Exhibit 10.1
Form of Escrow Agreement between CNL American Realty Fund, Inc.
and SouthTrust Asset Management Company of Florida, N.A.
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is dated this ___ day of
_____________, 1996, by and among CNL AMERICAN REALTY FUND, INC., a Maryland
corporation (the "Company"), CNL SECURITIES CORP., a Florida corporation (the
"Managing Dealer"), and SOUTHTRUST ASSET MANAGEMENT COMPANY OF FLORIDA, N.A.
(the "Escrow Agent"). This Agreement shall be effective as of the effective date
of the Company's Registration Statement filed with the Securities and Exchange
Commission (the "Effective Date").
WHEREAS, the Company proposes to offer and sell, on a best-efforts basis
through the Managing Dealer and selected broker-dealers registered with the
National Association of Securities Dealers, Inc. (the Managing Dealer and such
selected broker-dealers are hereinafter referred to collectively as the
"Soliciting Dealers") up to 16,500,000 shares of common stock of the Company
(the "Shares") to investors at $10.00 per Share pursuant to a registration
statement (the "Registration Statement") filed with the Securities and Exchange
Commission;
WHEREAS, the Company has agreed that the subscription price paid in cash
by subscribers for Shares will be refunded to such subscribers if less than an
aggregate of 250,000 Shares of the Company have been sold (which 250,000 Shares
shall not include subscriptions from Pennsylvania investors unless subscriptions
for at least 825,000 Shares are received and accepted from all investors), and
payment therefor received, within one year of the initial effective date of the
Company's prospectus (each date referred to herein individually as the "Closing
Date"); and
WHEREAS, the Company and the Managing Dealer desire to establish an
escrow in which funds received from subscribers will be deposited until the
Closing Date or such earlier date on which subscriptions for at least 250,000
Shares have been received (which 250,000 Shares shall not include subscriptions
from Pennsylvania investors), and the Escrow Agent is willing to serve as
Escrow Agent upon the terms and conditions herein set forth;
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.
1. Establishment of Escrow Accounts. On or prior to the Effective Date,
the Company and the Managing Dealer shall establish an interest-bearing escrow
account with the Escrow Agent, which escrow account shall be entitled "ESCROW
ACCOUNT FOR THE BENEFIT OF SUBSCRIBERS FOR COMMON STOCK OF CNL AMERICAN REALTY
FUND, INC." (the "Escrow Account"). All monies deposited in the Escrow Account
are hereinafter referred to as the "Escrowed Funds." The Managing Dealer will,
and will cause selected broker-dealers acting as Soliciting Dealers to, instruct
subscribers to make checks for subscriptions payable to the order of the Escrow
Agent until such time (if any) as the Escrowed Funds are deliverable to the
Company pursuant to the provisions of Paragraph 5(a) below. From and after such
time, checks may be made payable to either the Escrow Agent or the Company. Any
checks received prior to the time, if any, that the Escrowed Funds are
deliverable to the Company pursuant to the provisions of Paragraph 5(a) below
that are made payable to a party other than the Escrow Agent shall be returned
to the Soliciting Dealer who submitted the check. The Managing Dealer may
authorize certain Soliciting Dealers which are "$250,000 broker-dealers" to
instruct their customers to make their checks for Shares subscribed for payable
directly to the Soliciting Dealer. In such case, the Soliciting Dealer will
collect the proceeds of the subscribers' checks and issue a check made payable
to the order of the Escrow Agent for the aggregate amount of the subscription
proceeds.
2. Deposits into the Escrow Account. The Managing Dealer will promptly
deliver all monies received from subscribers for the payment of Shares to the
Escrow Agent for deposit in the Escrow Account. Until such time that the
Ecsrowed Funds are deliverable to the Company pursuant to the provisions of
Paragraph 5(a) below, the Managing Dealer also will deliver to the Escrow Agent
a written account of each sale, which account shall set forth, among other
things, the following information: (i) the subscriber's name and address, (ii)
the number of Shares purchased by such subscriber, and (iii) the amount paid for
by such subscriber for such Shares. The Company is aware and understands that,
during the escrow period, it is not entitled to any funds received into escrow
and no amounts deposited in the Escrow Account shall become the property of the
Company or any other entity, or be subject to the debts of the Company or any
other entity.
