EXHIBIT 10.4
ESCROW AGREEMENT
Xxxxx Fargo Bank, N.A.
000 Xxxxxx X0000-000
Corporate Trust Services, XXX
Xxx Xxxxxx, XX 00000
Re: Xxxxxxx Commercial Properties REIT Escrow Agreement
Ladies and Gentlemen:
XXXXXXX COMMERCIAL PROPERTIES REIT, a Maryland real estate investment trust (the
"Company"), the issuer for an offering (the "Offering") of up to 11,000,000
common shares of beneficial interest, par value $.001 per share (the "Shares"),
pursuant to a registration statement originally filed on Form S-11 with the
Securities and Exchange Commission on December 31, 2003, File No. 333-111674.
X.X. Xxxx Securities, LLP, a Texas limited liability partnership (the "Dealer
Manager"), will act as Dealer Manager for the offering of the Shares. The
Company is entering into this Escrow Agreement (the "Agreement") to set forth
the terms on which Xxxxx Fargo Bank, N.A. ("Escrow Agent"), will hold and
disburse the proceeds from subscriptions for the purchase of the Shares in the
Offering until such time as: (i) in the case of subscriptions received from all
nonaffiliates of the Company, other than from Pennsylvania Subscribers or New
York Subscribers (each as defined below), the Company has received subscriptions
for Shares resulting in total minimum capital raised of $2,000,000 (the
"Required Capital"); (ii) in the case of subscriptions received from residents
of Pennsylvania ("Pennsylvania Subscribers"), the Company has received
subscriptions for Shares from nonaffiliates of the Company resulting in total
minimum capital raised of $5,475,000 (the "Pennsylvania Required Capital"); and
(iii) in the case of subscriptions received from residents of New York ("New
York Subscribers"), the Company has received subscriptions for Shares from
nonaffiliates of the Company, other than from Pennsylvania Subscribers,
resulting in total minimum capital raised of $2,500,000 (the "New York Required
Capital").
The Company hereby appoints Escrow Agent as escrow agent for purposes of holding
the proceeds from the sale of the Shares, and the Company shall deposit with
Escrow Agent such proceeds to be held by Escrow Agent on the terms and
conditions hereinafter set forth below:
1. Persons subscribing to purchase the Shares (the "Subscribers") will be
instructed by the Dealer Manager or any soliciting dealers to remit the purchase
price in the form of checks (hereinafter called "instruments of payment")
payable to the order of, or funds wired in favor of, "Xxxxx Fargo Bank, Xxxxxxx
Commercial Properties REIT." Within one business day after receipt of
instruments of payment from the Offering, the Dealer Manager will send to the
Escrow Agent: (a) an electronic file in a compatible format containing each
subscriber's name, address, tax identification number, number of Shares
purchased, purchase price remitted and whether a IRS Form W-9 has been obtained,
and (b) the instruments of payment from such Subscribers (the "Subscription
Materials") for deposit into the deposit account entitled "Xxxxx Fargo Bank, as
Escrow Agent for the Benefit of Subscribers of Xxxxxxx Commercial Properties
REIT" (the "Escrow Account"). Instruments of payment received from Pennsylvania
Subscribers (as identified as such by the Company) shall be accounted for
separately in a subaccount entitled "Xxxxx Fargo Bank, as Escrow Agent for the
Benefit of Pennsylvania Subscribers of Xxxxxxx Commercial Properties REIT" (the
"Pennsylvania Escrow Account"), until such Pennsylvania Escrow Account has
closed pursuant to paragraph 3(a) hereof. Instruments of payment received from
New York Subscribers (as identified as such by the Company) shall be accounted
for separately in a subaccount entitled "Xxxxx Fargo Bank, as Escrow Agent for
the Benefit of New York Subscribers of Xxxxxxx Commercial Properties REIT" (the
"New York Escrow Account"), until such New York Escrow
Account has closed pursuant to paragraph 3(a) hereof. The Escrow Account, the
Pennsylvania Escrow Account, and the New York Escrow Account will be established
and maintained in such a way as to permit the interest income calculations
described in paragraph 7.
