EXHIBIT 10.2
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Form of Escrow Agreement
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NationsBank of Georgia, N.A.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. XxXxxxxxx
Re: Xxxxx Real Estate Trust, Inc.
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Ladies and Gentlemen:
Xxxxx Real Estate Investment Trust, Inc., a Maryland corporation (the
"Company"), will be the issuer for a public offering of its common stock (the
"Stock"). Xxxxx Investment Securities, Inc., a Georgia corporation (the "Dealer
Manager"), will act as Dealer Manager for the offering of the Stock. The
Company will sell a minimum of 125,000 shares of Stock at a price of $10.00 per
share, for a total minimum capital raised of $1,250,000 (the "Required
Capital"). The Company hereby appoints you as Escrow Agent for purposes of
holding the proceeds from the sale of the Stock, and the Company shall deposit
with you such proceeds to be held by you as Escrow Agent on the terms and
conditions hereinafter set forth:
1. Persons subscribing to purchase the Stock will be instructed by the
Dealer Manager or any soliciting dealers to remit the purchase price in the form
of checks, drafts or money orders (hereinafter called "instruments of payment")
payable to the order of, or funds wired in favor of, the Company (the "Escrow
Account"). The Dealer Manager will deposit such instruments of payment with you
into the deposit account entitled NationsBank, as Escrow Holder for Xxxxx Real
Estate Investment Trust, Inc. (the "Escrow Holding Account") promptly after
receipt of those instruments of payment by the Dealer Manager. Within one
business day after receipt by you of written notification from the Dealer
Manager setting forth, as to each subscriber, the name, address, number of
shares purchased and purchase price remitted (the "Batch Sheet"), you will
transfer the total amount of subscription proceeds shown on such Batch Sheet
from the Escrow Holding Account to the Escrow Account.
2. The aforesaid instruments of payment are to be promptly processed for
collection by you following deposit by the Dealer Manager into the Escrow
Holding Account. The proceeds thereof are to be transferred into the Escrow
Account as provided in paragraph I hereof and held in the Escrow Account until
such funds are either returned to the subscribers in accordance with paragraph 3
hereof or otherwise disbursed in accordance with paragraph 6 hereof. In the
event any of the instruments of payment are returned to you for nonpayment prior
to receipt by you of the Required Capital, you shall promptly notify the Dealer
Manager in writing of such nonpayment, and you are authorized to debit the
Escrow Account in the amount of such return payment as well as any interest
earned on the investment represented by such payment.
3. In the event that at the close of business on ________ __, 1997 (the
"Expiration Date") you are not in receipt of Batch Sheets evidencing
subscriptions accepted on or before such date, and instruments of payment dated
not later than that date (or actual wired funds), for the purchase of Stock
providing for total purchase proceeds that equal the Required Capital (exclusive
of any funds received from subscriptions for Stock from entities which we have
notified you are affiliated with the Company or its affiliates), you shall
promptly notify the Company that such instruments of payment and Batch Sheets
have not been received by you. Thereafter, you agree to use your best efforts
to obtain an executed IRS Form W-9 from each subscriber within thirty (30) days
after you provide such notice. Upon receipt of said Form W-9 from each
subscriber, you shall promptly return by your check the funds
deposited in the Escrow Account, or shall return the instruments of payment
delivered to you if such instruments have not been processed for collection
prior to such time, directly to the Company, which will in turn promptly forward
such checks to each subscriber at the address indicated on the Batch Sheet. In
the event an executed Form W-9 is not received by you from each subscriber
within such period, you shall thereupon remit an amount to the subscribers in
accordance with the provisions hereof, withholding thirty one percent (31%) of
the earnings attributable to those subscribers not furnishing executed forms in
accordance with IRS Regulations. Included in the remittance shall be a
proportionate share of the income earned in the account allocable to each
subscriber's investment in accordance with the terms and conditions specified in
paragraph 7 hereof (less the thirty one percent (31%) withholding, where
applicable). However, you shall not be required to remit any payments until
funds represented by such payments have been collected by you.
