EXHIBIT 10.3
SUBSCRIPTION ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of, 2007 (the "Agreement") is entered
into by and among Shopoff Properties Trust, Inc., a Maryland corporation (the
"Company"), Shopoff Securities, Inc., a Delaware corporation (the
"Broker-Dealer"), and Xxxxx Fargo Bank, N.A., a national banking association, as
escrow agent (the "Escrow Agent").
WHEREAS, the Company has filed a Registration Statement on Form S-11
(Registration No. 333-[ ]) with the Securities and Exchange Commission (the
"SEC") to commence an initial public offering (the "Offering") of up to
20,100,000 shares of common stock ("Shares") with the first 2,000,000 Shares
being sold at $9.50 per Share, and the last 18,100,000 Shares being sold at
$10.00 per Share to the public, with a minimum offering (the "Minimum Offering")
of $19,000,000 in Shares (the "Minimum Amount"). The Shares are being sold on a
best-efforts basis through the Broker-Dealer;
WHEREAS, the Company and the Broker-Dealer desire to establish an Escrow
Account (as defined below) for the deposit of the subscribers' subscription
funds raised in the Offering, together with any earnings thereon (the "Escrow
Property") in accordance with the terms of this Agreement;
WHEREAS, the Escrow Agent agrees to maintain such an Escrow Account; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by each of the parties hereto, the
parties hereto, intending to be legally bound, do hereby agree as follows:
SECTION 1. APPOINTMENT OF THE ESCROW AGENT. The Company and the Broker-Dealer
hereby appoint Xxxxx Fargo Bank, N.A. as escrow agent in accordance with the
terms and conditions set forth herein, and the Escrow Agent hereby accepts such
appointment.
SECTION 2. PROCEEDS TO BE ESCROWED; SUBSCRIPTION DOCUMENTS TO BE ESCROWED.
(a) A sample copy of the subscription agreement to be executed by each
subscriber for Shares in the Offering is attached as Exhibit A (the
"Subscription Agreement"). Each person desiring to purchase Shares in the
Offering will be required to complete and execute a Subscription Agreement and
to deliver to the Broker-Dealer such completed Subscription Agreement, together
with a check, draft, wire or money order (hereinafter referred to as an
"Instrument of Payment") in the amount of either $9.50 per share or $10.00 per
share, depending upon whether the Minimum Amount has been reached as the
subscriber shall be so advised by the Company, the Broker-Dealer or the Escrow
Agent after the Escrow Agent's receipt of a Minimum Offering Notice (as
hereinafter defined). The Broker-Dealer shall conduct its review of the
Subscription Agreements and the Instruments of Payment at the same location at
which the Subscription Agreements and Instruments of Payment are received from
subscribers. Any Subscription Agreement and Instrument of Payment not conforming
to the foregoing instructions shall be returned by the Broker-Dealer directly to
such subscriber not later than the end of the next business day following
receipt by the Broker-Dealer of such materials. If the Subscription
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Agreements and Instruments of Payment received by the Broker-Dealer conform to
the foregoing instructions, then by the end of the next business day following
receipt by the Broker-Dealer, the Broker-Dealer shall transmit the Subscription
Agreements to the Escrow Agent and shall effect a wire transfer in immediately
available federal funds from the Broker-Dealer to the Escrow Agent using the
wire transfer instructions attached hereto as Exhibit B (the "Wire Transfer
Instructions") of the subscribers' subscription funds represented by the
instructions of payment received by the Broker-Dealer (it being understood that
the Broker-Dealer will transmit all subscription funds to the Escrow Agent by
wire transfer regardless of the form of the instruction of payment received by
the Broker-Dealer and that such wire transfer shall specify the subscriber(s)
that it benefits).
(b) Notwithstanding the foregoing, with respect to any Shares to be
purchased by a custodial account, the Broker-Dealer shall cause the custodian of
such account to deliver a completed Subscription Agreement for such account
directly to the Escrow Agent and to effect a wire transfer of such account's
subscription funds in immediately available federal funds to the Escrow Agent
using the Wire Transfer Instructions. The Broker-Dealer shall furnish to the
Escrow Agent with each delivery of Instruments of Payment a list of the
subscribers described in Section 3 of this Agreement.