2. The aforesaid instruments of payment are to be promptly processed for
collection by Escrow Agent following deposit by the Dealer Manager into the
applicable Escrow Account, Pennsylvania Escrow Account, or New York Escrow
Account, as applicable. The proceeds thereof are to be held in the Escrow
Account, Pennsylvania Escrow Account, or New York Escrow Account, as applicable,
until such funds are either returned to the Subscribers in accordance with
paragraph 3 hereof or otherwise disbursed in accordance with paragraph 7 hereof.
In the event any of the instruments of payment are returned to Escrow Agent for
nonpayment prior to receipt by Escrow Agent of the Required Capital, the
Pennsylvania Required Capital, or the New York Required Capital, Escrow Agent
shall promptly notify the Dealer Manager in writing of such nonpayment, and
Escrow Agent is 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 and return to the Dealer Manager the returned item.
3. (a) Subject to the provisions of subparagraphs 3(b)-3(f) below:
(i) once the aggregate of all collected funds in the Escrow
Account, (for purposes of clarification, this amount will not
include funds in the Pennsylvania Escrow Account or the New
York Escrow Account) is an amount equal to or greater than the
Required Capital, the Escrow Agent shall promptly notify the
Company and, upon receiving written instruction from the
Company, (A) disburse to the Company, by check, ACH or wire
transfer, the funds in the Escrow Account representing the
gross purchase price for the Shares, and (B) disburse to the
Subscribers or the Company, as applicable, any interest
thereon pursuant to the provisions of subparagraph 3(f). 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 Company shall continue to cause subscriptions for
the Shares that are not to be deposited in either the
Pennsylvania Escrow Account or the New York Escrow Account to
be deposited therein until the Company informs the Escrow
Agent in writing to close the Escrow Account, and thereafter
any subscription documents and instruments of payment received
by the Escrow Agent from Subscribers other than Pennsylvania
Subscribers and New York Subscribers shall be forwarded
directly to the Company.
(ii) regardless of any closing of the Escrow Account, the
Company and the Dealer Manager shall continue to forward
instruments of payment and Subscription Materials received
from Pennsylvania Subscribers for deposit into the
Pennsylvania Escrow Account to the Escrow Agent until such
time as the Company notifies the Escrow Agent in writing that
total subscription proceeds (including the amount then in the
Pennsylvania Escrow Account) equal or exceed the Pennsylvania
Required Capital. Upon receipt of a written notice and
instruction from the Company that total subscription proceeds
(including the amount then in the Pennsylvania Escrow Account)
equaling or exceeding the Pennsylvania Required Capital have
been received in collected funds, the Escrow Agent shall (A)
disburse to the Company, by check, ACH or wire transfer, the
funds then in the Pennsylvania Escrow Account representing the
gross purchase price for the Shares, and (B) disburse to the
Pennsylvania Subscribers or the Company, as applicable, any
interest thereon pursuant to the provisions of subparagraph
3(f). Following such disbursements, the Escrow Agent shall
close the Pennsylvania Escrow Account, and thereafter any
Subscription Materials and instruments of payment received by
the Escrow
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Agent from Pennsylvania Subscribers shall be deposited
directly to the Escrow Account (or to the Company, if it has
closed the Escrow Account, as instructed in writing by the
Company).
(iii) regardless of any closing of the Escrow Account, the
Company and the Dealer Manager shall continue to forward
instruments of payment and Subscription Materials received
from New York Subscribers for deposit into the New York Escrow
Account to the Escrow Agent until such time as the Company
notifies the Escrow Agent in writing that total subscription
proceeds (including the amount then in the New York Escrow
Account but not including the amount then in the Pennsylvania
Escrow Account) equal or exceed the New York Required Capital.
