds wire transfer, to be determined by the General Partner, duly made
out to the Escrow Agent in the following form: "THE BANK OF NEW YORK, AS
ESCROW AGENT FOR ML PRINCIPAL PROTECTION L.P., ESCROW ACCOUNT NO. 328436." If
the deposit into the Escrow Account is made by certified check or Federal Funds
wire transfer, the Escrow Agent shall invest the funds deposited on the same day
as deposited, provided such deposit is received by the Escrow Agent by 10:00
a.m. E.S.T. If the deposit into the Escrow Account is made by certified check or
Federal Funds wire transfer and received by the Escrow Agent after 10:00 a.m.
E.S.T., the Escrow Agent shall invest the funds deposited on the next business
day. If the deposit into the Escrow Account is made by clearinghouse check, the
Escrow Agent shall invest the funds deposited on the next business day following
the receipt of the clearinghouse check. The Selling Agent will retain all
Subscription Agreement and Power of Attorney signature pages submitted by
subscribers.
As Escrow Agent, you are hereby directed to hold, deal with and
dispose of the aforesaid property and any other property, including without
limitation, interest earned on funds held in the Escrow Account, at any time
held by you hereunder in the following manner, subject, however, to the terms
and conditions hereinafter set forth:
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Units are sold to the public, on a continuous basis, as of the
beginning of each calendar quarter (hereinafter referred to as a "Closing
Date"). There is no minimum number of Units which must be sold as of the
beginning of any calendar quarter for any Units then to be sold. The General
Partner may terminate, but not suspend, the offering at any time upon verbal
notice promptly confirmed in writing to you.
On each Closing Date the Escrow Agent shall, upon (i) written
instructions from the Selling Agent, the General Partner and ML PRINCIPAL
PROTECTION L.P., and (ii) possession in the Escrow Account of cleared funds in
payment of subscriptions, release all funds then held in such Escrow Account,
except as otherwise provided herein, to the ML PRINCIPAL PROTECTION TRADING L.P.
(a Delaware limited partnership which serves as the trading subsidiary of ML
PRINCIPAL PROTECTION L.P. and of which ML PRINCIPAL PROTECTION L.P. is the sole
limited partner and the General Partner is the sole general partner) commodity
trading account maintained with MERRILL LYNCH FUTURES INC. ("Broker"), as
commodity broker for ML PRINCIPAL PROTECTION TRADING L.P., or to the checking
account of ML PRINCIPAL PROTECTION L.P., as the General Partner may direct. No
selling commissions or offering
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or other charges are payable from any amounts held in escrow. The General
Partner shall give you verbal notice (promptly confirmed in writing) of the
Closing Date at least three business days prior thereto. In lieu of liquidating
investments in which the escrow funds are being maintained, the Escrow Agent may
transfer such investments in kind to the checking account of ML PRINCIPAL
PROTECTION L.P., with the consent of the General Partner.
As promptly as practicable (but in no event more than 10 business
days) after each Closing Date, you shall remit to the Selling Agent a check for
all interest earned on subscribers' funds while in escrow. All interest earned
on rejected subscriptions shall be distributed by the Selling Agent (upon
receipt of funds from you) to the appropriate subscribers as described above,
irrespective of amount.
In the event that the General Partner terminates the offering of the
Units at a time when any subscription funds are held in escrow, the Escrow Agent
shall, as promptly as practicable, and in no event later than 5 business days
thereafter, transmit to the Selling Agent a check or checks in
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the amount of the subscriptions received plus the interest actually earned
thereon while held in escrow.
The Escrow Agent shall invest all funds deposited in the Escrow
Account in United States Treasury Bills, time deposits or other securities to
which the General Partner instructs the Escrow Agent in writing. The General
Partner shall instruct the Escrow Agent as to in which securities the funds in
the Escrow Account shall be invested prior to 10:00 a.m. E.S.T. on any date on
which funds shall be invested. In the absence of such instruction the Escrow
Agent is authorized to invest such funds in securities which have the same
maturity as the last set of instructions received.
At any time prior to the release of a subscriber's funds from the
Escrow Account, the General Partner is authorized to notify the Escrow Agent
that such subscription has not been accepted (irrespective of how long such
subscription has been held in the Escrow Account and of whether the General
Partner had previously indicated its willingness to accept such subscription),
and the General Partner is further authorized to direct the Escrow Agent to
return any funds held in the Escrow Account
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to the Selling Agent for the benefit of the person submitting such subscription
(including any interest attributable to such funds while held in the Escrow
Account). In the event a subscription has not been accepted, the Selling Agent
shall provide the Escrow Agent with the name of the subscriber, the number of
Units subscribed for each such subscriber, the amount of principal initially
deposited or the amount debited to the subscriber's customer securities account.
