Exhibit 10.1
FORM OF
ESCROW AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of this __________
day of __________, by and between Sandalwood Lodging Investment Corporation (the
"Company") and U.S. Bank National Association ("Escrow Agent"), a national
banking association.
RECITALS
A. The Company is conducting a public offering of shares of common stock
(the "Shares") at a price of $20.00 per Share, with a minimum investment of
$10,000 for individuals or $3,000 for IRA's, under applicable state and Federal
securities laws and regulations (the "Offering").
B. The Company wishes to assure those who subscribe for Shares (the
"Subscribers") that the Subscribers' monies will be released to the Company only
if and when not less than $50,000,000 (the "Threshold Amount") in subscriptions
are accepted by the Company from the sale of Shares and upon the direction of
the Company.
C. The Company desires to provide for the safekeeping of the proceeds of
the Offering until such time as subscriptions for Shares totaling the Threshold
Amount (or such greater amount as the Company may direct in writing) have been
received and upon the direction of the Company, or until such time as Escrow
Agent is required to pay and return such proceeds to the Subscribers upon the
terms hereinafter provided.
AGREEMENT
1. Deposit and Disbursement.
a. Escrow Agent hereby agrees to receive and disburse the proceeds
from the Offering of the Shares and any interest earned thereon in accordance
with the terms of this Agreement.
b. Subscribers shall from time to time cause to be wired or
deposited with Escrow Agent certain funds representing the purchase price of
their subscribedShares to be placed in a special interest-bearing escrow account
at Escrow Agent designated as the Sandalwood Lodging Investment Corporation
Escrow Account (the "Escrow Account") until the Threshold Amount (or such
greater amount as the Company may direct in writing) has been deposited in said
account. All funds are to be deposited in the Escrow Account within one (1)
business day after receipt by Escrow Agent.
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c. Subscribers shall cause to be delivered to Escrow Agent with each
such deposit a form bearing the name, address, and tax identification number of
such Subscriber Escrow Agent shall keep a current list of the persons who have
subscribed for the Shares and deposited money, showing name, date, address and
amount of each subscription. All funds so deposited shall remain the property of
the Subscribers, subject to the provisions of Paragraph 5 hereof. Escrow Agent
shall promptly forward to the Company any subscription agreements which it may
receive directly from Subscribers.
d. If the Company rejects any subscriptions for which Escrow Agent
has already collected funds, Escrow Agent shall promptly issue a refund check to
the rejected Subscriber in the amount of the original deposit collected from
such Subscriber, plus interest thereon (if any). If the Company rejects any
subscription for which Escrow Agent has not yet collected funds but has
submitted the Subscriber's check for collection, Escrow Agent shall promptly
issue a check in the amount of the rejected Subscriber's check or Escrow Agent
shall promptly remit the Subscriber's check directly to the Subscriber.
e. In the event that the Threshold Amount is not deposited with
Escrow Agent on or before June 30, 2004, as set forth in the Company's
prospectus, dated ________ , 2002 (the "Prospectus") (unless that date is
extended in accordance therewith), a copy of which has been attached as Exhibit
A hereto, Escrow Agent shall promptly return the funds which have been deposited
in the Escrow Account to the Subscribers, in the amount and to the addresses as
shown on its records, with interest earned. If the Offering is terminated due to
the failure to fulfill the Threshold amount by June 30, 2004, Escrow Agent will
inform the Company of the total amount of interest earned on funds deposited
with Escrow Agent, calculate the amount of interest earned by each Subscriber
and inform the Company how much of the total interest accrued will be
distributed to each Subscriber. For purposes of reporting to tax authorities,
Escrow Agent will report all interest earned by the escrow as paid upon
distribution. As needed, the Company will provide the Escrow Agentwritten
instructions with respect to the distribution of such amounts, subject to the
terms of this Agreement.
f. Upon receipt of (i) the Threshold Amount (or such greater amount
as the Company may direct in writing) and (ii) written confirmation from the
Company that funds may be released from escrow, Escrow Agent shall release the
escrow funds to the Company. Interest income shall be distributed to the
Subscribers by the Escrow Agent as calculated on a pro-rata basis. At the
Company's option, it may continue to deposit proceeds from the sale of
additional Shares (after receipt and/or distribution of the Threshold Amount or
any greater amount as directed in writing by the Company) and to direct the
disbursement from time to time of funds so deposited after subscriptions for the
Threshold Amount have been received.