(c) All such funds received from subscribers in payment for the Shares so
delivered to the Escrow Agent by the Broker-Dealer shall be retained in escrow
by the Escrow Agent in a separate deposit account (the "Escrow Account") upon
the terms and conditions hereinafter set forth and invested as stated below. The
Escrow Agent shall have no duty to solicit the Investor Funds from subscribers.
(d) The Escrow Property shall be held by the Escrow Agent in the Escrow
Account until such funds are either disbursed to the Company in accordance with
Section 4(a) hereof or returned to the subscribers in accordance with Section
4(b) hereof.
SECTION 3. IDENTITY OF SUBSCRIBERS. The Broker-Dealer shall furnish to the
Escrow Agent with each delivery of funds, as provided in Section 2 hereof, a
list of the persons who have paid money for the purchase of Shares showing the
name, address, tax identification number, state of residence, amount of Shares
subscribed for, and the amount of money paid. The information comprising the
identity of investors shall be provided to the Escrow Agent in the format set
forth in the List of Investors attached as Exhibit C. All proceeds so deposited
shall remain the property of the subscriber and shall not be subject to any
liens or charges by the Company, or the Escrow Agent, until released to the
Company as hereinafter provided.
9 The Company hereby acknowledges the Escrow Agent's right to reject any
subscriber on the basis of an incomplete Subscription Agreement or lack of
payment of funds, it being understood that the Escrow Agent shall be entitled to
exercise such right in its sole discretion and shall not be held liable or
accountable therefor; provided, however, that the Company may in its sole
discretion direct the Escrow Agent to accept an incomplete Subscription
Agreement, and the Escrow Agent shall be protected in acting upon such
direction.
SECTION 4. DISBURSEMENT OF ESCROW PROPERTY. The Escrow Agent shall notify the
Company on a weekly basis (and more frequently if requested by the Company) of
the amount of funds
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in the Escrow Account as well as the activity in the Escrow Account since the
last report. The Escrow Property shall be disbursed as follows:
(a) If payments of the Minimum Amount or more for Shares are obtained on
or prior to the date that is one year after the effective date of the
Registration Statement (the "Minimum Offering Expiration Date") and the Company
has delivered a written notice (the "Minimum Offering Notice") attached as
Exhibit D, signed jointly by two Authorized Persons (as defined in Section
12(p)) of the Company, stating that it has received and accepted Subscription
Agreements for the Minimum Amount of Shares, thereafter the Escrow Agent shall
pay out the Escrow Property when and as directed by any Authorized Person of the
Company. Upon the delivery of the Minimum Offering Notice, all interest accrued
on the Escrow Property shall be payable to the Company.
(b) If the Escrow Agent does not receive the Minimum Offering Notice
within one (1) business day of the Minimum Offering Expiration Date, the Escrow
Agent shall promptly, in any event within ten business days following the
Minimum Offering Expiration Date, by check, refund to each investor at the
address appearing on the List of Investors, or at such other address as shall be
furnished to the Escrow Agent by the Company in writing, all sums paid by the
investor pursuant to his Subscription Agreement for Shares, together with the
interest accrued on such funds in the Escrow Account, which the Company shall
calculate and provide to the Escrow Agent and shall then notify the Company in
writing of such refunds. The Company agrees to use its best efforts to obtain an
executed IRS Form W-9 from each subscriber prior to the Minimum Offering
Expiration Date if the Escrow Agent is not in receipt of evidence that
subscriptions for the Minimum Amount have been accepted at the close of business
on the date which is one month before the Minimum Offering Expiration Date. In
the event that a subscriber fails to remit an executed Form W-9 to the Escrow
Agent prior to the date the Escrow Agent returns the subscriber's funds, the
Escrow Agent will be required to withhold a portion of the earnings attributable
to those subscribers at the applicable rate in accordance with Section 3406 of
the Internal Revenue Code of 1986, as amended.
(c) Upon the termination of the Escrow Agreement, any remaining Escrow
Property shall be forwarded to the Company in accordance with the Company's
written directions.