Such refund of subscriptions, plus interest, shall be made in the case of each
rejected subscription in the same manner described above in the event that any
offering of a series of Units is terminated without Units being sold.
The Selling Agent acknowledges and agrees that the method established
pursuant to this Escrow Agreement for the refund of rejected subscriptions and
of interest earned on subscriptions is only acceptable under Rule 15c2-4 of the
Securities Exchange Act of 1934 provided that the Selling Agent informs
subscribers of when their customer securities accounts at the Selling Agent will
be credited with such refunded subscription payments and/or interest income.
Accordingly, the Selling Agent undertakes that it will (a) credit the
appropriate subscribers'
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customer securities accounts as promptly as practicable (and in no event more
than 5 business days) after receipt of the necessary funds from the Escrow
Agent and information indicating the amounts so due, and (b) inform all
subscribers as soon as practicable of the date that the amounts to be credited
will be available in their respective customer accounts.
Interest earned on funds while held in the Escrow Account shall be
allocated among subscribers in proportion to the amounts of their respective
subscriptions and the lengths of time their subscriptions were held in escrow.
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Prior to delivery as described above, ML PRINCIPAL PROTECTION L.P.
shall have neither title to nor interest in the funds on deposit in the Escrow
Account, and such funds shall under no circumstances be subject to the
liabilities or indebtedness of ML PRINCIPAL PROTECTION L.P.
All documents, including any instruments necessary to the negotiation
or other transfer of the assets held in the Escrow Account, deposited
simultaneously with the execution of
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this Escrow Agreement are approved by the parties hereto, other than the Escrow
Agent. The Escrow Agent shall not be obliged to inquire as to the form, manner
of execution or validity of any of these documents or of any document hereafter
deposited in the Escrow Account upon the instruction of the General Partner, nor
shall the Escrow Agent be obliged to inquire as to the identity, authority or
rights of the persons executing the same.
The General Partner shall indemnify and save the Escrow Agent harmless
from losses, costs, and expenses (including reasonable attorneys' fees) incurred
by the Escrow Agent in any suit or claim arising out of or in connection with
this Escrow Agreement except claims which are occasioned by the Escrow Agent's
negligence, bad faith, or willful misconduct. This indemnity shall survive the
termination of this Escrow Agreement.
The Escrow Agent shall not be liable for any error of judgment, for
any act done or steps taken or omitted by the Escrow Agent in good faith
(including without limitation the liquidation of investments held in the Escrow
Account), for any mistake of fact or law, or for anything which the Escrow Agent
may do or refrain from doing in connection herewith, except for
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the Escrow Agent's own negligence, bad faith, or willful misconduct. No
provision of this Agreement shall require the Escrow Agent to expand or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder.
In case of conflicting demands upon the Escrow Agent, the Escrow Agent
may withhold performance of this Escrow Agreement until such time as said
conflicting demands shall have been withdrawn or the rights of the respective
parties shall have been settled by court adjudication, arbitration, joint order
or otherwise.
Any notice which the Escrow Agent is required or desires to give
hereunder to any of the undersigned shall be in writing and may be given by
mailing the same to the address of the undersigned indicated under their
respective signatures hereon (or to such other address as said undersigned may
substitute therefor by written notification to the Escrow Agent). For all
purposes hereof, any notice shall be effective only when actually received.
Notices to the Escrow Agent shall be in writing and shall not be deemed
effective until actually received
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by the Escrow Agent's trust department. Whenever under the terms hereof the time
for giving notice or performing an act falls upon a Saturday, Sunday or bank
holiday, such time shall be extended to the Escrow Agent's next business day.
The Escrow Agent's duties and responsibilities shall be limited to
those expressly set forth in this Escrow Agreement, and the Escrow Agent shall
not be subject to, nor obligated to recognize, any other agreement between, or
direction or instruction of, any or all of the parties hereto even though
reference thereto may be made herein; provided, however, that with the Escrow
Agent's written consent, this Escrow Agreement may be amended at any time or
times by an instrument in writing signed by all of the then parties in interest.
If any property in the Escrow Account is at any time attached,
garnished or levied upon, under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting such property, or any part
thereof, then in any of such events, the Escrow Agent is authorized, in its
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sole discretion, to rely upon and comply with any such order, writ, judgment or
decree, which the Escrow Agent is advised by legal counsel of its own choosing
is binding upon the Escrow Agent, and if the Escrow Agent complies with any such
order, writ, judgment or decree, the Escrow Agent shall not be liable to any of
the parties hereto or to any other person, firm or corporation by reason of such
compliance, even though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside or vacated.
