EXHIBIT 10.7
ESCROW AGREEMENT
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Comerica Bank
____________________________
____________________________
Attention: ________________
Re: G REIT, Inc.
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Ladies and Gentlemen:
G REIT, Inc., a Virginia corporation (the "Company"), will issue in a
public offering (the "Offering") its common stock (the "Stock") pursuant to a
Registration Statement on Form S-11 filed by the Company with the Securities and
Exchange Commission. NNN Capital Corp., a California corporation (the "Dealer
Manager"), will act as dealer manager for the offering of the Stock. The Company
is entering into this agreement with you to set forth the terms on which you, as
Escrow Agent, will hold and disburse the proceeds from subscriptions for the
purchase of the Stock in the Offering until such time as subscriptions from
nonaffiliates of the Company have been received for Stock, resulting in total
minimum capital raised of $1,000,000 (the "Required Capital") and, in the case
of subscriptions received from residents of Pennsylvania ("Pennsylvania
Investors"), the Company has received subscriptions for Stock resulting in total
minimum capital raised of $10,000,000, not including subscriptions from
Pennsylvania Investors (the "Pennsylvania Required Capital"). The Company hereby
appoints you as Escrow Agent for purposes of holding the proceeds from the
subscriptions for the Stock, on the terms and conditions hereinafter set forth:
1. Persons subscribing to purchase the Stock will be instructed by the
Dealer Manager or any soliciting dealers to remit the purchase price in the form
of checks, drafts, or money orders (hereinafter called "instruments of payment")
payable to the order of, or funds wired in favor of, "Comerica Bank, as Escrow
Agent." Any checks received made payable to a party other than the Escrow Agent
shall be returned to the soliciting dealer who submitted the check. Within one
(1) business day after receipt of instruments of payment from the Offering, the
Dealer Manager will send to you: (a) each subscriber's name, address, number of
shares purchased, and purchase price remitted, and (b) the instruments of
payment from such subscribers, for deposit by you into an interest-bearing
deposit account entitled "ESCROW ACCOUNT FOR THE BENEFIT OF SUBSCRIBERS FOR
COMMON STOCK OF G REIT, INC." (the "Escrow Account"), which deposit shall occur
within one (1) business day after you receive such materials. Instruments of
payment and wired funds received from Pennsylvania Investors shall be placed in
a separate interest-bearing deposit account entitled "ESCROW ACCOUNT FOR THE
BENEFIT OF PENNSYLVANIA INVESTORS" (the "Pennsylvania Escrow Account"). Both
the Escrow Account and the Pennsylvania Escrow Account will be established and
maintained in such a way as to permit the interest income calculations described
in paragraph 7(a).
2. You agree to promptly process for collection the instruments of
payment upon deposit into either the Escrow Account or the Pennsylvania Escrow
Account. You will hold the deposited funds in the Escrow Account and the
Pennsylvania Escrow Account until such funds are disbursed in accordance with
paragraph 3 hereof. In the event any of the instruments of payment are returned
to you for nonpayment prior to receipt by you of the Required Capital or, in
connection with subscriptions from Pennsylvania Investors, the Pennsylvania
Required Capital, you shall promptly notify the Dealer Manager and the Company
in writing of such nonpayment, and you are authorized to debit the Escrow
Account or the Pennsylvania Escrow Account, as applicable, in the amount of such
return payment as well as any interest earned on the amount of such payment.
3. (a) Subject to the provisions of subparagraphs 3(b)-3(e) below:
(i) once you have received and collected subscription proceeds
in the Escrow Account in collected funds an amount equal to or greater than the
Required Capital, you shall promptly notify the Company and, upon receiving
written instruction from the Company, (A) disburse to the Company, by check or
wire transfer, the funds in the Escrow Account representing the gross purchase
price for the Stock and (B) disburse to the subscribers any interest thereon
calculated pursuant to the provisions of paragraph 7. For purposes of this
Agreement, the term "collected funds" shall mean all funds received by the
Escrow Agent have cleared normal banking channels and are in the form of cash.
Following such disbursements, the Escrow Account shall close and thereafter you
shall forward directly to the Company upon receipt by you any subscription
documents and instruments of payment received by you from subscribers other than
Pennsylvania Investors.
(ii) after the closing of the Escrow Account, the Company and
the Dealer Manager shall continue to forward to you instruments of payment and
subscriber information received from Pennsylvania Investors for deposit into the
Pennsylvania Escrow Account until such time as the Company notifies you in
writing that total subscription proceeds (not including the amount then in the
Pennsylvania Escrow Account) equal or exceed the Pennsylvania Required Capital.