SECTION 5. INVESTMENT OF THE ESCROW PROPERTY. Prior to the disbursement of
Escrow Property in accordance with the provisions of Section 4 hereof, all
Escrow Property shall be deposited in a Xxxxx Fargo Bank, N.A. Money Market
Deposit Account pursuant to the requirements of Rule 15c2-4 All investments
attributable to Escrow Property shall be made by the Escrow Agent in the name of
"Xxxxx Fargo Bank, N.A., as Escrow Agent."
SECTION 6. TERM OF ESCROW. This Agreement shall be effective as of the date the
Registration Statement is declared effective by the SEC as such date is promptly
notified to the Escrow Agent by the Company in writing. Unless otherwise
provided in this Agreement, final termination of this Agreement shall occur on
(1) the date that the Company and the Escrow Agent shall mutually agree in
writing to terminate this Agreement, or (2) after termination of this Offering,
the date on which all funds held in the Escrow Account have been distributed in
accordance with the terms hereof in each case. The provisions of Sections 8, 10
and 11 shall
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survive the termination of this Escrow Agreement and the earlier resignation or
removal of the Escrow Agent.
SECTION 7. ISSUANCE OF CERTIFICATES. Until the terms of the Escrow Agreement
with respect to Shares have been met and the funds hereunder received from
subscriptions for Shares have been released to the Company, the Company may not
issue any certificates or other evidence of Shares, except Subscription
Agreements.
SECTION 8. COMPENSATION OF THE ESCROW AGENT. As compensation for serving as the
Escrow Agent hereunder, the Escrow Agent shall receive from the Company the
fees, charges and reimbursement of expenses as agreed to between the Company and
Escrow Agent on Schedule A attached hereto. The Company shall reimburse the
Escrow Agent on demand for all loss, liability, damage, disbursements, advances
or expenses paid or incurred by it for which the Company is obligated to pay or
indemnify the Escrow Agent pursuant to the terms hereof in the administration of
its duties hereunder, including, but not limited to, all counsel, advisors' and
agents' fees and disbursements and all taxes or other governmental charges. The
obligations contained in this Section 8 shall survive the termination of this
Escrow Agreement and the resignation or removal of the Escrow Agent.
SECTION 9. RESIGNATION OF THE ESCROW AGENT. The Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving thirty (30) calendar
days' prior written notice of such resignation to the Company. The Company may
remove the Escrow Agent at any time by giving thirty (30) calendar days' prior
written notice to the Escrow Agent. Upon such notice, a successor escrow agent
shall be appointed by the Company who shall provide written notice of such to
the resigning the Escrow Agent. Such successor escrow agent shall become the
escrow agent hereunder upon the resignation or removal date specified in such
notice. If the Company is unable to agree upon a successor escrow agent within
thirty (30) days after such notice, the Escrow Agent may, in its sole
discretion, deliver the Escrow Property to the Company at the address provided
herein or may apply to a court of competent jurisdiction for the appointment of
a successor escrow agent or for other appropriate relief. The costs and expenses
(including its attorneys' fees and expenses) incurred by the Escrow Agent in
connection with such proceeding shall be paid by the Company. Upon receipt of
the identity of the successor escrow agent, the Escrow Agent shall deliver the
Escrow Property then held hereunder to the successor Escrow Agent, less the
Escrow Agent's fees, costs and expenses or other obligations owed to the Escrow
Agent to be paid from any interest earned in respect of the Escrow Property, or
hold any interest earned in respect of the Escrow Property (or any portion
thereof), pending distribution, until all such fees, costs and expenses or other
obligations are paid. Upon its resignation and delivery of the Escrow Property
as set forth in this Section 9, the Escrow Agent shall be discharged from any
and all further obligations arising in connection with the Escrow Property or
this Agreement.