The Escrow Agent may resign by giving fifteen (15) business days'
written notice to the undersigned as aforesaid; and thereafter, subject to the
possible applicability of the provisions of the preceding paragraph hereof in
the event that any property in the Escrow Account has been attached, garnished
or levied upon, shall deliver all remaining property in the Escrow Account upon
the joint written and signed order of the undersigned. If no such order is
received by the Escrow Agent within thirty days after mailing such notice, the
Escrow Agent is unconditionally and irrevocably authorized and empowered to send
any and all property in the Escrow Account by registered mail to the respective
depositors thereof (irrespective of whether the
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Escrow Agent shall have received any certificate regarding, or funds in respect
of, additional interest from the General Partner).
The General Partner may remove the Escrow Agent at any time (with or
without cause) by giving at least 25 days' written notice thereof. Within 10
days after receiving such notice, the General Partner and the Selling Agent
shall jointly agree on and appoint a successor escrow agent at which time the
Escrow Agent shall either distribute the funds held in the Escrow Account, less
its fees, costs and expenses or other obligations owed to it as directed by the
joint instructions of the General Partner and the Selling Agent or hold such
funds, pending distribution, until all such fees, costs and expenses or other
obligations are paid. If a successor escrow agent has not been appointed or has
not accepted such appointment by the end of the 10 day period, the Escrow Agent
may appeal to a court of competent jurisdiction for the appointment of a
successor escrow agent, or for other appropriate relief and the costs, expenses
and reasonable attorneys fees which the Escrow Agent incurs in connection with
such a proceeding shall be paid by the General Partner.
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The General Partner shall pay the Escrow Agent pursuant to the Escrow
Agent's customary fee schedule. The Escrow Agent agrees that it shall have no
right against ML PRINCIPAL PROTECTION L.P. or its subsidiary, ML PRINCIPAL
PROTECTION TRADING L.P. with respect thereto. This paragraph shall survive
termination of the Agreement.
This agreement shall be construed, enforced, and administered in
accordance with the laws of the State of New York.
In the event of any dispute between or conflicting claims by or among
the General Partner or the Selling Agent and/or any other person or entity with
respect to any funds held in the Escrow Account, the Escrow Agent shall be
entitled, at its sole discretion, to refuse to comply with any and all claims,
demands or instructions with respect to such funds so long as such dispute or
conflict shall continue, and the Escrow Agent shall not be or become liable in
any way to the General Partner or the Selling Agent for its failure or refusal
to comply with such conflicting claims, demands or instructions, except to the
extent under the circumstances such failure would constitute negligence, bad
faith or willful misconduct on the Escrow Agent's
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part. The Escrow Agent shall be entitled to refuse to act until, at its sole
discretion, either such conflicting or adverse claims or demands shall have been
finally determined in a court of competent jurisdiction or settled by agreement
between the conflicting parties as evidenced in a writing, satisfactory to the
Escrow Agent or the Escrow Agent shall have received security or an indemnity
satisfactory to the Escrow Agent sufficient to save it harmless from and against
any and all loss, liability or expense which it may incur by reason of its
acting. The Escrow Agent may in addition elect at its sole discretion to
commence an interpleader action or seek other judicial relief or orders as the
Escrow Agent may deem necessary.
The invalidity, illegality or unenforceability of any provision of
this Agreement shall in no way affect the validity, legality or enforceability
of any other provision; and if any provision is held to be unenforceable as a
matter of law, the other provisions shall not be affected thereby and shall
remain in full force and effect.
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This Agreement shall constitute the entire agreement of the parties
with respect to the subject matter and supersedes all prior oral or written
agreements in regard thereto.
The rights and remedies conferred upon the parties hereto shall be
cumulative, and the exercise or waiver of any such right or remedy shall not
preclude or inhibit the exercise of any additional rights or remedies. The
waiver of any right or remedy shall not preclude or inhibit the subsequent
exercise of such right or remedy.
This Agreement may be executed by each of the parties hereto in any
number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all such counterparts shall
together constitute one and the same agreement.
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Dated at New York, New York as of ________, 1996
Parties to the Escrow
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ML PRINCIPAL PROTECTION L.P.
By: MERRILL LYNCH INVESTMENT PARTNERS INC.
General Partner
Merrill Lynch World Headquarters
Sixth Floor
South Tower
World Financial Center
New York, New York 10080-6106
By: _______________________________
James M. Bernard
Vice President
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, Selling Agent
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10080-6106
By: _______________________________
John R. Frawley, Jr.
Accepted this ____ day of
_____________, 1996
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
By: ________________________
Name:
Title:
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