Upon your receipt of a written notice from the Company that total subscription
proceeds (not including the amount then in the Pennsylvania Escrow Account)
equalling or exceeding the Pennsylvania Required Capital have been received in
collected funds, you shall (A) disburse to the Company, by check or wire
transfer, the funds then in the Pennsylvana Escrow Account representing the
gross purchase price for the Stock, and (B) disburse to the Pennsylvania
Investors any interest
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thereon calculated pursuant to the provisions of paragraph 7. Following such
disbursements, the Pennsylvania Escrow Account will close and thereafter you
shall forward directly to the Company upon receipt by you any subscription
documents and instrucments of payment received by you.
(b) In the event that at the close of business on June 30, 2003 (the
"Expiration Date") you are 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 Stock providing for total
purchase proceeds that equal or exceed the Required Capital (from all sources
but exclusive of any funds received from subscriptions for Stock from entities
which the Company has notified you are affiliated with the Company or its
affiliates), you shall promptly so notify the Company. Thereafter, you agree to
use your best efforts to obtain an executed IRS Form W-9 from each subscriber
within ten (10) calendar days after you provide such notice. On the tenth (10th)
day following the date of notice, you shall promptly return directly to each
subscriber by your check the funds deposited in the Escrow Account and the
Pennsylvania Escrow Account on behalf of such subscriber (unless earlier
disbursed in accordance with paragraph 3(c) below), or shall return the
instruments of payment delivered to you if such instruments have not been
processed for collection prior to such time, together with interest in the
amounts calculated pursuant to paragraph 7 for each subscriber at the address
given to you by the Dealer Manager or the Company. In the event an executed Form
W-9 is not received by you from each subscriber within such period, you shall
thereupon remit an amount to the subscribers in accordance with the provisions
hereof, withholding thirty one percent (31%) of any interest income on
subscription proceeds (determined in accordance with paragraph 7) attributable
to those subscribers not furnishing executed forms in accordance with IRS
Regulations. However, you shall not be required to remit any payments until
funds represented by such payments have been collected by you.
(c) Notwithstanding subparagraphs 3(a) and 3(b) above, if you are not
in receipt of evidence of subscriptions accepted on or before the close of
business on such date that is 120 days after commencement of the Offering (the
"Initial Escrow Period"), and instruments of payment dated not later than that
date (or actual wired funds), for the purchase of Stock providing for total
purchase proceeds (from all sources other than Pennsylvania Investors) that
equal or exceed the Pennsylvania Required Capital, you shall promptly so notify
the Company. Thereafter, the Company shall send to each Pennsylvania Investor 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
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notification, a Pennsylvania Investor requests the return of his or her
subscription funds within ten (10) calendar days after receipt of the
notification (the "Request Period"), you agree to use your best efforts to
obtain an executed IRS Form W-9 from each such Pennsylvania Investor within ten
(10) calendar days after you receive such notice from such Pennsylvania
Investor. You shall promptly return directly to each
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Pennsylvania Investor by your check the funds deposited in the Pennsylvania
Escrow Account on behalf of each Pennsylvania Investor, or shall return the
instruments of payment delivered to you if such instruments have not been
processed for collection prior to such time, at the address given to you by the
Dealer Manager or the Company, together with interest income in the amounts
calculated pursuant to paragraph 7 for each subscriber. In the event an executed
Form W-9 is not received by you from such Pennsylvania Investor within such
period, you shall thereupon remit an amount to such Pennsylvania Investor in
accordance with the provisions hereof, withholding thirty-one percent (31%) of
any interest income earned on subscription proceeds (determined in accordance
with paragraph 7) attributable to such Pennsylvania Investor not furnishing
executed forms in accordance with IRS Regulations. However, you shall not be
required to remit any payments until funds represented by such payments have
been collected by you.
(d) The subscription funds of Pennsylvania Investors 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
(each, 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 Stock with total collected funds 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 Investors
in accordance with the provisions hereof.
(e) In the event the Company rejects any subscription for
which you have already collected funds, you shall, upon the written request of
the Company, promptly issue a refund check to the rejected subscriber. If the
Company rejects any subscription for which you have not yet collected funds but
have submitted the subscriber's check for collection, you shall promptly issue a
check in the amount of the subscriber's check to the rejected subscriber after
you have cleared such funds. If you have not yet submitted a rejected
subscriber's check for collection, you shall promptly remit the subscriber's
check directly to the subscriber.
4. You shall report to the Company weekly the account balances in each
of the Escrow Account and the Pennsylvania Escrow Account and the activity in
each account since the last report.
5. Prior to the disbursement of funds deposited in the Escrow Account
or the Pennsylvania Escrow Account in accordance with the provisions of
paragraph 3 hereof, you shall invest all of the funds deposited in the Escrow
Account and the
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Pennsylvania Escrow Account in "Short-Term Investments" (as defined below)
and you are further authorized and you agree to reinvest all earnings and
interest derived therefrom in Short-Term Investments specified below. In the
event that instruments of payment are returned to you for nonpayment, you are
authorized to debit the Escrow Account or the Pennsylvania Escrow Account, as
applicable, 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 American International
Bank) which mature on or before the Expiration Date, unless such instrument
cannot be readily sold or otherwise disposed of for cash by the Expiration Date
without any dissipation of the offering proceeds invested.
