Form of Escrow Agreement

CNL Strategic Capital, LLC S-1

Exhibit 10.3

FORM OF ESCROW AGREEMENT 

This ESCROW AGREEMENT (this “Agreement”) is dated this [___] day of [________], 2018, by and among CNL Strategic Capital, LLC, a Delaware limited liability company (the “Company”), UMB Bank, N.A. (the “Escrow Agent”) and CNL Securities Corp. (the “Managing Dealer”), (collectively, the “Parties”). This Agreement shall be effective as of the effective date of the Company’s registration statement filed with the Securities and Exchange Commission containing the Prospectus (as defined below) (the “Effective Date”).

WHEREAS, the Company proposes to offer and sell, on a best-efforts basis through the Managing Dealer, in its capacity as the managing dealer, and selected broker-dealers that are registered with the Financial Industry Regulatory Authority or intermediaries that are exempt from such broker-dealer registration (the Managing Dealer and such intermediaries are hereinafter referred to collectively as the “Participating Broker-Dealers”), the Company’s shares of Class A, Class T, Class D, and Class I limited liability interests (the “Shares”), on a best-efforts basis, for at least $2,000,000 and up to $1,100,000,000 of gross offering proceeds (including the shares of its Class A, Class T and Class I common stock to be offered and sold pursuant to the Company’s dividend reinvestment plan), at an initial purchase price of up to $27.32 per Class A share, $26.25 per Class T share, $25.00 per Class D and $25.00 per Class I share (the “Offering”) pursuant to an offering prospectus as amended from time to time and filed with the Securities and Exchange Commission as part of a registration statement file no. 333-[ ], including amended for additional share classes (hereinafter the “Prospectus”); and

WHEREAS, the Company has agreed that the subscription price paid by subscribers for Shares (with interest) will be promptly refunded in full to such subscribers if subscriptions and payment for an aggregate of at least $2,000,000 in Shares of the Company in the Offering or in separate private offering transactions have not been received on or before the date that is one year from the Effective Date (the “Outside Date”); and

WHEREAS, the Company has also engaged the Escrow Agent to act as escrow agent in connection with the Company’s private offering (the “Private Offering”) pursuant to the Escrow Agreement dated June [ ], 2017 (the “Private Offering Escrow Agreement”); and

WHEREAS, the Company desires to establish an escrow account for the Offering as further described herein in which funds received from subscribers will be deposited in such account and the Escrow Agent is willing to serve as escrow agent for such account upon the terms and conditions herein set forth; and

WHEREAS, the Escrow Agent had engaged DST Systems, Inc. (“DST”) to receive, examine for “good order” and facilitate subscriptions into the Escrow Account as further described herein and to act as record keeper, maintaining on behalf of the Escrow Agent the ownership records for the escrow account (the “Processing Agent”); and

WHEREAS, in so acting, DST shall be acting solely in the capacity as the Processing Agent for the Escrow Agent and not in any capacity on behalf of the Company or the Managing Dealer, nor shall the Company or the Managing Dealer have any interest, other than that provided in this Agreement, in assets in Processing Agent’s possession as the agent of the Escrow Agent; and

WHEREAS, in order to subscribe for Shares, a subscriber must deliver an executed subscription agreement in substantially the form attached as an exhibit to the registration statement encompassing the Prospectus, along with the full amount of its subscription, subject to volume discounts or other discounts, as applicable: (i) by check in U.S. dollars or (ii) by wire transfer of immediately available funds in U.S. dollars (collectively, the “Subscription Payment”). The Company or the Managing Dealer shall instruct any Participating Broker-Dealers that any such wire transfers shall be in accordance with the instructions provided on Exhibit B hereto.

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:

(i) Upon receipt of the Break Escrow Letter (as defined in Section 5(a)(ii) from the Company to the Escrow Agent and the Processing Agent by 3:00 P.M. Eastern Time that the Company has raised the Minimum Proceeds, and contingent upon the prior day’s notification by the Company to the Escrow Agent and the Processing Agent of the Company’s best efforts at an estimate of the amount of Escrowed Funds anticipated to be released from the Escrow Account, the Escrow Agent will release such Escrowed Funds that day from the Escrow Account to the Company’s designated account.