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2. Responsibilities and Obligations of Escrow Agent.
a. Escrow Agent assumes no responsibilities, obligations, or
liabilities except those expressly provided for elsewhere in this Agreement and
as follows:
(1) Escrow Agent shall have no responsibility, obligation or
liability to any person with respect to any action taken, suffered or omitted to
be taken by it in good faith under this Agreement and shall in no event be
liable hereunder except for its gross negligence or willful misconduct.
(2) Notwithstanding anything herein to the contrary, no
reference in this Agreement to any other agreement shall be construed or deemed
to enlarge the responsibilities, obligations, or liabilities of Escrow Agent set
forth in this Agreement.
b. Escrow Agent shall be protected in relying upon the truth of any
statement contained in any requisition, notice, request, certificate, approval,
consent or other proper paper, and in acting on any such document, which on its
face and without inquiry as to any other facts, appears to be genuine and to be
signed by the proper party or parties, and is entitled to believe all signatures
are genuine and that any person signing any such paper who claims to be duly
authorized is in fact so authorized.
c. Escrow Agent shall be entitled to act on any instruction given to
it in writing and signed by an authorized signatory of the Company and shall be
fully protected in doing so.
d. Escrow Agent shall be entitled to act in accordance with any
court order or other final determination by any governmental authority with
jurisdiction of any matter arising hereunder.
e. Escrow Agent shall have no responsibility for, and makes no
representation as to the value, validity or genuineness of any article, asset or
document deposited with Escrow Agent in the Escrow Account under this Agreement,
provided that it will give notice to the Company of any check for money not
credited and the reason stated therefore and of any discrepancy with respect to
the value, validity or genuineness of any article, asset or document so
deposited if and when it has actual knowledge thereof.
f. Escrow Agent shall have no responsibility to make payments out of
the Escrow Account for any amount in excess of the amount of collected funds
deposited in the Escrow Account, together with any interest earnings thereon, at
the time any payment is to be made.
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g. If any controversy arises between the parties hereto or with any
third person relating to the Escrow Account, Escrow Agent shall not be required
to resolve the same or to take any action to do so but may at its discretion,
institute such interpleader or other proceedings as it deems proper. As to any
third-party dispute relating to the Escrow Agreement, Escrow Agent shall notify
the Company of the existence and facts of such dispute. Escrow Agent may rely on
any joint written instructions as to the disposition of funds, assets, documents
or other assets held in escrow hereunder.
h. Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any of its rights hereunder either directly or by or
through its agents or attorneys. Nothing in this Agreement shall be deemed to
impose upon Escrow Agent any duty to qualify to do business or to act as a
fiduciary or otherwise in any jurisdiction. Escrow Agent shall not be
responsible for and shall not be under a duty to examine or pass upon the
validity, binding effect, execution or sufficiency of the Prospectus or of any
amendment or supplement to the Prospectus or the subscription documents or of
any other agreement.
3. Investment of Escrow Funds.
The Escrow Agent shall invest all deposited funds in an interest
bearing U.S. Bank Money Market Savings Account. Owner acknowledges that the U.S.
