ESCROW AGREEMENT
Exhibit
(k)
THIS
Escrow Agreement (this “ Agreement”) made and entered into as of this
day of
, 2011 by and among Chanticleer Dividend Fund, Inc., a Maryland
Corporation (“Company”), and Paragon Commercial Bank, N.A., as Escrow Agent, a
national banking association organized and existing under the laws of the United
States of America (the “ EscrowAgent”).
RECITALS
WHEREAS,
the Company proposes to offer and sell shares of common stock, on a best-efforts
basis, of at least $1.5 million and up to $125.0 million of gross offering
proceeds at an initial purchase price of $10.00 per share (the “Shares”) to
investors pursuant to the Company’s Registration statement on Form N-2 (File
No. 333-_______), as amended from time to time (the “Offering
Document”).
WHEREAS,
the Company plans to engage one or more dealer managers (the “Dealer Managers”),
each of which may engage one or more licensed brokers ( “Selected Dealers”), to
distribute the shares on behalf of the Company on a “best efforts”
basis
WHEREAS,
the Company has agreed that the subscription price paid by subscribers for
shares will be refunded to such subscribers if a minimum aggregate of $1.5
million of gross offering proceeds from persons who are not affiliated with the
Company or Chanticleer Advisors, LLC (the “Advisor”) has not been raised within
one year from the date the Offering Document becomes effective (the “Closing
Date,”).
WHEREAS,
the Company desires to establish an escrow account (the “Escrow Account”) as
further described herein in which funds received from subscribers will be
deposited and the Company desires that Paragon Commercial Bank, N.A. act as
Escrow Agent to the Escrow Account and Escrow Agent is willing to act in such
capacity.
WHEREAS,
In order to subscribe for Shares, a subscriber must deliver the full amount of
its subscription: (i) by check in U.S. dollars or (ii) by wire
transfer of immediately available funds in U.S. dollars.
AGREEMENT
NOW,
THEREFORE, the Company and Escrow Agent agree to the terms of this Agreement as
follows:
1. Commencement of
Duties. On or prior to the commencement of the offering of Shares
pursuant to the Offering Document, the Company shall establish the Escrow
Account which shall be entitled “Paragon Commercial Bank N.A. as Agent for
Chanticleer Dividend Fund, Inc.—Escrow Account”, with the Escrow Agent. The
Company will cause all Dealer Managers and Selected Dealers to instruct
subscribers to make checks for subscriptions payable to the order of “Paragon
Commercial Bank, N.A., as agent for Chanticleer Dividend Fund,
Inc.”
This
Agreement shall be effective on the date on which the Offering Document becomes
effective. The escrow period shall commence upon the effectiveness of this
Agreement and shall continue until the earlier of (i) the date upon which the
Escrow Agent receives confirmation from the Company and the Dealer Manager that
the Company has raised an aggregate of at least $1.5 million of gross offering
proceeds from persons who are not affiliated with the Company or the Advisor
(the “Minimum Proceeds”), (ii) the Closing Date, or (iii) the termination of the
Offering by the Company prior to the receipt of the Minimum Proceeds (the
“Escrow Period”).
2. Operation of the
Escrow.
(a) Deposits in the Escrow
Account . The Transfer Agent will promptly deliver all monies received
from subscribers for the payment of Shares to the Escrow Agent for deposit in
the Escrow Account. Deposits shall be held in the Escrow Account until such
funds are disbursed in accordance with this paragraph 2. Prior to disbursement
of the funds deposited in the Escrow Account, such funds shall not be subject to
claims by creditors of the Company or any of its affiliates. If any of the
instruments of payment are returned to the Escrow Agent for nonpayment prior to
receipt of the Escrow Break Affidavit (as described below), the Escrow Agent
shall promptly notify the Transfer Agent and the Company in writing via mail,
email or facsimile of such nonpayment, and is authorized to debit the Escrow
Account, as applicable in the amount of such returned payment as well as any
interest earned on the amount of such payment. The Company will, or will cause
its transfer agent, Xxxxx Stock Transfer, Inc. (the “Transfer Agent”), to
maintain 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 by such subscriber for such Shares. During the Escrow
Period neither the Company, the Dealer Managers nor the Selected Dealers are
entitled to any principal funds received into the Escrow Account.