(ii) A letter from an officer of the Company to the Processing Agent and the Escrow Agent certifying that the Minimum Proceeds have been timely subscribed shall constitute sufficient evidence for the purpose of this Agreement that such event has occurred (the “Break Escrow Letter”). The current form of the Break Escrow Letter is attached hereto as Exhibit C. The Break Escrow Letter shall indicate (i) the date on which the Company has raised the Minimum Proceeds (the “Break Escrow Date”) and (ii) the wire amount, in U.S. dollars, which represents the amount of subscriptions determined to be in good and proper order “Good Order Funds”), and (iii) the Company’s designated account for such released Escrowed Funds.

(iii) If the Escrow Agent has not received a Break Escrow Letter on or prior to the Outside Date, the Escrow Agent shall cause the Escrowed Funds to be promptly returned to the respective subscribers in amounts equal to the subscription amount theretofore paid by each of them, with interest and without deduction, penalty or expense to the subscriber. The Escrow Agent shall notify the Processing Agent, the Company and the Managing Dealer 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, the Processing Agent, the Escrow Agent, the Participating Broker-Dealers or any of their creditors.

(Signature Page follows)

IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as of the date first above written.

SCHEDULE I

Escrow Agent Fee Schedule

Acceptance fee and first year Annual fee will be payable at the initiation of the escrow. Thereafter, the Quarterly Fees will be billed quarterly in arrears and the Annual fee will be billed annually in advance. Other fees and expenses will be billed as incurred.

Fees specified are for the regular, routine services contemplated by the Escrow Agreement, and any additional or extraordinary services, including, but not limited to disbursements involving a dispute or arbitration, or administration while a dispute, controversy or adverse claim is in existence, will be charged based upon time required at the then standard hourly rate.

*All expenses related to the administration of the Escrow Agreement (other than normal overhead expenses of the regular staff) such as, but not limited to, travel, postage, shipping, courier, telephone, facsimile, supplies, legal fees, accounting fees, etc., will be reimbursable.

EXHIBIT A

Prospectus dated [__________]

EXHIBIT B

Wiring Instructions 

UMB Bank, N.A. 

ABA No: 

Acct No: 

Acct Name: UMB Bank, N.A., as EA for CNL Strategic Capital, LLC

EXHIBIT C

_______________, 201_ 

UMB Bank, N.A.

1010 Grand Blvd., 4th Floor

Mail Stop: 1020409

Kansas City, Missouri 64106 

Facsimile: (816) 860-3029

Attention: [__________]

Break Escrow Date: _________________, 2018 

Dear Ladies and Gentlemen:

The undersigned signatory hereby certifies to you the following, pursuant to Section 5(a) of the Escrow Agreement among the Company and therein defined Escrow Agent and Managing Dealer dated as of [___________], 2018 (the “Escrow Agreement”): 

1.       He is the Chief Financial Officer of the Company;

2.       At least $2,000,000 in shares of common stock (the “Shares”) of the Company subscribed for in one or more offerings as of _______________, 201___ (the “Break Escrow Date”), and $___________ represents the amount good order funds that have been subscribed in the Company’s offering. The investors who submitted subscriptions that were accepted on or before the Break Escrow Date should be admitted as shareholders of the Company as of the Break Escrow Date. Thereafter, investors should be admitted as shareholders at such time as their funds are released from the Escrow Account upon written authorization received by the Escrow Agent from the Issuer. The Company also instructs the Escrow Agent that as of the Break Escrow Date, the Escrow Account shall not be an interest-bearing account.

Please contact the undersigned should you have any questions at (407) _____________. 

Very truly yours, 

CNL Strategic Capital, LLC 

By:

Chief Financial Officer