3. Collection Procedure.
(a) The Escrow Agent is hereby authorized to forward each check for
collection and, upon collection of the proceeds of each check, to
deposit the collected proceeds in the Escrow Account or, alternatively,
the Escrow Agent may telephone the bank on which the check is drawn to
confirm that the check has been paid.
(b) Any check returned unpaid to the Escrow Agent shall be returned
to the Soliciting Dealer that submitted the check. In such cases the
Escrow Agent will promptly notify the Company of such return.
(c) In the event that (i) the Company rejects any subscription for
Shares or (ii) an investor who has telephonically or orally subscribed
for Shares properly withdraws such subscription within fifteen (15)
days from the date written confirmation has been mailed to the
subscriber, and, in either such event, the Escrow Agent has already
collected funds for such subscription, the Escrow Agent shall promptly
issue a refund check to the drawer of the check submitted by or on
behalf of the rejected or withdrawing subscriber. If either of the
events specified in the clauses (i) or (ii) of the preceding sentence
occur and, in either such event, the Escrow Agent has not yet collected
funds for such subscription but has submitted the check relating to
such subscription for collection, the Escrow Agent shall promptly issue
a check in the amount of such check to the rejected or withdrawing
subscriber after the Escrow Agent has cleared such funds. If the Escrow
Agent has not yet submitted the check relating to the subscription of
the rejected or withdrawing subscriber, the Escrow Agent shall promptly
remit such check directly to the drawer of the check submitted by or on
behalf of the subscriber.
4. Investment of Escrowed Funds. The Escrow Agent, immediately upon
receipt of each check remitted to it, shall deposit such check in
interest-bearing savings accounts, in short-term certificates of deposit issued
by a bank, or in other short-term securities directly or indirectly issued or
guaranteed by the United States government, all as directed by the Company.
Interest and dividends earned on such investments shall be similarly reinvested.
Following the distribution of Escrowed Funds to the Company pursuant to
Paragraph 5 below, any funds remaining in the Escrow Account shall be invested
in bank money market funds or other similar instruments as directed by the
Company.
-2-
5. Distribution of Escrowed Funds. The Escrow Agent shall distribute
the Escrowed Funds in the amounts, at the times, and upon the conditions
hereinafter set forth in this Agreement.
(a) Subject to the last three sentences of this Paragraph
5(a), if at any time on or prior to the Closing Date, an aggregate of
250,000 Shares of the Company have been sold, then upon the happening
of such event, the Escrow Agent shall deliver the Escrowed Funds to the
Company. An affidavit or certification from an officer of the Company
stating that, after excluding all Shares covered by the subscriptions
described in the last three sentences of this Paragraph 5(a), 250,000,
Shares have been timely sold, together with the receipt by the Escrow
Agent of a minimum of $2,500,000 in cleared funds attributable to sales
of Shares shall constitute sufficient evidence for the purposes of this
Agreement that such event has occurred. Thereafter, the Escrow Agent
shall release from the Escrow Account to the Company any and all
Escrowed Funds therein, together with all interest earned thereon, upon
the written request of an officer of the Company, except as expressly
provided otherwise in the next three sentences. First, subscriptions
from investors who are Pennsylavania residents shall not be included in
determining whether the minimum 250,000 Shares have been sold, and such
subscription funds shall not be released from escrow until the Escrow
Agent has received $8,250,000 in Escrowed Funds (including any funds
included in reaching the $2,500,000 minimum) attributable to sales of
Shares. Second, subscriptions from investors who have subscribed for
Shares orally, where representatives of a Soliciting Dealer have
executed the Subscription Agreement relating to such Shares on behalf
of the investor, shall not be included in determining whether the
minimum 250,000 Shares have been sold for a period of ten (10) days
from the date written confirmation has been received by the subscriber,
provided that such subscriptions shall not be released from escrow
until the expiration of a period fifteen (15) days from the date
written confirmation has been mailed to the subscriber relating to such
subscriptions. Third, subscriptions from investors who received a
prospectus less than five (5) business days prior to the determination
under this subparagraph (a) of the number of available Shares to be
released from escrow as evidenced by the date of execution of such
investor's subscription agreement shall not be included in determining
whether the minimum 250,000 Shares have been sold.