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(b) Distribution of the Escrowed
Funds. If at any time on or prior to the Closing Date, the Minimum
Proceeds have been raised, then upon the happening of such event, the principal
amount of the Escrowed Funds shall remain in the Escrow Account until the Escrow
Agent receives written direction provided by the Company instructing the Escrow
Agent to deliver the principal amount of such Escrowed Funds as the Company
shall direct. An affidavit or certification from an officer of the Company to
the Escrow Agent and Transfer Agent stating that the Minimum Proceeds have been
timely raised, shall constitute sufficient evidence for the purpose of this
agreement that such event has occurred (the “Break Escrow Affidavit”). The
Affidavit shall indicate (i) the date on which the Minimum Proceeds have
been raised (the “Break Escrow Date”) and (ii) the actual total number of
Shares sold as of the Break Escrow Date. Thereafter, the Escrow Agent shall
release funds from the Escrow Account as directed by the Company pursuant to
written instruction that the Company shall provide to the Escrow Agent from time
to time. Upon the receipt of the Escrow Agent of the Break Escrow Affidavit, the
Company hereby directs the Escrow Agent to deliver to Reliance Trust Company
(the “Custodian”), as directed by the Company on the 1stbusiness
day of the month following the receipt of the Escrow Break Affidavit all of the
principal and interest earned on such Escrowed Funds and the Escrow Agent shall
from that point forward (the “Post Escrow Break Period”), transfer on the 1stbusiness
day of each month all principal and interest earned on the Escrowed Funds for
the prior month to the Custodian, as directed by the Company. Additionally, the
Company hereby directs the Escrow Agent to provide the Transfer Agent with all
electronic files and information needed by the Transfer Agent to perform its
duties as record keeper under its agreement between the Transfer Agent and the
Company.
If the
Escrow Agent has not received a Break Escrow Affidavit on or prior to the
Closing Date, the Escrow Agent shall to return the Escrowed Funds to the
Transfer Agent per written instructions for further delivery to the respective
subscribers, per the name, address and the amounts provided by the Company or
Transfer Agent to the Escrow Agent without deduction, penalty or expense, and
the Escrow Agent shall notify the Company and the Dealer Managers of its
distribution of the funds. The subscription payments returned to each subscriber
shall be free and clear of any and all claims of the Company or any of its
creditors.
3. Escrowed Funds. Upon
receipt of the Escrowed Funds, the Escrow Agent shall hold the Escrowed Funds in
escrow pursuant to the terms of this Agreement. Until such time as the Escrowed
Funds shall be distributed by the Escrow Agent as provided herein, the Escrowed
Funds shall be invested and reinvested by the Escrow Agent in —————— [Paragon needs to tell us what fund
the escrowed funds will be invested in].
The
Escrow Agent shall be entitled to sell or redeem any such investment as
necessary to make any distributions required under this Agreement and shall not
be liable or responsible for any loss resulting from any such sale or
redemption.
Income,
if any, resulting from the investment of the Escrowed Funds shall be retained by
the Escrow Agent, and shall be distributed according to this
Agreement.
4. Duties of the Escrow
Agent. The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth in this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent is not a party to, or bound by, the any other agreement among the
other parties hereto, and the Escrow Agent’s duties shall be determined solely
by reference to this Agreement. The Escrow Agent shall have no duty to enforce
any obligation of any person, other than as provided herein. The Escrow Agent
shall be under no liability to anyone by reason of any failure on the part of
any party hereto or any maker, endorser or other signatory of any document or
any other person to perform such person’s obligations under any such
document.
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5. Liability of the Escrow
Agent; Indemnification. The Escrow Agent acts hereunder as a depository
only. The Escrow Agent is not responsible or liable in any manner for the
sufficiency, correctness, genuineness or validity of this Escrow Agreement or
with respect to the form of execution of the same. The Escrow Agent shall not be
liable for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith, and in the exercise of its own best judgment,
and may rely conclusively and shall be protected in acting upon any order,
notice, demand, certificate, opinion or advice of counsel (including counsel
chosen by the Escrow Agent), statement, instrument, report or other paper or
document (not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to be
signed or presented by the proper person(s). The Escrow Agent shall not be held
liable for any error in judgment made in good faith by an officer or employee of
the Escrow Agent unless it shall be proved that the Escrow Agent was grossly
negligent or reckless in ascertaining the pertinent facts or acted intentionally
in bad faith. The Escrow Agent shall not be bound by any notice of demand, or
any waiver, modification, termination or rescission of this Agreement or any of
the terms hereof, unless evidenced by a writing delivered to the Escrow Agent
signed by the proper party or parties and, if the duties or rights of the Escrow
Agent are affected, unless it shall give its prior written consent
thereto.
The
Escrow Agent may consult legal counsel and shall exercise reasonable care in the
selection of such counsel, in the event of any dispute or question as to the
construction of any provisions hereof or its duties hereunder, and it shall
incur no liability and shall be fully protected in acting in accordance with the
reasonable opinion or instructions of such counsel.