Bank money market accounts are U.S. Bank Trust National Association deposit
accounts designed to meet the needs of global escrow and other corporate trust
customers of U.S. Bank Trust National Association. The accounts pay competitive
variable interest rates, which are determined based upon the customer's
aggregated balance. Each customer's deposit is insured up to $100,000 per
participant by the Federal Deposit Insurance Corporation. Interest rates
currently offered on the accounts are determined at U.S. Bank's direction and
may change daily. U.S. Bank Trust National Association uses the daily balance
method to calculate interest on these accounts. This method applies a daily
periodic rate to the principal in the accounts each day of the month and
dividing that figure by the number of days in the period. Interest on customer
deposits begins to accrue on the business day funds are credited to the U.S.
Bank deposit account. Interest is compounded on a monthly basis. The owner of
the accounts is U.S. Bank Trust National Association as agent for its customers.
All account deposits and withdrawals are performed by U.S. Bank Trust National
Association. Any and all interest earned on the Proceeds after the deposit shall
be added to the Proceeds and shall become a part thereof. Interest earned on the
Escrow Account will be the property of the Subscribers, pro-rata, as provided in
Section 1(e) above. All entities entitled to receive interest from the escrow
account will provide Escrow Agent with a W-9 or W-8 IRS tax form prior to the
disbursement of interest. A statement of citizenship will be provided if
requested by Escrow Agent. Escrow Agent shall have no responsibility for
preparing or filing any Federal or State tax returns in connection therewith.
4. Compensation of Escrow Agent.
Escrow Agent shall be paid for services hereunder in accordance with
the fee schedule attached hereto as Exhibit B. Payment of all fees shall be the
responsibility of the Company..
In the event that Escrow Agent is made a party to litigation with
respect to the property held hereunder, or brings an action in interpleader or
in the event that the conditions of this escrow are not promptly fulfilled, or
Escrow Agent is required to render any service not provided for in this
Agreement and fee schedule, or there is any assignment of the interest of this
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escrow or any modification hereof, Escrow Agent shall be entitled to reasonable
compensation for such extraordinary services and reimbursement for all fees,
costs, liability and expenses, including reasonable attorneys' fees.
5. Indemnification of Escrow Agent.
The Company hereby agrees to indemnify and hold harmless Escrow
Agent against any and all claims, losses, and damages it may suffer in
connection with its carrying out the terms of this Agreement, including, without
limitation, Escrow Agent's unpaid fees and reimbursable expenses, but excluding
any loss Escrow Agent may sustain as a result of its gross negligence or willful
misconduct. Escrow Agent shall have a lien or right of setoff on all funds,
monies or other assets held hereunder to pay all of its fees and reimbursable
expenses permitted under this Agreement. The obligations of the Company under
this Section 5 shall survive termination of this Agreement for any reason or
resignation or removal of Escrow Agent.
6. Termination and Resignation.
a. This Agreement shall terminate when (i) Escrow Agent or its
successor or assign receives written notification of termination from the
Company; including final disposition instructions signed by the Company, and
(ii) there occurs the actual final disposition of the monies held in escrow
hereunder as provided in this Agreement. The rights and obligations of Escrow
Agent shall survive the termination of this Agreement.
b. Escrow Agent may resign at any time and be discharged from its
duties as Escrow Agent hereunder by giving the Company not fewer than sixty (60)
days prior written notice thereof. Upon resignation during the first six months
of this Agreement, the Escrow Agent shall be required to return any initial or
set-up fees paid by the Company. As soon as practicable after its resignation,
Escrow Agent shall turn over to a successor escrow agent appointed by the
Company all monies held hereunder upon presentation of the document from the
Company appointing a successor escrow agent and its acceptance of appointment.
If no such designation of a successor Escrow Agent is made by the Company within
45 days of Company's receipt of Escrow Agent's notice of resignation, Escrow
Agent may designate its own successor by written notice to the Company, so long
as any such successor is a bank or trust company and Escrow Agent receives
written consent to such proposed successor escrow agent within 60 days of Escrow
Agent's original notice of resignation. Upon the designation of a successor
escrow agent and the delivery to the resigning Escrow Agent of the document
appointing such successor escrow agent and its acceptance of appointment, the
resigning Escrow Agent shall be released from any and all liabilities arising
thereafter except as provided in Sections 2(a)(1) and 5 of this Agreement.
