EXHIBIT 10.1
Form of Escrow Agreement between
CNL Income Properties, Inc.
and SouthTrust Bank
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is dated this ____ day of
_________, 2004, by and among CNL INCOME PROPERTIES, INC., a Maryland
corporation (the "Company"), CNL SECURITIES CORP., a Florida corporation (the
"Managing Dealer"), and SOUTHTRUST BANK (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 200,000,000 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; and
WHEREAS, the Company has agreed that the subscription price paid by
subscribers for Shares will be refunded to such subscribers if an aggregate of
250,000 Shares or more of the Company have not been sold and paid for, 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
Share have been received, 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 INCOME
PROPERTIES, 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
Escrowed 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 amount 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 ten
(10) days from the date written confirmation has been received by 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 a bank
account (including, but not limited to, interest-bearing savings accounts and
bank money market accounts), in short-term certificates of deposit issued by a
bank, in short-term securities directly or indirectly issued or guaranteed by
the United States Government, or in other short-term, highly liquid investments
with appropriate safety of principal, 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 similar instruments as directed by the Company.
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 the 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 two 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 purpose 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 last two sentences. In determining whether
the 250,000 share threshold has been attained, 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. Further, in determining
whether the 250,000 share threshold has been attained, 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.
6. Distribution of Interest. If the Escrowed Funds become
deliverable to subscribers pursuant to Paragraph 5(b) 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:
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 its 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
Paragraph 5(b) 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:
If to the subscribers for Shares: To their respective
addresses as specified in
their Subscription
Agreements.
If to the Company: CNL Income Properties, Inc.
CNL Center at City Commons
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X.
Xxxxxx, Xx.,
Chairman of the Board
If to the Managing Dealer: CNL Securities Corp.
CNL Center at City Commons
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxx X.
Xxxxxx, President
If to the Escrow Agent: SOUTHTRUST BANK
000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
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) In 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 interpreted, construed and
enforced in all respects in accordance with the laws of the State of
Florida applicable to contracts to be made and performed entirely in
said state.
(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.
(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.
13. Resignation of Escrow Agent. Should, at any time, any attempt
be made to modify this Agreement in a manner that would
increase the duties and responsibilities of the Escrow Agent,
or to modify the Escrow Agreement in any manner that the
Escrow Agent shall deem undesirable, the Escrow Agent may
resign by notifying the Company. Such resignation shall become
effective on the earlier to occur of (i) the acceptance by a
successor Escrow Agent as shall be appointed by the Company or
(ii) sixty (60) days following the date upon which notice was
mailed. Until such time as the Escrow Agent has resigned in
accordance herewith, the Escrow Agent shall perform its duties
hereunder in accordance with the terms of this Escrow
Agreement.
14. Acts of God. The Escrow Agent shall not be responsible for any
failure or delay in the performance of its obligations under
this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control,
including without limitation, acts of God, earthquakes, fires,
floods, wars, civil or military disturbances, sabotage,
epidemics, riots, interruptions, loss or malfunctions of
utilities, computer (hardware or software) or communication
service, accidents, labor disputes, acts of civil or military
authority, or governmental actions.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
"COMPANY"
CNL INCOME PROPERTIES, INC.
By: __________________________________________
XXXXX X. XXXXXX, XX.,
Chairman of the Board and Chief Executive Officer
"MANAGING DEALER"
CNL SECURITIES CORP.
Attest: ___________ By: _________________________________________
XXXXXX X. XXXXXX, President
"ESCROW AGENT"
SOUTHTRUST BANK
Attest: ___________ By: ______________________________________
Name: ______________________________________
Title: ______________________________________