SECTION 10. INDEMNIFICATION OF THE ESCROW AGENT. The Company and the
Broker-Dealer hereby jointly and severally agree to indemnify, defend, protect
and hold harmless the Escrow Agent and its officers, directors, employees,
representatives and agents, from and against and reimburse the Escrow Agent for
any and all claims, expenses, obligations, liabilities, losses, damages,
injuries (to person, property, or natural resources), penalties, stamp or other
similar taxes, actions, suits, judgments, reasonable costs and expenses
(including reasonable attorney's
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fees and expenses) of whatever kind or nature regardless of their merit,
demanded, asserted or claimed against the Escrow Agent directly or indirectly
relating to, or arising from, claims against the Escrow Agent by reason of its
participation in the transactions contemplated hereby, including without
limitation all reasonable costs required to be associated with claims for
damages to persons or property, and reasonable attorneys' and consultants' fees
and expenses and court costs, except to the extent finally determined to have
been primarily caused by the Escrow Agent's gross negligence or willful
misconduct. The provisions of this Section 10 shall survive the termination of
this Agreement or the resignation or removal of the Escrow Agent.
SECTION 11. LIMITATIONS ON THE RESPONSIBILITIES OF THE ESCROW AGENT.
(a) The duties, responsibilities and obligations of the Escrow Agent shall
be limited to those expressly set forth herein and no duties, responsibilities
or obligations shall be inferred or implied against the Escrow Agent. The Escrow
Agent shall not be subject to, nor required to comply with, any other agreement
to which the Company is a party, even though reference thereto may be made
herein, or to comply with any direction or instruction (other than those
contained herein or delivered in accordance with this Escrow Agreement) from the
Company or an entity acting on its behalf. The Escrow Agent shall not be
required to expend or risk any of its own funds or otherwise incur any
liability, financial or otherwise, in the performance of any of its duties
hereunder. The sole duty of the Escrow Agent shall be to receive subscription
funds and hold and invest them subject to release, in accordance herewith, and
the Escrow Agent shall be under no duty to determine whether the Company or the
Broker-Dealer is complying with requirements of this Agreement, the Offering,
any disclosure or marketing materials in connection therewith or any applicable
laws. The Company and the Broker-Dealer agree that the Escrow Agent had and has
no role in the preparation of the Offering documents, has not reviewed any such
documents and makes no representations or warranties with respect to the
information contained therein or omitted therefrom. The Escrow Agent shall have
no obligation, duty or liability with respect to compliance with any federal or
state securities, disclosure or tax laws concerning the Offering documents or
the issuance, offering or sale of the Shares. The Escrow Agent shall have no
duty or obligation to monitor the application and use of the subscription funds
once transferred to the Company, that being the sole obligation and
responsibility of the Company.
(b) If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrow Property (including
but not limited to orders of attachment or garnishment or other forms of levies
or injunctions or stays relating to the transfer of the Escrow Property), the
Escrow Agent is authorized to comply therewith in any manner it or legal counsel
of its own choosing deems appropriate; and if the Escrow Agent complies with any
such judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
(c) The Escrow Agent shall not be liable for any action taken or omitted
or for any loss or injury resulting from its actions or its performance or lack
of performance of its duties hereunder in the absence of gross negligence or
willful misconduct on its part. In no event shall
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the Escrow Agent be liable (i) for acting in accordance with or conclusively
relying upon any instruction, notice, demand, certificate or document from the
Company or any entity acting on behalf of the Company, (ii) for any indirect,
consequential, punitive or special damages, regardless of the form of action and
whether or not any such damages were foreseeable or contemplated, (iii) for the
acts or omissions of its nominees, correspondents, designees, agents, subagents
or subcustodians, (iv) for the investment or reinvestment of any cash held by it
hereunder, in each case in good faith, in accordance with the terms hereof,
including without limitation any liability for any delays (not resulting from
its gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Property, or any loss of interest or income incident to any such
delays, or (v) for an amount in excess of the value of the Escrow Property,
valued as of the date of deposit, but only to the extent of direct money
damages.
(d) The Escrow Agent may consult with legal counsel of its own choosing at
the expense of the Company as to any matter relating to this Escrow Agreement,
and the Escrow Agent shall not incur any liability in acting in good faith in
accordance with any advice from such counsel. If such expenses are to be billed
to the Company, the Company will be informed of such expenses before they are
incurred. Failure of the Escrow Agent to provide such notice will discharge the
Company's payment obligations hereunder.
(e) The Escrow Agent shall not incur any liability for not performing any
act or fulfilling any duty, obligation or responsibility hereunder by reason of
any occurrence beyond the control of the Escrow Agent (including but not limited
to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, civil unrest, local or national
disturbance or disaster, any act of terrorism or the unavailability of the
Federal Reserve Bank wire or facsimile or other wire or communication facility).