Upon receipt of a written notice and instruction from the
Company that total subscription proceeds (including the amount
then in the New York Escrow Account) equaling or exceeding the
New York Required Capital have been received in collected
funds, the Escrow Agent shall (A) disburse to the Company, by
check, ACH or wire transfer, the funds then in the New York
Escrow Account representing the gross purchase price for the
Shares, and (B) disburse to the New York Subscribers or the
Company, as applicable, any interest thereon pursuant to the
provisions of subparagraph 3(f). Following such disbursements,
the Escrow Agent shall close the New York Escrow Account, and
thereafter any Subscription Materials and instruments of
payment received by the Escrow Agent from New York Subscribers
shall be deposited directly to the Escrow Account (or to the
Company, if it has closed the Escrow Account, as instructed in
writing by the Company).
(b) In the event that at the close of business on the date exactly one
year after the SEC grants an effective order under Section 8(a) of the
Securities Act of 1933, as amended (the "Expiration Date"), which date
will be communicated to the Escrow Agent in writing as soon as possible
after determination, Escrow Agent is not in receipt of evidence of
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 Shares providing for total purchase proceeds that at least
equal the Required Capital, Escrow Agent shall promptly notify the
Company that such instruments of payment totaling an amount at least
equal to the Required Capital have not been received by Escrow Agent.
Thereafter, Dealer Manager agrees to use its best efforts to obtain an
executed IRS Form W-9 from each subscriber. Promptly following the
Expiration Date, and in any event no later than the next business day
after the Expiration Date or as soon as possible thereafter, Escrow
Agent shall promptly return by check the funds deposited in the Escrow
Account, the Pennsylvania Escrow Account, and the New York Escrow
Account, or shall return the instruments of payment delivered to Escrow
Agent if such instruments have not been processed for collection prior
to such time, directly to each Subscriber at the address given to the
Company. 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, except that in the case of Subscribers who have not
provided to the Company an executed Form W-9, Escrow Agent shall
withhold a portion of the earnings attributable to those Subscribers at
the applicable rate in accordance with Section 3406 of the Internal
Revenue Code of 1986, as amended. Notwithstanding the foregoing, Escrow
Agent shall not be required to remit any payments until funds
represented by such payments have been collected by Escrow Agent.
(c) Notwithstanding subparagraphs 3(a) and 3(b) above, if the Escrow
Agent is not in receipt of evidence of subscriptions accepted on or
before the close of business on such date that is 120 days after the
SEC grants an effective order under Section 8(a) of the Securities Act
of 1933, as amended (the Company will notify the Escrow Agent of the
date the SEC grants the effective order) (the "Initial Escrow Period"),
and instruments of payment dated not later than that date, for
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the purchase of Shares providing for total purchase proceeds from all
nonaffiliated sources that equal or exceed the Pennsylvania Required
Capital, the Escrow Agent shall promptly notify the Company.
Thereafter, the Company shall send to each Pennsylvania Subscriber by
certified mail within ten (10) calendar days after the end of the
Initial Escrow period a notification in the form of Exhibit A. If,
pursuant to such notification, a Pennsylvania Subscriber requests the
return of his or her subscription funds within ten (10) calendar days
after receipt of the notification (the "Request Period") and the
Company is not in possession of an executed IRS form W-9, the Company
shall obtain an executed IRS Form W-9 from each such Pennsylvania
Subscriber within ten (10) calendar days after receiving notice from
such Pennsylvania Subscriber. The Escrow Agent shall promptly refund
directly to each Pennsylvania Subscriber the collected funds deposited
in the Pennsylvania Escrow Account on behalf of such Pennsylvania
Subscriber, or shall return the instruments of payment delivered, but
not yet processed for collection prior to such time, to the address
provided by the Dealer Manager or the Company, together with interest
income in the amounts calculated pursuant to paragraph 7. If an
executed IRS Form W-9 is not received for such Pennsylvania Subscriber
within ten (10) calendar days, the Escrow Agent shall thereupon remit
an amount to such Pennsylvania Subscriber, in accordance with the
provisions hereof, withholding a portion of the earnings attributable
to such Pennsylvania Subscriber at the applicable rate in accordance
with Section 3406 of the Internal Revenue Code of 1986, as amended.
