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EXHIBIT 10.1
UNITED DEVELOPMENT FUNDING [LOGO]
FORM OF ESCROW AGREEMENT
Coppermark Bank
3333 Northwest Expressway
Oklahoma City, Oklahoma 73112
Re:
United
Development Funding III, L.P.
Ladies and Gentlemen:
United
Development Funding III, L.P., a Delaware limited partnership
(the
"Partnership"), will issue in a public
offering (the "Offering") units of its
limited partnership interests (the "Units")
pursuant to a Registration Statement
on Form S-11 filed by the Partnership with
the Securities and Exchange
Commission. The units will be offered by
select members of the National
Association of Securities Dealers, Inc.
(NASD) on a "best efforts" basis (each
being referred to herein as a "Dealer" and
collectively as the "Dealers"). The
Partnership is entering into this Escrow
Agreement (the "Agreement") to set
forth the terms on which Coppermark Bank
(the "Escrow Agent"), will hold and
disburse the proceeds from subscriptions
for the purchase of the Units in the
Offering until such time as the Partnership
has received subscriptions for Units
resulting in total minimum capital raised
of $1,000,000 (the "Required Capital")
and, thereafter, until otherwise directed
by the Partnership.
The
Partnership hereby appoints Coppermark Bank as Escrow Agent for
purposes of holding the proceeds from the
subscriptions for the Units, on the
terms and conditions hereinafter set
forth:
1. Persons
subscribing to purchase the Units (the "Subscribers") will be
instructed by the Dealers to remit the
purchase price in the form of checks,
drafts, wires, Automated Clearing House
(ACH) or money orders (hereinafter
referred to as "Instruments of Payment")
payable to the order of "United
Development Funding III, L.P. Escrow
Account" (the "Escrow Account"). Any
Instruments of Payment made payable to a
party other than the Escrow Agent shall
be returned to the Dealer who submitted
such Instrument of Payment. Within one
business day after receipt of any
Instruments of Payment, a Dealer will (a) send
to the Escrow Agent each Subscriber's name,
address, executed IRS Form W-9,
number of Units purchased and purchase
price remitted (the "Subscription
Materials"), and (b) send to the Escrow
Agent such Instrument of Payment unless
such Subscription Materials were previously
sent to the Escrow Agent. The Escrow
Agent shall cause funds received to be held
in the Escrow Account as provided
herein until such Escrow Account has closed
pursuant to paragraph 3(a) hereof.
The Escrow Agent shall notify the
Partnership from time to time during the term
of this Agreement of the names of any
Subscribers for whom the Escrow Agent has
not received a properly executed IRS Form
W-9.
2. The
Escrow Agent will promptly process for collection the
Instruments
of Payment upon deposit into the Escrow
Account. Deposits will be held in the
Escrow Account until such funds are
disbursed in accordance with paragraph 3
hereof. Prior to disbursement of the funds
deposited in the Escrow Account, such
funds will not be subject to claims by
creditors of the Company, any Dealer or
any of their affiliates. If any of the
Instruments of Payment are returned to
the Escrow Agent for nonpayment prior to
the receipt of the Required Capital,
the Escrow Agent shall promptly notify the
submitting Dealer and the Partnership
in writing via mail, email or facsimile of
such nonpayment, and is authorized to
debit
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the Escrow Account in the amount of such
returned payment as well as any
interest earned on the amount of such
payment.
3. (a)
Subject to the provisions of subparagraphs 3(b)-3(d) below,
once
collected funds in the Escrow Account are
an amount equal to or greater than the
Required Capital, the Escrow Agent shall
promptly notify the Partnership and,
upon receiving written instruction from the
Partnership, (i) disburse to the
Partnership, by check, ACH or wire
transfer, the funds in the Escrow Account
representing the gross purchase price for
the Units, and (ii) disburse to the
Subscribers or the Partnership, as
applicable, any interest thereon pursuant to
the provisions of subparagraph 3(d). For
purposes of this Agreement, the term
"collected funds" shall mean all funds
received by the Escrow Agent that have
cleared normal banking channels and are in
the form of cash or a cash
equivalent. After such time, the Escrow
Account shall remain open and the
Partnership shall continue to cause
subscriptions for the Units to be deposited
therein until the Partnership informs the
Escrow Agent in writing to close the
Escrow Account. Thereafter, any
subscription documents and instruments of
payment received by the Escrow Agent from
Subscribers shall be forwarded
directly to the Partnership.