(f) The Escrow Agent shall be entitled to conclusively rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity or
the service thereof. The Escrow Agent may act in conclusive reliance upon any
instrument or signature believed by it to be genuine and may assume that any
person purporting to make any statement or execute any document in connection
with the provisions hereof has been duly authorized to do so.
(g) The Escrow Agent shall not be responsible in any respect for the form,
execution, validity, value or genuineness of documents or securities deposited
hereunder, or for any description therein, or for the identity, authority or
rights of persons executing or delivering or purporting to execute or deliver
any such document, security or endorsement. The Escrow Agent shall not be called
upon to advise any party as to the wisdom in selling or retaining or taking or
refraining from any action with respect to any securities or other property
deposited hereunder.
(h) The Escrow Agent shall not be under any duty to give the Escrow
Property held by it hereunder any greater degree of care than it gives other
similar escrow property and shall not be required to invest any funds held
hereunder except as directed in this Escrow Agreement.
(i) At any time the Escrow Agent may request an instruction in writing
from the Company and may, at its own option, include in such request the course
of action it proposes to
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take and the date on which it proposes to act, regarding any matter arising in
connection with its duties and obligations hereunder. The Escrow Agent shall not
be liable for acting in accordance with such a proposal on or after the date
specified therein, provided that the specified date shall be at least three (3)
business days after the Company receives the Escrow Agent's request for
instructions and its proposed course of action, and provided further that, prior
to so acting, the Escrow Agent has not received the written instructions
requested.
(j) When the Escrow Agent acts on any information, instructions,
communications, (including, but not limited to, communications with respect to
the delivery of securities or the wire transfer of funds) sent by telex,
facsimile, email or other form of electronic or data transmission, the Escrow
Agent, absent gross negligence on its part, shall not be responsible or liable
in the event such communication is not an authorized or authentic communication
of the Company or is not in the form the Company sent or intended to send
(whether due to fraud, distortion or otherwise). The Company shall indemnify the
Escrow Agent against any loss, liability, claim or expense (including legal fees
and expenses) it may incur with its acting in accordance with any such
communication.
(k) In the event of any ambiguity or uncertainty hereunder or in any
notice, instruction or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its sole discretion, refrain from taking any
action other than to retain possession of the Escrow Property, unless the Escrow
Agent receives written instructions, signed by the Company which eliminates such
ambiguity or uncertainty.
(l) In the event of any dispute between or conflicting claims among the
Company and any other person or entity with respect to any Escrow Property, the
Escrow Agent shall be entitled, in its sole discretion, to refuse to comply with
any and all claims, demands or instructions with respect to such Escrow Property
so long as such dispute or conflict shall continue, and the Escrow Agent shall
not be or become liable in any way to the Company or any other person for
failure or refusal to comply with such conflicting claims, demands or
instructions. The Escrow Agent shall be entitled to refuse to act until, in its
sole discretion, either (i) such conflicting or adverse claims or demands shall
have been determined by a final order, judgment or decree of a court of
competent jurisdiction, which order, judgment or decree is not subject to
appeal, or settled by agreement between the conflicting parties as evidenced in
a writing satisfactory to the Escrow Agent or (ii) the Escrow Agent shall have
received security or an indemnity satisfactory to it sufficient to hold it
harmless from and against any and all losses which it may incur by reason of so
acting. Any court order, judgment or decree shall be accompanied by a legal
opinion by counsel for the presenting party to the effect that said order,
judgment or decree represents a final adjudication of the rights of the parties
by a court of competent jurisdiction, and that the time for appeal from such
order, judgment or decree has expired without an appeal having been filed with
such court. The Escrow Agent shall act on such court order and legal opinions
without further question. The Escrow Agent may, in addition, elect, in its sole
discretion, to commence an interpleader action or seek other judicial relief or
orders as it may deem, in its sole discretion, necessary. The costs and expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
such proceeding shall be paid by, and shall be deemed an obligation of, the
Company.
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(m) The Escrow Agent shall have no responsibility for the contents of any
writing of the arbitrators or any third party contemplated herein as a means to
resolve disputes and may conclusively rely without any liability upon the
contents thereof.