However, the Escrow Agent shall not be required to remit such payments
until funds represented by such payments have been collected by the
Escrow Agent.
(d) The subscription funds of Pennsylvania Subscribers who do not
request the return of their subscription funds within the Request
Period shall remain in the Pennsylvania Escrow Account for successive
120-day escrow periods (a "Successive Escrow Period"), each commencing
automatically upon the termination of the prior Successive Escrow
Period, and the Company and Escrow Agent shall follow the notification
and payment procedure set forth in subparagraph 3(c) above with respect
to the Initial Escrow Period for each Successive Escrow Period until
the occurrence of the earliest of (i) the Expiration Date, (ii) the
receipt and acceptance by the Company of subscriptions for the purchase
of Shares with total purchase proceeds that equal or exceed the
Pennsylvania Required Capital and the disbursement of the Pennsylvania
Escrow Account on the terms specified herein, or (iii) all funds held
in the Pennsylvania Escrow Account having been returned to the
Pennsylvania Subscribers in accordance with the provisions hereof.
(e) In the event that the Company rejects any subscription for which
Escrow Agent has already collected funds, Escrow Agent shall promptly
issue a refund check to the rejected Subscriber. If the Company rejects
any subscription for which Escrow Agent has not yet collected funds but
have submitted the Subscriber's check for collection, Escrow Agent
shall promptly issue a check in the amount of the Subscriber's check to
the rejected Subscriber after Escrow Agent has collected such funds. If
Escrow Agent has not yet submitted a rejected Subscriber's check for
collection, Escrow Agent shall promptly remit the Subscriber's check
directly to the Subscriber.
(f) At any time after funds are disbursed upon the Company's acceptance
of subscriptions pursuant to subparagraph 3(a) above on the tenth
(10th) day following the date of such acceptance, the Escrow Agent
shall promptly provide directly to each Subscriber the amount of the
interest payable to the Subscribers as calculated in accordance with
paragraph 7; provided that the Company is in possession of such
Subscriber's executed IRS Form W-9. In the event the Company is not in
possession of an executed IRS Form W-9 from any Subscriber, the Company
shall obtain an executed IRS Form W-9 from such Subscriber within ten
(10) calendar days after acceptance of such subscription. In the event
an executed IRS Form W-9 is not received for each Subscriber within
such period, the Escrow Agent shall remit an amount to the Subscribers
in
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accordance with the provisions hereof, withholding a portion of the
earnings attributable to those Subscribers at the applicable rate in
accordance with Section 3406 of the Internal Revenue Code of 1986, as
amended. However, the Escrow Agent shall not be required to remit any
payments until funds represented by such payments have been collected
by the Escrow Agent. 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 payable to the Company.
In the event that instruments of payment are returned for nonpayment, the Escrow
Agent is authorized to debit the Escrow Account, the Pennsylvania Escrow
Account, or the New York Escrow Account, as applicable, in accordance with
paragraph 2 hereof.
4. Following receipt by Escrow Agent of instruments of payment (or wired funds)
of the Required Capital prior to the time provided in paragraph 3 hereinabove,
Escrow Agent shall notify the Company in writing and/or via secure online
real-time account access service within one business day when such funds have
been deposited in the Escrow Account, the Pennsylvania Escrow Account, or the
New York Escrow Account, as applicable, and collected through normal banking
channels.