The
Escrow Agent shall not be responsible, may conclusively rely upon and shall be
protected, indemnified and held harmless by the Company, for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of any
document or property received, held or delivered by it hereunder, or of the
signature or endorsement thereon, or for any description therein; nor shall the
Escrow Agent be responsible or liable in any respect on account of the identity,
authority or rights of the persons executing or delivering or purporting to
execute or deliver any document, property or this Agreement.
In the
event that the Escrow Agent shall become involved in any arbitration or
litigation relating to the Escrowed Funds, the Escrow Agent is authorized to
comply with any decision reached through such arbitration or
litigation.
The
Company, hereby agrees to indemnify the Escrow Agent for, and to hold it
harmless against any loss, liability or expense incurred in connection herewith
without gross negligence, recklessness or willful misconduct on the part of the
Escrow Agent, including without limitation legal or other fees arising out of or
in connection with its entering into this Agreement and carrying out its duties
hereunder, including without limitation the costs and expenses of defending
itself against any claim of liability in the premises or any action for
interpleader. The Escrow Agent shall be under no obligation to institute or
defend any action, suit, or legal proceeding in connection herewith, unless
first indemnified and held harmless to its satisfaction in accordance with the
foregoing, except that the Escrow Agent shall not be indemnified against any
loss, liability or expense arising out of its own gross negligence, recklessness
or willful misconduct. Such indemnity shall survive the termination or discharge
of this Agreement or resignation of the Escrow Agent.
6. The Escrow Agent’s
Fee. Escrow Agent shall be entitled to fees and expenses for its regular
services as Escrow Agent as set forth in Exhibit A. Additionally, Escrow Agent
is entitled to reasonable fees for extraordinary services and reimbursement of
any reasonable out of pocket and extraordinary costs and expenses related to its
obligations as Escrow Agent under this Agreement, including, but not limited to,
reasonable attorneys’ fees. All of the Escrow Agent’s compensation, costs and
expenses shall be paid by the Company
7. Security Interests.
No party to this Escrow Agreement shall grant a security interest in any monies
or other property deposited with the Escrow Agent under this Escrow Agreement,
or otherwise create a lien, encumbrance or other claim against such monies or
borrow against the same.
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8. Dispute. In the event
of any disagreement between the undersigned or the person or persons named in
the instructions contained in this Agreement, or any other person, resulting in
adverse claims and demands being made in connection with or for any papers,
money or property involved herein, or affected hereby, the Escrow Agent shall be
entitled to refuse to comply with any demand or claim, as long as such
disagreement shall continue, and in so refusing to make any delivery or other
disposition of any money, papers or property involved or affected hereby, the
Escrow Agent shall not be or become liable to the undersigned or to any person
named in such instructions for its refusal to comply with such conflicting or
adverse demands, and the Escrow Agent shall be entitled to refuse and refrain to
act until: (a) The rights of the adverse claimants shall have been fully
and finally adjudicated in a Court assuming and having jurisdiction of the
parties and money, papers and property involved herein or affected hereby, or
(b) All differences shall have been adjusted by agreement and the Escrow
Agent shall have been notified thereof in writing, signed by all the interested
parties.
9. Resignation of Escrow
Agent. Escrow Agent may resign or be removed, at any time, for any
reason, by written notice of its resignation or removal to the proper parties at
their respective addresses as set forth herein, at least 60 days before the date
specified for such resignation or removal to take effect; upon the effective
date of such resignation or removal:
(a) All
cash and other payments and all other property then held by the Escrow Agent
hereunder shall be delivered by it to such successor escrow agent as may be
designated in writing by the Company, whereupon the Escrow Agent’s obligations
hereunder shall cease and terminate;
(b) If no
such successor escrow agent has been designated by such date, all obligations of
the Escrow Agent hereunder shall, nevertheless, cease and terminate, and the
Escrow Agent’s sole responsibility thereafter shall be to keep all property then
held by it and to deliver the same to a person designated in writing by the
Company or in accordance with the directions of a final order or judgment of a
court of competent jurisdiction.
(c)
Further, if no such successor escrow agent has been designated by such date, the
Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor agent; further the Escrow Agent may pay into court
all monies and property deposited with Escrow Agent under this
Agreement.
10. Notices. All notices,
demands and requests required or permitted to be given under the provisions
hereof must be in writing and shall be deemed to have been sufficiently given,
upon receipt, if (i) personally delivered, (ii) sent by telecopy and
confirmed by phone or (iii) mailed by registered or certified mail, with
return receipt requested, delivered as follows:
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(1) If to Company:
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00000
Xxx Xxxx, Xxxxx 000
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Xxxxxxxxx,
Xxxxx Xxxxxxxx
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Attn:
Xxxxxxx Xxxxxx
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Company
Wire Instructions:
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Paragon
Commercial Bank, N.A.
