EXHIBIT 10.1
ESCROW AGREEMENT
GEN-NET LEASE INCOME TRUST, INC.
This Agreement is entered into this ________ day of __________________,
2001, by and among Citizens First Savings Bank (the "Escrow Agent") and Gen-Net
Lease Income Trust, Inc., a Michigan corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Company proposes to arrange for the offer for sales to
investors through one or more registered broker-dealers of up to 2,500,000
shares ("Shares") of common stock of the Company at a price of $10.00 per Share
(the "Proceeds"); and
WHEREAS, the Company, through selected broker-dealers that are members
of the National Association of Securities Dealers, Inc., (individually, a
"Selected Dealer" and collectively, the "Selected Dealers"), intends to cause
the sale of the Shares in a public offering (the "Offering"); and
WHEREAS, the Shares are being offered pursuant to the Prospectus of the
Company filed with the Securities and Exchange Commission on
_____________________, 2001 (the "Prospectus"); and
WHEREAS, the Company desires to establish an escrow account into which
funds received from subscribers will be deposited pending completion of the
escrow period and Escrow Agent agrees to serve as escrow agent in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter contained, the parties hereby agree as follows:
1. ESTABLISHMENT OF ESCROW ACCOUNT. After the date hereof, the parties
shall establish one or more general deposit accounts which are interest-bearing,
money market escrow accounts with or under the name of the Escrow Agent, which
escrow account or accounts shall be entitled "Gen-Net Lease Income Trust, Inc.
Escrow Account" (collectively, the "Escrow Account"). Each Selected Dealer will
instruct its subscribers to make their checks for subscriptions payable to the
order of "Gen-Net Lease Income Trust, Inc.". The Selected Dealer will promptly
send such checks along with the Written Account (as defined herein) to the
Escrow Agent. Any checks received that are made payable to a party other than as
specifically set forth above shall be
returned by the Escrow Agent to the Selected Dealer who submitted the check. The
Escrow Agent shall return to the Selected Dealer who submitted the check any
checks that are not submitted along with the Written Account or other
information of similar content satisfactory to the Escrow Agent. If any checks
are received by the Escrow Agent from a party other than a Selected Dealer, the
Escrow Agent shall return such check to the person submitting the same. The
Company will assist the Selected Dealers in forwarding the checks to the Escrow
Agent and will provide the names and addressees of Selected Dealers approved by
the Company to submit checks directly to the Escrow Agent. Any person or entity
not named on such current list shall not be considered a Selected Dealer.
2. ESCROW PERIOD. The escrow period (the "Escrow Period") shall begin
on the date the Escrow Account is opened and shall terminate upon the earlier to
occur of the following dates:
a. Upon satisfaction of the conditions established under Section 4
below permitting the release of the Escrow Amount (the "Minimum
Conditions");
b. The date that is one year from the date of the Prospectus or one
year from the date of the Order of Effectiveness applicable to the
Prospectus as issued by the Securities and Exchange Commission,
whichever is first; or
c. The effective date in the written notification which the Escrow
Agent receives from Company of its determination to terminate the
offering prior to the satisfaction of the Minimum Conditions.
During the Escrow Period, the Company is aware and understands that it
is not entitled to any funds received into escrow and no amounts deposited in
the Escrow Account shall be withdrawn or subject to check or otherwise used by
it or any other entity, except as herein provided, or be subject to the debts of
the Company or any other entity.
3. DEPOSITS INTO THE ESCROW ACCOUNT. Each approved Selected Dealer
shall promptly deliver all monies received from subscribers for the payment of
the Shares to the Escrow Agent for deposit into the Escrow Account together with
a written account of each sale (the "Written Account"), which account shall set
forth, among other things, the subscriber's name and address, social security
number, the number of Shares purchased, the amount paid therefor, whether the
consideration received was in the form of a check draft or money order and the
Selected Dealer's name and address. All collected funds so deposited in the
Escrow Account prior to satisfaction of the Minimum Conditions are herein
referred to as the "Escrow Amount", except for interest
earned thereon. Notwithstanding anything to the contrary contained herein, after
(i) satisfaction of the Minimum Conditions and (ii) written notification from
the Company, Selected Dealers shall continue to promptly transmit such checks,
drafts and money orders, along with the appropriate subscription documents, to
the Escrow Agent and Escrow Agent shall thereafter collect the funds and
promptly thereafter remit such funds (less commission payments deducted from the
non-U.S. sales of Shares per written instructions from the Company) to the
Company.