If no successor escrow agent is appointed, or consented to, by
the Company within the sixty (60) day period following such notice of
resignation, Escrow Agent reserves the right to forward the matter and all
monies and other property held by Escrow Agent pursuant to this Agreement to a
court of competent jurisdiction at the expense of the Company.
c. The Company may discharge Escrow Agent without cause and appoint
a successor escrow agent hereunder at any time by giving Escrow Agent no fewer
than sixty (60) days prior written notice thereof. As soon as practicable after
its discharge, Escrow Agent shall turn over to the successor escrow agent
appointed by the Company all monies held hereunder upon presentation of the
document from the Company appointing such successor escrow agent
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and its acceptance of appointment. Upon the designation of a successor escrow
agent, the delivery to a discharged Escrow Agent with its obligations pursuant
to the immediately preceding sentence, the discharged Escrow Agent shall be
released from any and all liabilities arising thereafter except as provided in
Sections 2(a)(1) and 5 of this Agreement.
7. Notices.
All notices provided for herein shall be in writing, shall be
delivered by hand or by registered or certified mail, shall be deemed given when
actually received, and shall be addressed to the parties hereto at their
respective addresses, which may be changed by any party from time to time by
written notice to all other parties hereto as follows:
a. If to the Company:
Sandalwood Lodging Investment Corporation
00000 Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X.X. Xxxxxx
(000) 000-0000 (phone)
(000) 000-0000 (fax)
With fax copy to:
Xxxxxxxxxxx X. Xxxxxxxx, Esq.
(000) 000-0000 (phone)
(000) 000-0000 (fax)
b. If to the Escrow Agent:
U.S. Bank Corporate Trust Services
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attn: Xxxxx Xxxxx (EP-MN-T3DM)
(000) 000-0000 (phone)
(000) 000-0000 (fax)
With Fax Copy to:
Xxxxxxx Xxx
(000)000-0000 (phone)
(000)000-0000 (fax)
8. Disclosure.
The parties hereby agree not to use the name of U.S. Bank National
Association to imply an association with the Offering other than that of a legal
escrow agent.
9. Brokerage Confirmation.
The parties acknowledge that to the extent regulations of any
applicable regulatory entity grant a right to receive brokerage confirmations of
security transactions of the escrow, the parties waive receipt of such
confirmations to the extent permitted by law. Escrow Agent shall furnish a
statement of security transactions on its regular daily reports to the
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Company, which should be made available either via US Bank's Internet website or
via e-mail to the Company .
10. Parties Bound.
This Agreement shall extend to and be binding upon the respective
successors, representatives, and assigns of the Company and Escrow Agent.
11. Entire Agreement.
This Agreement constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and cannot be modified,
amended, supplemented, or changed, nor can any provisions hereof be waived,
except by written instrument executed by the parties hereto.
12. Assignment.
Neither party may assign its rights or obligations under this
Agreement without the written consent of the other party hereto.
13. Applicable Law.
The Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Maryland.
14. Severability.
If at any time subsequent to the date hereof, any provision of this
Agreement shall be held by a court of competent jurisdiction to be illegal,
void, or unenforceable, such provision shall be of no force or effect, and shall
be limited or expanded in scope so as to carry out the intent of the parties as
expressed herein to the greatest extent possible. The illegality or
unenforceability of any such provision shall have no effect upon and shall not
impair the enforceability of any other provision of this Agreement.
15. Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SANDALWOOD LODGING INVESTMENT CORPORATION
By: ________________________________________
Title: _______________________________________
U.S. BANK NATIONAL ASSOCIATION
Authorized Agent: _______________________________
Title: _______________________________
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