In the event that the Company rejects any subscription for which you
have already collected funds, you shall promptly issue a refund check to the
rejected subscriber. If the Company rejects any subscription for which you have
not yet collected funds but have submitted the subscriber's check for
collection, you shall promptly issue a check in the amount of the subscriber's
check to the rejected subscriber after you have cleared such funds. If you have
not yet submitted a rejected subscriber's check for collection, you shall
promptly remit the subscriber's check directly to the subscriber.
4. Following receipt by you of cash and instruments of payment (or wired
funds) of the Required Capital prior to the time provided in paragraph 3
hereinabove, you shall notify the Company in writing within one business day
when such funds have been collected through normal banking channels and
deposited in the Escrow Account.
5. Prior to the disbursement of funds deposited in the Escrow Account in
accordance with the provisions of paragraph 3 or 6 hereof, you shall invest all
of the funds deposited in the Escrow Account in "Short-term Investments" (as
defined below) and you are further authorized and you agree to reinvest all
earnings and interest derived therefrom in any of the Short-term Investments
specified below. In the event that instruments of payment are returned to you
for nonpayment, you are authorized to debit the Escrow Account in accordance
with paragraph 2 hereof.
"Short-term Investments" include obligations of, or obligations
guaranteed by, the United States government or bank money-market accounts or
certificates of deposit of national or state banks that have deposits insured by
the Federal Deposit Insurance Corporation (including certificates of deposit of
any bank acting as a depository or custodian for any such funds, including,
without limitation, such certificates or instruments of The Bank of New York),
which mature on or before the Expiration Date, unless such instrument cannot be
readily sold or otherwise disposed of for cash by the Expiration Date without
any dissipation of the offering proceeds invested.
The following securities are not permissible investments:
(a) money market mutual funds;
(b) corporate equity or debt securities;
(c) repurchase agreements;
(d) bankers' acceptances;
(e) commercial paper; and
(f) municipal securities.
6. All disbursements from the Escrow Account, except for disbursements
under the provisions of paragraph 3 hereof, shall be made by you only pursuant
to the provisions of this paragraph 6. Except for disbursements authorized upon
court order, you shall hold all funds in the Escrow Account until (i) the date
checks for Required Capital have cleared normal banking channels after receipt
by you of the Required Capital, and (ii) receipt of letter instructions from the
Company directing disbursements of such funds to the Company. In disbursing such
funds, you are authorized to rely solely upon such letter instructions which you
receive from the Company whether or not such instructions are correct, true or
authentic; provided that, if in your opinion such letter instructions from the
Company are unclear, you are authorized to rely upon the legal counsel to the
Company in
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distributing such funds to the effect that distribution of the funds is
authorized by the letter instructions of the Company and that distribution of
the funds in that manner is authorized by and in compliance with such letter.
However, you shall not be required to disburse any funds attributable to
instruments of payment which have not been collected by you, provided that you
shall use your best efforts to promptly collect such funds after your receipt of
disbursement instructions from the Company in accordance with this paragraph,
and shall disburse such funds in compliance with the disbursement instructions
from the Company.
7. In the event the offering of Stock terminates prior to receipt of the
Required Capital, income earned on subscription proceeds deposited in the Escrow
Account ("Gross Escrow Income") minus the total escrow expenses ("Net Escrow
Income") shall be remitted to subscribers in compliance with paragraph 3. Each
subscriber's pro rata portion of Net Escrow Income shall be determined as
follows: The total amount of Net Escrow Income shall be multiplied by a
fraction, the numerator of which is determined by multiplying the number of
Stock purchased by said subscriber times the number of days said subscriber's
proceeds are invested prior to termination of the offering, and the denominator
of which is the total of the numerators for all such subscribers.