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ABA
Routing Number: _________
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Account
Number: ____________________
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FFC
Account Name: _______________
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FFC:
______________
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Attn:
_______________________
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(2) If to the Escrow Agent:
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Paragon
Commercial Bank, N.A.
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0000
Xxxxxxxx Xxx Xxxxx, Xxxxx 000
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Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000
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Attention:
_____________________
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Telephone:
(000) 000-0000
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Facsimile:
(704) -
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Escrow
Agent Wiring Instructions:
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Paragon
Commercial Bank, N.A.
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ABA
Routing Number: _________
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Account
Number: ________________
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Checks
Payable Information:
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Paragon
Commercial Bank, N.A., as Agent for Chanticleer
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Dividend
Fund, Inc.
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11. Governing Law. This
Agreement shall be construed and enforced in accordance with the laws of the
State of North Carolina without regard to the principles of conflicts of
law.
12. Binding Effect;
Benefit. This Agreement shall be binding upon and inure to the benefit of
the permitted successors and assigns of the parties hereto.
13. Modification. This
Agreement may be amended, modified or terminated at any time by a writing
executed by Company and the Escrow Agent.
14. Assignability. This
Agreement shall not be assigned by the Escrow Agent without the Company’s prior
written consent.
15. Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument. Copies, telecopies, facsimiles, electronic files and other
reproductions of original executed documents shall be deemed to be authentic and
valid counterparts of such original documents for all purposes, including the
filing of any claim, action or suit in the appropriate court of
law.
16. Headings. The section
headings contained in this Agreement are inserted for convenience only, and
shall not affect in any way, the meaning or interpretation of this
Agreement.
17. Severability. This
Agreement constitutes the entire agreement among the parties and supersedes all
prior and contemporaneous agreements and undertakings of the parties in
connection herewith. No failure or delay of the Escrow Agent in exercising any
right, power or remedy may be, or may be deemed to be, a waiver thereof; nor may
any single or partial exercise of any right, power or remedy preclude any other
or further exercise of any right, power or remedy. In the event that any one or
more of the provisions contained in this Agreement, shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, then to the maximum
extent permitted by law, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement.
18. Earnings Allocation; Tax
Matters;
Patriot Act Compliance. The Company or its agent shall be responsible for
all tax reporting under this Escrow Agreement. The Company shall provide to
Escrow Agent upon the execution of this Agreement any documentation requested
and any information reasonably requested by the Escrow Agent to comply with the
USA Patriot Act of 2001, as amended from time to time.
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19. Miscellaneous. This
Agreement shall not be construed against the party preparing it, and shall be
construed without regard to the identity of the person who drafted it or the
party who caused it to be drafted and shall be construed as if all parties had
jointly prepared this Agreement and it shall be deemed their joint work product,
and each and every provision of this Agreement shall be construed as though all
of the parties hereto participated equally in the drafting hereof; and any
uncertainty or ambiguity shall not be interpreted against any one party. As a
result of the foregoing, any rule of construction that a document is to be
construed against the drafting party shall not be applicable.
[SIGNATURE
PAGES FOLLOW]
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Company:
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By:
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Name:
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Xxxxxxx
Xxxxxx
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Title:
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President
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ESCROW
AGENT:
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Paragon
Commercial Bank, N.A.
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By:
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Name:
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Title:
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EXHIBIT
A
ESCROW
FEES AND EXPENSES
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Acceptance
Fee
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Review
escrow agreement and establish account
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$ | [ | ] | |
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Annual
Fee
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||||
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Maintain
account
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$ | [ | ] | |
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Transaction
Fees
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(a)
per outgoing wire transfer
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$ | [ | ] | |
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(b)
per Form 1099 (Int., B or Misc.)
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$ | [ | *] | |
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(c)
per investment purchase, sale or settlement
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$ | [ | **] | |
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*
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Not anticipated to be
charged
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**
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Excludes money market mutual fund
transactions
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Fees
specified are for the regular, routine services contemplated by the Escrow
Agreement, and any additional or extraordinary services, including, but not
limited to disbursements involving a dispute or arbitration, or administration
while a dispute, controversy or adverse claim is in existence, will be charged
based upon time required at the then standard hourly rate. In addition to the
specified fees, all expenses related to the administration of the Escrow
Agreement (other than normal overhead expenses of the regular staff) such as,
but not limited to, travel, postage, shipping, courier, telephone, facsimile,
supplies, legal fees, accounting fees, etc., will be reimbursable. Acceptance
and first year annual fees will be payable at the initiation of the escrow and
annual fees will be payable in advance thereafter. Other fees and expenses will
be billed as incurred.
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