(n) The Escrow Agent does not have any interest in the Escrow Property
deposited hereunder but is serving as escrow holder only and having only
possession thereof. The Company shall pay or reimburse the Escrow Agent upon
request for any transfer taxes or other taxes relating to the Escrow Property
incurred in connection herewith and shall indemnify and hold harmless the Escrow
Agent from any amounts that it is obligated to pay in the way of such taxes. Any
payments of income from this Escrow Account shall be subject to withholding
regulations then in force with respect to United States taxes. The Company will
provide the Escrow Agent with appropriate W-9 forms for tax identification
number certifications, or W-8 forms for non resident alien certifications. This
paragraph shall survive notwithstanding any termination of this Escrow Agreement
or the resignation or removal of the Escrow Agent.
(o) The Escrow Agent shall provide to the Company weekly statements
identifying transactions, transfers or holdings of Escrow Property and each such
statement shall be deemed to be correct and final upon receipt thereof by the
Company unless the Escrow Agent is notified in writing, by the Company, to the
contrary within thirty (30) business days of the date of such statement.
SECTION 12. MISCELLANEOUS.
(a) This Agreement embodies the entire agreement and understanding among
the parties relating to the subject matter hereof.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of California without reference to the principles of
conflict of laws.
(c) All notices and other communications under this Agreement shall be in
writing in English and shall be deemed given when delivered personally, on the
next Business Day after delivery to a recognized overnight courier or mailed
first class (postage prepaid) or when sent by facsimile to the parties (which
facsimile copy shall be followed, in the case of notices or other communications
sent to the Escrow Agent, by delivery of the original) at the following
addresses (or to such other address as a party may have specified by notice
given to the other parties pursuant to this provision):
If to the Company, to:
Shopoff Properties Trust, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
8
with a copy to:
Manatt, Phelps, & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
If to the Escrow Agent, to:
Xxxxx Fargo Bank, N.A.
0000 Xxxx Xxxxxx, 0xx Xxxxx
MAC T5303-022
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxx, Corporate Trust & Escrow Services
If the Broker-Dealer, to:
Shopoff Securities, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
(d) The headings of the Sections of this Agreement have been inserted for
convenience and shall not modify, define, limit or expand the express provisions
of this Agreement.
(e) This Agreement and the rights and obligations hereunder of parties
hereto may not be assigned except with the prior written consent of the other
parties hereto. This Agreement shall be binding upon and inure to the benefit of
each party's respective successors and permitted assigns. Except as expressly
provided herein, no other person shall acquire or have any rights under or by
virtue of this Agreement. This Agreement is intended to be for the sole benefit
of the parties hereto, and (subject to the provisions of this Section 12(e))
their respective successors and assigns, and none of the provisions of this
Agreement are intended to be, nor shall they be construed to be, for the benefit
of any third person.
(f) This Agreement may not be amended, supplemented or otherwise modified
without the prior written consent of the parties hereto.
(g) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(h) Any payments of income from the Escrow Property shall be subject to
withholding regulations then in force with respect to United States taxes. The
Company will provide the Escrow Agent with its Employer Identification Number
for use by the Escrow Agent if necessary. It is understood that the Escrow Agent
shall be responsible for income reporting only with respect to income earned on
the Escrow Property and will not be responsible for any other reporting.
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(i) This Agreement may be executed in two or more counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
(j) The rights and remedies conferred upon the parties hereto shall be
cumulative, and the exercise or waiver of any such right or remedy shall not
preclude or inhibit the exercise of any additional rights or remedies. The
waiver of any right or remedy hereunder shall not preclude the subsequent
exercise of such right or remedy.
(k) The Company hereby represents and warrants (i) that this Escrow
Agreement has been duly authorized, executed and delivered on its behalf and
constitutes its legal, valid and binding obligation and (ii) that the execution,
delivery and performance of this Escrow Agreement by the Company does not and
will not violate any applicable law or regulation.
(l) The Broker-Dealer hereby represents and warrants (i) that this Escrow
Agreement has been duly authorized, executed and delivered on its behalf and
constitutes its legal, valid and binding obligation and (ii) that the execution,
delivery and performance of this Escrow Agreement by the Broker-Dealer does not
and will not violate any applicable law or regulation.