The following securities are not permissible investments:
(a) money market mutual funds;
(b) corporate equity or debt securities;
(c) repurchase agreements;
(d) bankers' acceptances;
(e) commercial paper; and
(f) municipal securities.
6. You are entitled to rely upon written instructions you receive from
the Company, unless you have actual knowledge that such instructions are not
valid or genuine; provided that, if in your opinion, any instructions from the
Company are unclear, you may request clarification from the Company prior to
taking any action and if such instructions continue to be unclear, you may rely
upon written instructions from the Company's legal counsel in distributing or
continuing to hold any funds. However, you shall not be required to disburse any
funds attributable to instruments of payment which have not been collected by
you, provided you shall use your best efforts to promptly collect such funds
after your receipt of disbursement instructions from the Company and shall
disburse such funds in compliance with the disbursement instructions from the
Company.
7. In the event the Offering terminates prior to receipt of the Required
Capital or one or more Pennsylvania Investors 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") and
the Pennsylvania Escrow Account (the "Pennsylvania Escrow Income") shall be
remitted to subscribers in accordance with paragraph 3 and without any
deductions for escrow expenses. Each subscriber's pro rata portion of Escrow
Income or
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Pennsylvania Escrow Income shall be determined as follows: the total amount
of Escrow Income (or Pennsylvania Escrow Income) shall be multiplied by a
fraction, (i) the numerator of which is determined by multiplying the number of
shares of Stock purchased by said subscriber times the number of days said
subscriber's proceeds are held in the Escrow Account or Pennsylvania Escrow
Account, as applicable, prior to the date of disbursement, and (ii) the
denominator of which is the total of the numerators for all such subscribers in
such account. The Company shall reimburse the Escrow Agent for all escrow
expenses. You shall remit all such Escrow Income and Pennsylvania Escrow Income
in accordance with paragraph 3.
8. As compensation for serving as Escrow Agent hereunder, you shall
receive a fee, as set forth in Schedule A attached hereto.
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9. In performing any of your duties hereunder, you shall not incur any
liability to anyone for any damages, losses, or expenses, except for your
willful misconduct, breach of trust, or gross negligence. Accordingly, you shall
not incur any such liability with respect to any action taken or omitted (a) in
good faith upon advice of your counsel given with respect to any questions
relating to your duties and responsibilities under this Agreement, or (b) in
reliance upon any instrument, including any written instrument or instruction
provided for in this Agreement, not only as to its due execution and validity
and effectiveness of its provisions but also as to the truth and accuracy of
information contained therein, which you shall in good faith believe to be
genuine, to have been signed or presented by a proper person or persons and to
conform to the provisions of this Agreement.
10. The Company hereby agrees to indemnify and hold you harmless against
any and all losses, claims, damages, liabilities, and expenses, including
reasonable attorneys' fees and disbursements, that may be imposed on you or
incurred by you in connection with your acceptance of appointment as the Escrow
Agent hereunder, or the performance of your duties hereunder, including any
litigation arising from this Agreement or involving the subject matter hereof,
except where such losses, claims, damages, liabilities, and expenses result from
your willful misconduct, breach of trust, or gross negligence.
11. In the event of a dispute between the parties hereto sufficient in
your discretion to justify doing so, you shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all money or property
in your hands under this Agreement, together with such legal pleadings as you
deem appropriate, and thereupon be discharged from all further duties and
liabilities under this Agreement. In the event of any uncertainty as to your
duties hereunder, you may refuse to act under the provisions of this Agreement
pending order of a court of competent jurisdiction and you shall have no
liability to the Company or to any other person as a result of such action. Any
such legal action may be brought in such court as you shall determine to have
jurisdiction thereof. The filing of any
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11. such legal proceedings shall not deprive you of your compensation
earned prior to such filing.
12. All communications and notices required or permitted by this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by messenger or by overnight delivery service or when
received via telecopy or other electronic transmission, in all cases addressed
to the person for whom it is intended at such person's address set forth below
or to such other address as a party shall have designated by notice in writing
to the other party in the manner provided by this paragraph:
(a) if to the Company:
G REIT, Inc.
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
fax: (000) 000-0000
Attn.: Xxxxxxx X. Xxxxxxxx, President
(b) if to the Dealer Manager:
NNN Capital Corp.
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
fax: (000) 000-0000
Attn.: Xxxxx X. Xxxxxxxx
(c) if to you:
Comerica Bank
Attn.: __________________
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 Agreement shall be governed by the laws of the State of
California as to both interpretation and performance without regard to the
conflict of laws rules thereof.