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT. In the event that the Escrow
Period terminates without satisfaction of the Minimum Conditions, the Escrow
Agent shall promptly refund directly to each subscriber, at the address
indicated on the Written Account or such other address that Escrow Agent can
determine, the amount received from the subscriber with interest actually earned
thereon, without deduction, penalty or expense to the subscriber, and the Escrow
Agent shall notify the Company and the Selected Dealer of its distribution of
the funds. 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.
Before the Escrow Agent shall be properly authorized and empowered
pursuant to this Agreement to release the Escrow Amount the following conditions
(the "Minimum Conditions") must be satisfied as determined by the Escrow Agent:
a. The Escrow Amount contains a minimum of $3,000,000 (the "Minimum
Escrow Amount");
b. The aforementioned minimum Escrow Amount was achieved prior to the
earlier of the dates set forth in Section 2B above;
c. The Company has certified in a written notification to the Escrow
Agent that the Escrow Amount constitutes the proceeds from valid
subscriptions of the Shares pursuant to the terms of the Prospectus;
and
d. Counsel for the Company as named in the Prospectus issues to the
Escrow Agent a confirmation letter stating that, to its knowledge,
neither the Company nor the Company's offering of Shares is subject
to any outstanding cease and desist order or stop order issued by
the Securities and Exchange Commission or any state securities
regulatory agency.
Subscriptions received after satisfaction of the Minimum Conditions
shall be held by the Escrow Agent until such time, and from time to time, as the
Company requests the release thereof. At such time as the Company requests the
release of the
escrowed funds, the Company shall designate to the Escrow Agent, in writing, the
names of the subscribers whose funds are being withdrawn and the entity or
account to which such funds are to be paid. For purposes of this Agreement, the
term "collected funds" shall mean all funds received by the Escrow Agent which
have cleared normal banking channels and are in the form of cash. If the Escrow
Amount is released to the Company, each subscriber will receive his pro rata
share of any interest actually earned on the Escrow Amount based on the date of
deposit of such subscriber's subscription payment. With respect to subscribed
Funds received held in Escrow Account and thereafter released once the Minimum
Escrow Amount has been received and the Company gives notice to the Escrow Agent
to release said funds, the Escrow Agent shall transmit directly to each
subscriber his pro rata share of such interest, at the address indicated on the
Written Account or such other address that Escrow Agent can determine. With
respect to subscribed funds received by the Escrow Agent after the Minimum has
been released to the Company, the Escrow Agent shall not be required to transmit
any interest earned on said funds to the subscriber.
5. COLLECTION PROCEDURE. The Escrow Agent is hereby authorized to
forward each check for collection and, upon collection of the proceeds of each
check, deposit the collected proceeds in the Escrow Account. As an alternative,
the Escrow Agent may telephone the bank on which the check is drawn to confirm
that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Selected Dealer that submitted the check, at the address indicated on the
Written Account or such other address that Escrow Agent can determine. In such
cases, the Escrow Agent will promptly notify the Company of such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds and upon written notice of such rejection to the Escrow
Agent from the Company, the Escrow Agent shall promptly issue a refund check to
the rejected subscriber in the amount of the subscriber's check plus any
interest credited thereon. If the Company rejects any subscription for which the
Escrow Agent has not yet collected funds but has submitted the subscriber's
check for collection and upon written notice of such rejection to Escrow Agent
from the Company, the Escrow Agent shall promptly issue a check in the amount of
the subscriber's check to the rejected subscriber after the Escrow Agent is
satisfied that such uncollected funds are collected. If the Escrow Agent has not
yet submitted a rejected subscriber's check for collection and upon written
notice to Escrow Agent from the Company is rejecting such subscription, the
Escrow Agent shall promptly return the subscriber's check directly to
subscriber.