(b) If the Escrowed Funds do not, on or prior to the
Closing Date, become deliverable to the Company pursuant to
subparagraph (a) above, the Escrow Agent shall return the Escrowed
Funds to the respective subscribers in amounts equal to the
subscription amount theretofore paid by each of them, together with
interest calculated as described in Paragraph 6 below and without
deduction, penalty or expense to the subscriber. The Escrow Agent shall
notify 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 or any of
its creditors.
(c) The Escrow Agent shall return to any California or
Florida investor who properly withdraws his subscription in accordance
with the terms set forth in the Prospectus the Escrowed Funds of such
withdrawing investor, as the case may be, together with interest
calculated as described in Paragraph 6 below.
6. Distribution of Interest. If the Escrowed Funds become deliverable
to subscribers pursuant to Paragraphs 5(b) or 5(c) above, the Escrow Agent shall
compute and distribute to each investor a PRO RATA share of the investment
earnings of the Escrowed Funds. Each subscriber's PRO RATA share of investment
earnings shall be computed as follows:
-3-
Individual Subscription
amount x days held
-----------------------
Investment Earnings x Total subscription
amounts x days held
Such PRO RATA share of investment earnings shall be distributed to each
subscriber with the return of their subscription amounts.
7. Liability of Escrow Agent.
(a) In performing any of duties under this Agreement, or upon the
claimed failure to perform its duties hereunder, the Escrow Agent shall
not be liable to anyone for any damages, losses, or expenses which it
may incur as a result of the Escrow Agent so acting, or failing to act;
provided, however, the Escrow Agent shall be liable for damages arising
out of its willful default or misconduct or its gross negligence under
this Agreement. Accordingly, the Escrow Agent shall not incur any such
liability with respect to (i) any action taken or omitted to be taken
in good faith upon advice of its counsel or counsel for the Company
which is given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder, or (ii) any action
taken or omitted to be taken in reliance upon any document, including
any written notice or instructions provided for in this Escrow
Agreement, not only as to its due execution and to the validity and
effectiveness of its provisions but also as to the truth and accuracy
of any information contained therein, if the Escrow Agent shall in good
faith believe such document to be genuine, to have been signed or
presented by a proper person or persons, and to conform with the
provisions of this Agreement.
(b) The Company hereby agrees to indemnify and hold harmless the
Escrow Agent against any and all losses, claims, damages, liabilities
and expenses, including, without limitation, reasonable costs of
investigation and counsel fees and disbursements which may be incurred
by it resulting from any act or omission of the Company; provided,
however, that the Company shall not indemnify the Escrow Agent for any
losses, claims, damages, or expenses arising out of the Escrow Agent's
willful default, misconduct, or gross negligence under this Agreement.
(c) If a dispute ensues between any of the parties hereto which, in
the opinion of the Escrow Agent, is sufficient to justify its doing so,
the Escrow Agent shall be entitled to tender into the registry or
custody of any court of competent jurisdiction, including the Circuit
Court of Orange County, Florida, all money or property in its hands
under the terms of this Agreement, and to file such legal proceedings
as it deems appropriate, and shall thereupon be discharged from all
further duties under this Agreement. Any such legal action may be
brought in any such court as the Escrow Agent shall determine to have
jurisdiction thereof. The Company shall indemnify the Escrow Agent
against its court costs and attorneys' fees incurred in filing such
legal proceedings.
8. Inability to Deliver. In the event that checks for subscriptions
delivered to the Escrow Agent by the Company pursuant to this Agreement are not
cleared through normal banking channels within 120 days after such delivery, the
Escrow Agent shall deliver such uncleared checks to the Company unless the
Escrowed Funds are returned to subscribers pursuant to Paragraphs 5(b) or 5(c)
above, in which case the Escrow Agent shall mail such uncleared checks to the
subscribers.