(b) At the close of business on ___________ ___, 2006, which is
one
year from the effective date of the
Offering (the "Expiration Date"), the Escrow
Agent shall promptly notify the Partnership
(the "Expiration Notice") if it is
not in receipt of Subscription Materials
received on or before the Expiration
Date and Instruments of Payment dated not
later than the Expiration Date for the
purchase of Units providing for total
purchase proceeds that equal or exceed the
Required Capital (from all sources but
exclusive of any funds received from
subscriptions for Units from entities for
which the Partnership has notified the
Escrow Agent are affiliated with the
Partnership). Following the tenth calendar
day after the date of the Expiration
Notice, the Escrow Agent shall promptly
return directly to each Subscriber the
collected funds deposited in the Escrow
Account on behalf of such Subscriber, or
shall return the Instruments of Payment
delivered, but not yet processed for
collection prior to such time, together
with interest in the amounts calculated
pursuant to paragraph 6 for each
Subscriber at the address provided in the
Subscription Materials. However, the
Escrow Agent shall not be required to remit
any payments until funds represented
by such payments have been collected.
(c) If the Partnership notifies the Escrow Agent that it rejects
any
subscription for which the Escrow Agent has
collected funds, the Escrow Agent
shall promptly issue a refund to the
rejected Subscriber. If the Partnership
rejects any subscription for which the
Escrow Agent has not yet collected funds
but has submitted the Subscriber's check
for collection, the Escrow Agent shall
promptly return the funds in the amount of
the Subscriber's check to the
rejected Subscriber after such funds have
been collected. If the Escrow Agent
has not yet submitted a rejected
Subscriber's check for collection, the Escrow
Agent shall promptly remit the Subscriber's
check directly to the Subscriber.
(d) At any time after funds are disbursed upon the
Partnership's
instructions pursuant to subparagraph 3(a)
above, on the tenth day following the
date of receipt of such instruction, the
Escrow Agent shall promptly provide
directly to each Subscriber the amount of
the interest payable to the
Subscribers. However, the Escrow Agent
shall not be required to remit any
payments until the Escrow Agent has
collected funds represented by such
payments. The forgoing notwithstanding,
interest, if any, earned on accepted
subscription proceeds will be payable to a
Subscriber only if the Subscriber's
funds have been held in escrow by the
Escrow Agent for at least 35 days.
Interest, if any, earned on accepted
subscription proceeds of Subscribers' funds
held less than 35 days will be paid to the
Partnership. The Escrow Agent may use
such reasonable allocation methods as it
determines to be equitable in
allocating interest income among
Subscribers and as between the Subscribers and
the Partnership if the funds bear interest
at multiple rates during the escrow
period.
(e) After the Required Capital has been received and the proceeds
of
the Escrow Account have been distributed to
the Partnership, any Instruments of
Payment received by the Escrow Agent shall
be deposited in the Escrow Account
within one business day. Upon receiving
written
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instruction from the Partnership, the
Escrow Agent shall (i) disburse to the
Partnership, by check, ACH or wire
transfer, the funds in the Escrow Account,
and (ii) disburse to the Subscribers or the
Partnership, as applicable, any
interest thereon pursuant to the provisions
of subparagraph 3(d). In the event
that any Instruments of Payment are
returned for nonpayment, the Escrow Agent is
authorized to debit the Escrow Account in
accordance with paragraph 2 hereof.
(f) Any disbursement of funds by the Escrow Agent to
Subscribers
shall be made to the persons named in the
Subscription Materials at the address
stated therein by cashiers' check mailed by
United States mail.
(e) If at the time of any required disbursement of interest to
a
Subscriber, the Escrow Agent has not
received a properly executed IRS Form W-9,
the Escrow Agent shall withhold from any
interest distribution such amount as
may be required to be withheld by law and
remit such withheld amounts to the
Internal Revenue Service in timely
fashion.
4. Prior
to the disbursement of funds deposited in the Escrow Account in
accordance with the provisions of
paragrap