6. COMPENSATION OF ESCROW AGENT. The Company shall pay the Escrow Agent
compensation for its escrow services as set forth in the attachment to this
Escrow Agreement, said attachment being incorporated herein by reference. If it
is necessary for
the Escrow Agent to return funds to the subscribers or to a Selected Dealer or
if Escrow Agent does any other act or provides any other service as requested by
the Company, the Company shall pay to the Escrow Agent an additional amount
sufficient to reimburse it for its actual cost in disbursing such funds or in
doing such acts or providing such services. However, no such fee, reimbursement
for costs and expenses, indemnification for any damages incurred by the Escrow
Agent, or any monies whatsoever shall be paid out of or chargeable to the funds
on deposit in the Escrow Account.
7. MISCELLANEOUS. The Escrow Agent represents that it is not affiliated
with the Company. In receiving items for deposit or collection, the Escrow Agent
acts only as the collecting agent for the Company, and assumes no responsibility
beyond the exercise of ordinary care. All items received by the Escrow Agent for
the purposes of deposit or collection and all credit for items are provisional
and subject to final payment. No withdrawals shall be permitted from the Escrow
Account except as provided herein or as required by law or court order. The
Escrow Agent may not at any time set off any sums credited to the Escrow Account
against any indebtedness owed to the Escrow Agent by any party. The Escrow Agent
will not liable for default or negligence of its duly selected correspondents,
nor for losses in transit, and each correspondent so selected shall not be
liable except for its own negligence. The Escrow Agent or its correspondents may
send any item, directly or indirectly, to any bank including the payor, and
accept its draft or credit as conditional payment in lieu of cash, it may charge
back any item at any time before final payment, whether returned or not, or any
item drawn on the Escrow Agent which is not good at the close of business on the
date deposited.
All notices, communications or transmissions required or permitted by
this Agreement shall be mailed by United States mail, first class. All notices,
communications or transmissions sent by Escrow Agent to a subscriber or Selected
Dealer shall be sent to the address indicated on the Written Account or such
other address that Escrow Agent can determine.
As to all checks, drafts and other items for the payment of money,
which now or hereafter constitute, or which are intended to constitute, any part
of (or which are attempted to be deposited in) the Escrow Account, the Escrow
Agent shall have the right (and is hereby authorized) to endorse the same in the
name of any party hereto and deposit the same in the Escrow Account. In general,
Escrow Agent shall have all of the rights afforded a collecting bank or
presenting bank under the Uniform Commercial Code in effect in the State of
Michigan; provided, however, that Escrow Agent shall not have the right of
set-off.
All of the terms and conditions in connection with the Escrow Agent's
duties and responsibilities, and the rights of the undersigned or anyone else,
with respect to the
Escrow Account, are contained solely in this Agreement and in any signature card
required by the Escrow Agent pertaining to the Escrow Account, and the Escrow
Agent is not expected or required to be familiar with the provisions of any
other writing, understanding or agreement, and shall not be charged with any
responsibility or liability in connection with the observance or non-observance
of the provisions of any such other writing, understanding or agreement, and no
implied covenant or obligation on the part of the Escrow Agent shall be read
into this Agreement; and the Escrow Agent shall not be responsible in any manner
for any depreciations in the value of the Escrow Account or any of the items
attempted to be deposited therein or the proceeds thereof, nor shall the Escrow
Agent have any duty or responsibility whatsoever to take any necessary steps to
preserve any rights or enforce collection of any of the items attempted to be
deposited in the Escrow Account or the proceeds thereof by legal proceedings or
otherwise.
The Escrow Agent may act or refrain from acting in respect of any
matter referred to herein in full reliance upon any by any with the advice of
counsel which may be selected by it, and shall be fully protected in so acting
or in refraining from acting upon the advise of such counsel.
The Escrow Agent may rely and shall be protected in acting upon any
writing which may be submitted to it in connection with its duties hereunder and
which is believed by it to be genuine and to have been signed or presented by
the proper party or parties and shall have no liability or responsibility with
respect to the form, content, execution or validity thereof.