5. Prior to the disbursement of funds deposited in the Escrow Account, the
Pennsylvania Escrow Account, or the New York Escrow Account, as applicable, in
accordance with the provisions of paragraph 3 or 7 hereof, Escrow Agent shall
invest all of the funds deposited in the Escrow Account, the Pennsylvania
Account, and the New York Account, as applicable, in "Short-term Investments"
(as defined below) and Escrow Agent is further authorized and Escrow Agent
agrees to reinvest all earnings and interest derived therefrom in any of the
Short-term Investments specified below. In the absence of written direction from
the Company, funds deposited in the Escrow Account, the Pennsylvania Escrow
Account, and the New York Escrow Account will be invested in the Xxxxx Fargo
100% Treasury Money Market Fund as long as such Fund maintains the highest
rating available by Standard & Poor's or Moody's. (Xxxxx Fargo Bank, N.A. is the
investment advisor and custodian and receives compensation for these services.
These investments are not deposits of or obligations of Xxxxx Fargo Bank, N.A.,
nor are they insured or guaranteed by the FDIC or any other government agency).
In the event that instruments of payment are returned to Escrow Agent for
nonpayment, Escrow Agent is 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 Escrow Agent, 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) corporate equity or debt securities:
(b) repurchase agreements;
(c) bankers' acceptances;
(d) commercial paper; and
(e) municipal securities;
6. The Escrow Agent is entitled to rely upon written instructions received from
the Company, unless the Escrow Agent has actual knowledge that such instructions
are not valid or genuine; provided that, if in
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the Escrow Agent's opinion, any instructions from the Company are unclear, the
Escrow Agent may request clarification from the Company prior to taking any
action, and if such instructions continue to be unclear, the Escrow Agent may
rely upon written instructions from the Company's legal counsel in distributing
or continuing to hold any funds. However, the Escrow Agent shall not be required
to disburse any funds attributable to instruments of payment that have not been
processed for collection, until such funds are collected and then shall disburse
such funds in compliance with the disbursement instructions from the Company.
7. If the Offering terminates prior to receipt of the Required Capital or one or
more Pennsylvania Subscribers elects to have his or her subscription returned in
accordance with paragraph 3, interest income earned on subscription proceeds
deposited in the Escrow Account (the "Escrow Income"), the Pennsylvania Escrow
Account (the "Pennsylvania Escrow Income"), or the New York Escrow Account (the
"New York Escrow Income"), as applicable, shall be remitted to Subscribers, or
to the Company if the applicable Subscriber's funds have been held in escrow by
the Escrow Agent for less than 35 days, in accordance with paragraph 3. For each
such Subscriber who has invested funds that have been held in escrow by the
Escrow Agent for at least 35 days, such Subscriber's pro rata portion of Escrow
Income, Pennsylvania Escrow Income, or New York Escrow Income, as applicable,
shall be determined as follows: the total amount of Escrow Income (or
Pennsylvania Escrow Income or New York Escrow Income, as appropriate) minus
interest earned on accepted subscription proceeds held by the Escrow Agent for
less than 35 days shall be multiplied by a fraction, (i) the numerator of which
is determined by multiplying the number of Shares purchased by said Subscriber
times the number of days said Subscriber's proceeds are held in the Escrow
Account, the Pennsylvania Escrow Account, or the New York Escrow Account, as
applicable, prior to the date of disbursement, and (ii) the denominator of which
is the total of the numerators for all Subscribers in such account who have
invested funds that have been held in escrow by the Escrow Agent for at least 35
days. The Escrow Agent shall remit all such Escrow Income, Pennsylvania Escrow
Income, and New York Escrow Income in accordance with paragraph 3.
Notwithstanding the foregoing, (i) escrow expenses, if any, may be deducted from
Escrow Income, Pennsylvania Escrow Income, or New York Escrow Income, as
applicable, and the Company shall reimburse the Escrow Agent any reasonable
expenses in excess of such amount, and (ii) residents of states where deductions
for escrow expenses are prohibited, as set forth on Exhibit B attached hereto,
shall be paid their pro rata portion of Escrow Income, Pennsylvania Escrow
Income, or New York Escrow Income, as applicable, without any deduction for
escrow expenses. Escrow Agent shall promptly notify the Company of the amount of
pro rata escrow expenses attributable to residents of states where deductions
are prohibited, and the Company shall reimburse Escrow Agent for such pro rata
escrow expenses attributable to such residents. If the Company chooses to leave
the Escrow Account open after receiving the Required Capital then it shall make
regular acceptances of subscriptions therein, but no less frequently than
monthly, and the Escrow Income from the last such acceptance shall be calculated
and remitted to the Subscribers or the Company, as applicable, pursuant to the
provisions of paragraph 3(f).