Notwithstanding the foregoing, (i) escrow expenses may be deducted from the
Escrow Account only to the extent of Gross Escrow Income, and the Company shall
reimburse the Escrow Agent for any escrow expenses in excess of such amount, and
(ii) Maine, Missouri, Ohio and Pennsylvania residents will be paid their pro
rata portion of income earned on subscription proceeds deposited in the Escrow
Account without any deductions for escrow expenses. You shall promptly notify
the Company of the amount of Net Escrow Income which subscribers who are Maine,
Missouri, Ohio or Pennsylvania residents would have received if escrow expenses
were not deducted from Gross Escrow Income, and the Company shall reimburse you
for such pro rata escrow expenses attributable to subscribers who are Maine,
Missouri, Ohio or Pennsylvania residents. You shall promptly remit all such Net
Escrow Income in accordance with paragraph 3.
8. As compensation for serving as Escrow Agent hereunder, you shall receive
a fee, as set forth in Schedule A attached hereto.
9. In performing any of your duties hereunder, you shall not incur any
liability to anyone for any damages, losses or expenses, except for willful
default, breach of trust, or gross negligence, and accordingly you shall not
incur any such liability with respect to any action taken or omitted (1) in good
faith upon advice of your counsel given with respect to any questions relating
to your duties and responsibilities under this Agreement, or (2) in reliance
upon any instrument, including any written instrument or instruction provided
for in this Agreement, not only as to its due execution and validity and
effectiveness of its provisions but also as to the truth and accuracy of
information contained therein, which you shall in good faith believe to be
genuine, to have been signed or presented by a proper person or persons and to
conform to the provisions of this Agreement.
10. The Company hereby agrees to indemnify and hold you harmless against
any and all losses, claims, damages, liabilities and expenses, including the
reasonable cost of attorneys' fees and disbursements, that may be imposed on you
or incurred by you in connection with your acceptance of appointment as the
Escrow Agent hereunder, or the performance of your duties hereunder, including
any litigation arising from this Agreement or involving the subject matter
hereof, except where such losses, claims, damages, liabilities and expenses
result from willful default, breach of trust or gross negligence.
11. In the event of a dispute between the parties hereto sufficient in your
discretion to justify doing so, you shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all money or property
in your hands under this Agreement, together with such legal pleadings as you
deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Agreement. In the event of any uncertainty as to your
duties hereunder, you may refuse to act under the provisions of this Agreement
pending order of a court of competent jurisdiction and you shall have no
liability to the Company or to any other person as a result of such action. Any
such legal action may be brought in such court as you shall determine to have
jurisdiction thereof. The filing of any such legal proceedings shall not deprive
you of your compensation earned prior to such filing.
12. All written notices and letters required hereunder to you shall only be
effective if delivered personally or by certified mail, return receipt requested
to NationsBank of Georgia, N..A., 000 Xxxxxxx Xxxxxx
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Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attn: Xxxxx X. XxXxxxxxx. All written
notices and letters required hereunder to the Company or the Dealer Manager
shall only be effective if delivered personally or by certified mail, return
receipt requested to Xxx X. Xxxxx, III, 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxxxxx,
Xxxxxxx 00000.
13. This Agreement shall be governed by the laws of the State of Georgia as
to both interpretation and performance.
14. The provisions of this Agreement shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.
15. The Company hereby acknowledges that you are serving as Escrow Agent
only for the limited purposes herein set forth, and hereby agrees that it will
not represent or imply that you, by serving as Escrow Agent hereunder or
otherwise, have investigated the desirabilities or advisability of investment in
the Company, or have approved, endorsed or passed upon the merits of the Stock
or the Company. The Company further agrees to instruct the Dealer Manager, and
each of its representatives, and any other representative who may offer Stock to
persons from time to time, that they shall not represent or imply that you have
investigated the desirability or advisability of investment in the Company, or
have approved, endorsed or passed upon the merits of the Stock or the Company,
nor shall they use your name in any manner whatsoever in connection with the
offer or sale of the Stock other than by acknowledgment that you have agreed to
serve as Escrow Agent for the limited purposes herein set forth.