The Escrow Agent shall have no responsibility or liability for any act
or omission on its part, notwithstanding any demand or notice to the contrary by
any party hereto or any other person or entity, all subject to the sole
limitation that the Escrow Agent act in good faith, and upon the exercise of its
best judgment. Except as herein expressly provided, none of the provisions of
this Agreement shall require the Escrow Agent to expend or risk its own funds or
otherwise incur financial liability or expense in the performance of any of its
duties hereunder.
The Escrow Agent is hereby authorized to comply with and obey all
orders, judgments, decrees or writs entered or issued by any court, and in the
event the Escrow Agent obeys or complies with any such order, judgment, decree
or writ of any court, in whole or in part, it shall not be liable to any of the
parties hereto, nor to any other person or entity, by reason of such compliance,
notwithstanding that it shall be determined that any such order, judgment,
decree or writ be entered without jurisdiction or be invalid for any reason or
be subsequently reversed, modified, annulled, satisfied or vacated.
The Escrow Agent shall not be required to institute or defend any
action or legal process involving any matter referred to herein which in any
manner affects it or its duties or liabilities hereunder to take any other
action with reference to the Escrow Account not specifically agreed to therein,
and the Escrow Agent shall not be responsible for any act or failure to act on
its part except in the case of its own bad faith or gross negligence.
Company promises and agrees to indemnify and save the Escrow Agent from
any and all claims, liabilities, judgments, attorney fees and other expenses of
every kind and nature which may be incurred by the Escrow Agent in any manner
pertaining to, connected with or emanating from the Escrow Agent's acceptance
of, and its performance under, this Agreement.
Should any controversy arise between the undersigned or between any of
the undersigned and any other person or entity with respect to this Agreement,
or with respect to the ownership of or the right to receive any sums from the
Escrow Account, Escrow Agent shall have the right to institute a xxxx of
interpleader in any court of competent jurisdiction to determine the rights of
the parties. Should a xxxx of interpleader be instituted, or should Escrow Agent
become involved in litigation in any manner whatsoever connected with or
pertaining to this Agreement or the Escrow Account, the Company hereby binds and
obligates itself, its heirs and legal representatives, to pay Escrow Agent, on
demand, in addition to any charge made hereunder for acting as escrow agent,
reasonable attorney fees incurred by Escrow Agent, and any other disbursements,
expenses, losses, costs and damages in connection with or resulting from such
litigation.
Escrow Agent may resign as escrow agent by giving all of the parties
hereto not less than 15 days prior written notice of the effective date of such
resignation. If on or prior to the effective date of such resignation, Escrow
Agent has not received joint written instructions from the parties hereto, it
will thereupon deposit the Escrow Amount into the registry of a court of
competent jurisdiction. The parties hereto intend that a substitute escrow agent
will be appointed to fulfill the duties of the Escrow Agent hereunder for the
remaining term of this Agreement in the event of the Escrow Agent's resignation,
and if the parties hereto cannot agree on a substitute escrow agent, they will
use their best efforts to derive a procedure to appoint a substitute escrow
agent.
The Escrow Agent is acting solely as an escrow agent hereunder and not
as a trustee, and the Escrow Agent has no fiduciary duties, obligations or
liabilities under this Agreement.
All of the terms, conditions and agreements contained herein shall be
binding on each of the undersigned, jointly and severally, and each of the
undersigned's heirs, successors, legal representatives and assigns.
The name of the Escrow Agent shall not be used in any way which may
infer an association with the Company, other than that of escrow agent.
This Agreement is entered into for the express benefit of the Company
and the subscribers for Shares.
The laws of the State of Michigan shall govern the interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
GEN-NET LEASE INCOME TRUST, INC.
By:_______________________________________
Xxxxx X. Xxxxxxxx, President
Agreed to and accepted this _______ day of
__________________, 2001.
Citizens First Savings Bank
By:_______________________________________
Printed Name:_____________________________
Title:____________________________________