8. As compensation for serving as Escrow Agent hereunder, Escrow Agent shall
receive a fee, as set forth on Exhibit C attached hereto. Notwithstanding
anything contained herein to the contrary, the Escrow Agent shall look to the
Company for payment of the fees and expenses, and waives all right of offset
against the funds held in escrow pursuant to the terms of this Agreement.
9. In performing any of Escrow Agent's duties hereunder, Escrow Agent 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 Escrow
Agent shall not incur any such liability with respect to any action taken or
omitted (1) in good faith upon advice of Escrow Agent's counsel given with
respect to any questions relating to Escrow Agent's duties and responsibilities
under this Escrow Agreement, or (2) in reliance upon any instrument, including
any written instrument or instruction provided for in this Escrow Agreement, not
only as to its due execution and validity and effectiveness of its provisions
but also as to
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the truth and accuracy of information contained therein, which Escrow Agent
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 Escrow
Agreement.
10. The Company hereby agrees to indemnify and hold Escrow Agent harmless
against any and all losses, claims, damages, liabilities and expenses, including
the reasonable cost of attorneys' fees and expenses and disbursements, that may
be imposed on Escrow Agent or incurred by Escrow Agent in connection with Escrow
Agent's acceptance of appointment as the Escrow Agent hereunder, or the
performance of Escrow Agent's duties hereunder, including any litigation arising
from this Escrow 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 Escrow
Agent's discretion to justify doing so, Escrow Agent shall be entitled to tender
into the registry or custody of any court of competent jurisdiction all money or
property in Escrow Agent hands under this Escrow Agreement, together with such
legal pleadings as Escrow Agent deems appropriate, and thereupon be discharged
from all further duties and liabilities under this Escrow Agreement. In the
event of any uncertainty as to Escrow Agent's duties hereunder, Escrow Agent may
refuse to act under the provisions of this Escrow Agreement pending order of a
court of competent jurisdiction and Escrow Agent 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 Escrow Agent shall determine to have
jurisdiction thereof. The filing of any such legal proceedings shall not deprive
Escrow Agent of compensation earned prior to such filing.
12. All written notices and letters required hereunder to Escrow Agent shall
only be effective if delivered personally or by certified mail, return receipt
requested to:
Xxxxx Fargo Bank, N.A.
000 Xxxxxx X0000-000
Corporate Trust Services, XXX
Xxx Xxxxxx, XX 00000
Attn: X.X. Xxxxx or Xxxxxx X. Xxxxx.
All written notices and letters required hereunder to the Company shall only be
effective if delivered personally or by certified mail, return receipt requested
to Xxxxxxx Commercial Properties REIT, 0000 Xxxx Xxx Xxxxxxx Xxxxxxx, Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attn: Xxxxx X. Xxxxxxx, President. All written
notices and letters required hereunder to the Dealer Manager shall only be
effective if delivered personally or by certified mail, return receipt requested
to X.X. Xxxx Securities, LLP, 00000 XX Xxx 00 Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000, Attn: President. Each party hereto may, from time to time, change the
address to which notices to it are to be delivered or mailed hereunder by notice
in accordance herewith to the other parties.
13. This Escrow Agreement shall be governed by the laws of the State of
Louisiana as to both interpretation and performance.