9. Notice. All notices, requests, demands and other communications or
deliveries required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally, given by
prepaid telegram or deposited for mailing, first class, postage prepaid,
registered or certified mail, as follows:
-4-
IF TO THE SUBSCRIBERS FOR SHARES: To their respective addresses as
specified in their Subscription
Agreements.
IF TO THE COMPANY: 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxx, Xx.,
Chairman of the Board
IF TO THE MANAGING DEALER: 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X.
Xxxxxx, President
IF TO THE ESCROW AGENT: SOUTHTRUST ASSET MANAGEMENT COMPANY
OF FLORIDA, N.A.
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Mr. Xxxx Xxxx
10. Fees to Escrow Agent. In consideration of the services to be provided by the
Escrow Agent hereunder, the Company agrees to pay the following fees to the
Escrow Agent.
(a) In the event that by the Closing Date an aggregate of 250,000 Shares
have not been sold for the account of the Company, the Company will pay the
Escrow Agent a fee in an amount equal to $15 per investor, with a minimum fee of
$1,500, payable within 30 days following the Closing Date.
(b) the event that an aggregate of at least 250,000 Shares are sold by
the Closing Date, the Company will pay the Escrow Agent a fee for its services
hereunder (the "Escrow Fee"). The Escrow Fee shall be $350 for each month or any
portion thereof that the Escrow Account continues for the Company. The first
payment of the Escrow Fee by the Company shall be due on the earlier of (i) the
date on which the Escrowed Funds become distributable to the Company pursuant to
Paragraph 5 hereof, or (ii) six months from the effective date of this
Agreement; or (iii) the closing of the offering of Shares in the Company.
Subsequent payments by the Company, if any, shall be due and payable no less
frequently than six-month intervals while the escrow continues for the Company.
In no event shall the total Escrow Fees payable by the Company pursuant to this
Agreement be less than $2,100, nor more than $4,200, for any 12-month period.
Notwithstanding anything contained in this Agreement to the contrary, in no
event shall any fee, reimbursement for costs and expenses, indemnification for
any damages incurred by the Escrow Agent, or monies whatsoever be paid out of or
chargeable to the Escrowed Funds in the Escrow Account.
11. General.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida.
(b) The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
-5-
(c) This Agreement sets forth the entire agreement and
understanding of the parties with regard to this escrow transaction and
supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
(d) This Agreement may be amended, modified, superseded or
cancelled, and any of the terms or conditions hereof may be waived,
only by a written instrument executed by each party hereto or, in the
case of a waiver, by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time to enforce
the same. No waiver in any one or more instances by any party of any
condition, or of the breach of any term contained in this Agreement,
whether by conduct or otherwise, shall be deemed to be, or construed
as, a further or continuing waiver of any such condition or breach, or
a waiver of any other condition or of the breach of any other terms of
this Agreement.
(e) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(f) This Agreement shall inure to the benefit of the parties
hereto and their respective administrators, successors, and assigns.
12. Representation of the Company. The Company hereby acknowledges
that the status of the Escrow Agent with respect to the offering of the Shares
is that of agent only for the limited purposes herein set forth, and hereby
agrees it will not represent or imply that the Escrow Agent, by serving as the
Escrow Agent hereunder or otherwise, has investigated the desirability or
advisability of an investment in the Shares, or has approved, endorsed or passed
upon the merits of the Shares, nor shall the Company use the name of the Escrow
Agent in any manner whatsoever in connection with the offer or sale of the
Shares, other than by acknowledgement that it has agreed to serve as Escrow
Agent for the limited purposes herein set forth.
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
"Company"
CNL AMERICAN REALTY FUND, INC.
By: ___________________________
XXXXX X. XXXXXX, XX.,
Chairman of the Board
"MANAGING DEALER"
CNL SECURITIES CORP.
Attest: ___________________________ By: ___________________________
___________________________________ XXXXXX X. XXXXXX, President
"ESCROW AGENT"
SOUTHTRUST ASSET MANAGEMENT COMPANY
OF FLORIDA, N.A.
Attest:
___________________________________ By: ___________________________
Name: _________________________
Title:_________________________
-7-