14. The provisions of this Agreement shall be binding upon the legal
representatives, successors, and assigns of the parties hereto.
15. The Company and the Dealer Manager hereby acknowledge that you are
serving as Escrow Agent only for the limited purposes herein set forth, and
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hereby agree that they will not represent or imply that you, by serving as
Escrow Agent hereunder or otherwise, have investigated the desirabilities or
advisability of investment in the Company or have approved, endorsed, or passed
upon the merits of the Stock or the Company, nor shall they use your name in any
manner whatsoever in connection with the offer or sale of the Stock other than
by acknowledgment that you have agreed to serve as Escrow Agent for the limited
purposes herein set forth.
16. This Agreement and any amendment hereto may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed to be
an original.
17. Except as otherwise required for subscription funds received from
Pennsylvania Investors as provided herein, in the event that you receive
instruments of payment (or wired funds) after the Required Capital has been
received and the proceeds of the Escrow Account have been distributed to the
Company, you are hereby authorized to deposit such instruments of payment within
one (1) business day to any deposit account as directed by the Company. The
application of said funds into a deposit account or to forward such funds
directly to the Company, in other case directed by the Company shall be a full
acquittance to you and you shall not be responsible for the application of said
funds thereafter.
18. The Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound by or incur any liability with respect to any
other agreements or understanding between any other parties, whether or not the
Escrow Agent has knowledge of any such agreements or understandings.
19. Indemnification provisions set forth herein shall survive the
termination of this Agreement.
20. 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 are distributed either (a) to the Company or to subscribers pursuant to
paragraph 3 hereof or (b) to a successor escrow agent upon written instructions
from the Company.
21. The Escrow Agent has no responsibility for accepting, rejecting, or
approving subscriptions.
22. This Agreement shall not be modified, revoked, released, or
terminated unless reduced to writing and signed by all parties hereto, subject
to the following paragraph.
If, at any time, any attempt is made to modify this Agreement in a
manner that would increase the duties and responsibilities of the Escrow Agent
or to modify this Agreement in any manner which the Escrow Agent shall deem
undesirable, or
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at any other time, the Escrow Agent may resign by providing written notice to
the Company and until (a) the acceptance by a successor escrow agent as shall be
appointed by the Company; or (b) thirty (30) days after such written notice has
been given, whichever occurs sooner, the Escrow Agent's only remaining
obligation shall be to perform its duties hereunder in accordance with the terms
of the Agreement.
23. The Escrow Agent may resign at any time from its obligations under
this Escrow Agreement by providing written notice to the Company. Such
resignation shall be effective on the date specified in such notice which shall
be not less than thirty (30) days after such written notice has been given. The
Escrow Agent shall have no responsibility for the appointment of a successor
escrow agent.
24. The Escrow Agent may be removed for cause by the Company by written
notice to the Escrow Agent effective on the date specified in such written
notice. The removal of the Escrow Agent shall not deprive the Escrow Agent of
its compensation earned prior to such removal.
[Signature page follows]
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Agreed to as of the ____ day of ________________, ______.
G REIT, INC.
By:_________________________________________
Name: ______________________________________
Title: _____________________________________
NNN CAPITAL CORP.
By:_________________________________________
Name: ______________________________________
Title: _____________________________________
The terms and conditions contained above are hereby accepted and agreed to by:
COMERICA BANK, N.A.
By: ____________________________________
Name: __________________________________
Title: _________________________________
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EXHIBIT A
[Form of Notice to Pennsylvania Investors]
You have tendered a subscription to purchase shares of common stock of
G REIT, Inc. (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 $10,000,000 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 common
stock and have your subscription returned please so indicate below, sign, date,
and return to the Escrow Agent Comerica Bank, at the address below.
_____________________________
I hereby terminate my prior subscription to purchase shares of common stock
of G REIT, Inc. and request the return of my subscription funds. I certify to G
REIT, Inc. that I am a resident of Pennsylvania.
__________________________________
Signature
Name:_____________________________
(please print)
Date_______________________
Please send the subscription refund to:
___________________________
___________________________
___________________________
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SCHEDULE A TO
ESCROW AGREEMENT FOR
G REIT, INC.
Schedule of Fees - Escrow Agency
Comerica Bank
Administration Fee - Payable Annually............................. $__________
For costs incurred in connection with returned checks............. $__________
per returned check
Charges for refunding subscription proceeds if the Required Capital or the
Pennsylvania Required Capital are not met will be negotiated between the
parties.
Charges for filing reports or information as may be required by Internal Revenue
Service regulations or for the performance of any services not contemplated at
the time of opening account, or not of a routine administrative nature, or not
specifically covered in this schedule, will be negotiated between the parties.
Actual out-of-pocket expenses such as attorneys fees, cost of special checks,
postage, insurance, telephone, telegraph, etc., will be billed at cost.
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