14. The provisions of this Escrow Agreement shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.
15. The Company and Dealer Manager hereby acknowledge that Escrow Agent is
serving as escrow agent only for the limited purposes herein set forth, and
hereby agrees that it will not represent or imply that Escrow Agent, by serving
as escrow agent hereunder or otherwise, has investigated the desirabilities or
advisability of investment in the Company, or has approved, endorsed or passed
upon the merits of the
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Shares or the Company. The Company further agrees to instruct the Dealer
Manager, and each of its representatives, and any other representative who may
offer Shares to persons from time to time, that they shall not represent or
imply that Escrow Agent has investigated the desirability or advisability of
investment in the Company, or has approved, endorsed or passed upon the merits
of the Shares or the Company, nor shall they use Escrow Agent's name in any
manner whatsoever in connection with the offer or sale of the Shares other than
by acknowledgment that Escrow Agent has agreed to serve as escrow agent for the
limited purposes herein set forth.
16. This Escrow Agreement and any amendment hereto may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed to be
an original.
17. Except as otherwise required for subscription funds received from
Pennsylvania Subscribers and New York Subscribers as provided herein, in the
event that Escrow Agent receives 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, Escrow Agent is 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 Escrow Agent and Escrow Agent shall not
be responsible for the application of said funds.
18. 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 Escrow Agreement.
20. In the event that any part of this Agreement is declared by any court or
other judicial or administrative body to be null, void, or unenforceable, said
provision shall survive to the extent it is not so declared, and all of the
other provisions of this Agreement shall remain in full force and effect.
21. Unless otherwise provided in this Agreement, final termination of this
Escrow Agreement shall occur on the date that all funds held in the Escrow
Account, the Pennsylvania Escrow Account, and the New York Escrow Account are
distributed either (a) to the Company or to Subscribers and the Company has
informed the Escrow Agent in writing to close the Escrow Account, the
Pennsylvania Escrow Account, and the New York Escrow Account pursuant to
paragraph 3 hereof or (b) to a successor escrow agent upon written instructions
from the Company.
22. Escrow Agent has no responsibility for accepting, rejecting or approving
subscriptions. The Escrow Agent shall complete an OFAC search, in compliance
with its policy and procedures, of each subscription check prior to depositing
the check in the Escrow Account, the Pennsylvania Escrow Account, or the New
York Escrow Account, as applicable, and shall inform the Company if a
subscription check fails the OFAC search.
23. This Escrow 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 Escrow Agreement in a
manner that would increase the duties and responsibilities of Escrow Agent or to
modify this Escrow Agreement in any manner which Escrow Agent shall deem
undesirable, or at any other time, 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
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was mailed, whichever occurs sooner, Escrow Agent's only remaining obligation
shall be to perform its duties hereunder in accordance with the terms of the
Escrow Agreement.
24. 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. Escrow Agent shall
have no responsibility for the appointment of a successor escrow agent.
25. Escrow Agent may be removed for cause by the Company by 30 days written
notice to the Escrow Agent unless otherwise agreed upon effective on the date
specified in such notice. The removal of Escrow Agent shall not deprive Escrow
Agent of its compensation earned prior to such removal.
26. To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions, including Escrow
Agent, to obtain, verify and record information that identifies each
person/entity opening an account. For this account, Escrow Agent will need the
principal name and address of each party, tax payer identification number, and
other information, such as certified articles of incorporation, a
government-issued business license, a partnership agreement, and annual report
filed with the Secretary of State (or equivalent), or a trust agreement, that
will allow the Escrow Agent to identify the parties to the Escrow.
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Agreed to as of the __ day of _______, 2004.
XXXXXXX COMMERCIAL PROPERTIES REIT
By:
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Xxxxx X. Xxxxxxx, President
X.X. XXXX SECURITIES, LLP
By: H&H Services, Inc., general partner
By:
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Xxx X. Xxxx, President
The terms and conditions contained above are hereby accepted and agreed to by:
XXXXX FARGO BANK, N.A, AS ESCROW AGENT
By:
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Name:
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Title:
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EXHIBIT A
[Form of Notice to Pennsylvania Subscribers]
You have tendered a subscription to purchase shares of beneficial interest of
Xxxxxxx Commercial Properties REIT. (the "Company"). Your subscription is
currently being held in escrow. The guidelines of the Pennsylvania Securities
Commission do not permit the Company to accept subscriptions from Pennsylvania
residents until an aggregate of $5,475,000 of gross offering proceeds have been
received by the Company. The Pennsylvania guidelines provide that until this
minimum amount of offering proceeds is received by the Company, every 120 days
during the offering period Pennsylvania Subscribers may request that their
subscription be returned.