16. This Agreement and any amendment hereto may be executed by the parties
hereto in one or more counterpane, each of which shall be deemed to be an
original.
17. In the event that you receive instruments of payment (or wired funds)
after the Required Capital has been received and the proceeds of the Escrow
Account have been distributed to the Company, you are hereby authorized to
deposit such instruments of payment to any deposit account as directed by the
Company. The application of said funds into a deposit account directed by the
Company shall be a full acquittance to you and you shall not be responsible for
the application of said funds.
18. The Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound or incur any liability with respect to any
other agreements or understanding between any other parties, whether or not the
Escrow Agent has knowledge of any such agreements or understandings.
19. Indemnification provisions set forth herein shall survive the
termination of this Agreement.
20. Upon acceptance and distribution of the Required Capital, this Escrow
Agreement shall terminate and the Escrow Agent shall have no further
responsibility or liability with regard to the terms of this Agreement.
21. The Escrow Agent has no responsibility for accepting, rejecting or
approving subscriptions.
22. This Agreement shall not be modified, revoked, released or terminated
unless reduced to writing and signed by all parties hereto, subject to the
following paragraph.
Should, at any time, any attempt be made to modify this Agreement in a
manner that would increase the duties and responsibilities of the Escrow Agent
or to modify this Agreement in any manner which the Escrow Agent shall deem
undesirable, or at any other time, the Escrow Agent may resign by notifying the
Company in writing, by certified mail, and until (i) the acceptance by a
successor escrow agent as shall be appointed by the Company; or (ii) thirty (30)
days following the date upon which notice was mailed, whichever occurs sooner,
the Escrow Agent's only remaining obligation shall be to perform its duties
hereunder in accordance with the terms of the Agreement.
23. The Escrow Agent may resign at any time from its obligations under this
Escrow Agreement by providing written notice to the Company. Such resignation
shall be effective on the date specified in such notice which shall be not less
than thirty (30) days after such written notice has been given. The Escrow Agent
shall have no responsibility for the appointment of a successor escrow agent.
Unless otherwise provided in this Agreement,
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final termination of this Escrow Agreement shall occur on the date that all
funds held in the Escrow Account are distributed either (a) to the Company
pursuant to paragraph 6 hereof, or (b) to subscribers pursuant to paragraphs 3
and 7 hereof.
24. The Escrow Agent may be removed for cause by the Company by written
notice to the Escrow Agent effective on the date specified in such notice. The
removal of the Escrow Agent shall not deprive the Escrow Agent of its
compensation earned prior to such removal.
[Signatures on following page]
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Agreed to as of the ____ day of ____________, 1997.
XXXXX REAL ESTATE TRUST, INC.,
a Maryland corporation
By:
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Name:
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Title:
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XXXXX INVESTMENT SECURITIES, INC.,
a Georgia corporation
By:
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Name:
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Title:
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The terms and conditions contained above are hereby accepted and agreed to by:
NATIONSBANK OF GEORGIA, N.A.
By:
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Name:
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Title:
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SCHEDULE A TO
ESCROW AGREEMENT FOR
XXXXX REAL ESTATE INVESTMENT TRUST, INC.
Schedule of Fees - Escrow Agency
NationsBank of Georgia
Administration Fee - Payable Annually................$
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For return of funds due to
rejected subscription................................$
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per rejected
subscription
For costs incurred in connection
with returned checks.................................$
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per returned check
Charges for refunding subscription proceeds if Required Capital is not met will
be negotiated between the parties.
Charges for filing reports or information as may be required by Internal Revenue
Service regulations or for the performance of any services not contemplated at
the time of opening account, or not of a routine administrative nature, or not
specifically covered in this schedule, will be determined by appraisal.
Actual Out-of-Pocket expenses such as counsel fees, cost of special checks,
postage, insurance, telephone, telegraph, etc. will be billed at cost.
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