If you wish to continue your subscription in escrow until the Pennsylvania
minimum subscription amount is received, nothing further is required.
If you wish to terminate your subscription for the Company's shares of
beneficial interest and have your subscription returned please so indicate
below, sign, date, and return to the Escrow Agent, Xxxxx Xxxxx Xxxx, X.X., 000
Xxxxxx X0000-000, Corporate Trust Services, XXX, Xxx Xxxxxx, XX 00000.
I hereby terminate my prior subscription to purchase shares of beneficial
interest of Xxxxxxx Commercial Properties REIT and request the return of my
subscription funds. I certify to Xxxxxxx Commercial Properties REIT that I am a
resident of Pennsylvania.
Signature:
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Name:
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(please print)
Date:
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Please send the subscription refund to:
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EXHIBIT B
States Prohibiting Deductions
1. Alabama
2. New Mexico
3. North Carolina
4. Oklahoma
5. Texas
EXHIBIT C
XXXXXXX COMMERCIAL PROPERTIES REIT
ESCROW AGENT FEE SCHEDULE
ACCEPTANCE FEE: $1,000.00
For initial services including examination of the Escrow Agent Agreement and all
supporting documents as well as database development. This is a one-time fee
payable upon the execution of the Escrow Agent Agreement.
ANNUAL ADMINISTRATION FEE: $4,000.00
This annual administration fee covers standard services required under the
documents. An additional charge of $500 per sub-account will be billed for
accounts opened in connection with certain state regulations or escrow break
limits (i.e. Pennsylvania, Nebraska and similar states). Transaction charges
noted below apply for certain responsibilities including payments to
subscribers. Customer will be responsible for 1099 Tax Reporting. This fee is
payable upon the execution of the Escrow Agreement and annually thereafter for
any 12 month period or portion thereof. This fee shall be reviewed at the end of
the first year and may be renegotiated in accordance with new volume estimates.
TRANSACTION FEES:
Wire transfer of funds to investors $17.00 per item
Check transfer of funds to investors $10.00 per item
Receipt and posting of incoming wires No charge
Receipt and posting of incoming check No charge
1099 INT Tax reporting Customer will be
responsible
ACH transfer of funds No charge
Electronic pre-determined reports No charge
Interest calculations No charge
OFAC check on check deposits with copy to the Fund No charge
ASSUMPTIONS
o Receipt by Xxxxx Fargo of the electronic transmission of subscriber
data in a format compatible with Xxxxx Fargo systems
o WF has no responsibility for collecting or handling subscription
documents
o WF receives funds via deposit by issuer in the escrow bank account
maintained at the Issuer's expense
o Continuation of the Escrow Account after the initial break until the
maximum REIT amount is reached
o Investment of Funds
o Monthly reporting
EXTRAORDINARY SERVICES:
Additional reasonable compensation will be charged for extraordinary
services based on the then current standard hourly charge. Extraordinary
services include, but are not limited to, attending escrow closings, processing
assignments of escrow interest, specialized reports (e.g. tax reporting other
than 1099s), unusual certifications, reviewing and accepting modifications or
amendments to the escrow agreement, and letter of credit draws, etc. You will be
informed in advance of Xxxxx Fargo's performance of services that are considered
extraordinary.
All out-of-pockets expenses incurred in the administration of the account,
including, but not limited to, postage, telephone charges, insurance,
photocopies, supplies, and legal fees with the exception of legal fees incurred
at the inception of the account, will be billed to the customer at cost.
Xxxxxxxx over 30 days past due are subject to a 1.5% per month late payment
penalty of the balance due.