(m) The invalidity, illegality or unenforceability of any provision of
this Escrow Agreement shall in no way affect the validity, legality or
enforceability of any other provision; and if any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.
(n) No printed or other material in any language, including prospectuses,
notices, reports, and promotional material which mentions "Xxxxx Fargo Bank,
N.A." or any of their respective affiliates by name or the rights, powers, or
duties of the Escrow Agent under this Escrow Agreement shall be issued by any
other parties hereto, or on such party's behalf, without the prior written
consent of the Escrow Agent.
(o) For purposes of this Agreement, "Business Day" shall mean any day that
is not a Saturday or Sunday or a day on which banks are required or permitted by
law or executive order to be closed in the City of Irvine, California or the
City of Dallas, Texas.
(p) For purposes of sending and receiving instructions or directions
hereunder, all such instructions or directions shall be, and the Escrow Agent
may conclusively rely upon such instructions or directions, delivered, and
executed by representatives of the Company designated on Scheduled B attached
hereto and made a part hereof (each such representative, an "Authorized Person")
which such designation shall include specimen signatures of such
representatives, as such Schedule B may be updated from time to time.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SHOPOFF PROPERTIES TRUST, INC.
By:____________________________
Name:
Title:
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SHOPOFF SECURITIES, INC.
By: ____________________________
Name:
Title:
XXXXX FARGO BANK, N.A.
as Escrow Agent
By: ____________________________
Name:
Title:
11
SCHEDULE A
DESCRIPTION OF SUBSCRIPTION ESCROW AGENT SERVICES:
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Xxxxx Fargo Bank Xxxx X. Xxxxxx [XXxxX
Corporate Trust Services Vice President/Business Development FARGO
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx Tel: 000.000.0000 LOGO]
Mac T5656-013 Fax: 000.000.0000
Xxxxxx, XX 00000 Xxxx.X.Xxxxxx@xxxxxxxxxx.xxx
SCHEDULE OF FEES
TO ACT AS SUBSCRIPTION ESCROW AGENT FOR THE
SHOPOFF PROPERTY TRUST, INC.
ACCEPTANCE FEE: WAIVED
Initial Fees as they relate to Xxxxx Fargo Bank acting in the capacity of
Escrow Agent - includes creation and examination of the Escrow Agreement;
acceptance of the Escrow appointment; setting up of Escrow Account(s) and
accounting records; and coordination of receipt of funds for deposit to the
Escrow Account.
The Acceptance Fee is payable at time of Escrow Agreement execution.
ESCROW AGENT ADMINISTRATION FEE: FOR UP TO 300 INVESTOR DEPOSITS:
--------------------------------
$20,000.00
For ordinary administration services by Escrow Agent - includes daily routine
account management; investment transactions; cash transaction processing
(including wires and check processing); disbursement of the funds in accordance
with the agreement; and mailing of trust account statements to all applicable
parties. Tax reporting for up to 300 entities or individuals is included in the
Escrow Agent Administration Fee. Should the escrow agent be required to actively
collect W-9s, or any additional tax information from the subscribers, an
additional reporting fee of $25 per event may be charged. Additionally, a sweep
fee of 20 basis points will be assessed by the Escrow Agent on the average
monthly balance for Money Market Fund or Money Market Demand Account (sweep)
Investments. Float credit received by the bank for receiving funds that remain
uninvested are deemed part of the Escrow Agent's compensation. Fees are due and
payable from the investment earnings within the escrow account and will be paid
there from as soon as possible. In the event investment earnings are not
sufficient to accommodate the Escrow Agent Administration Fee, or any additional
fees that may be charged, Shopoff Property Trust, Inc., or an affiliate, will
pay the fee. The Fee will not be prorated in case of early termination.
TRANSACTION CHARGES:
International Wire disbursements $85 per wire
NSF checks, stop payments, return checks $35 per check
XXXXX FARGO'S BID IS BASED ON THE FOLLOWING ASSUMPTIONS:
- Number of escrow funds/accounts to be established: One (1)
13
- Number of Deposits to Escrow Account: Approximately Three Hundred (300)
- Number of Withdrawals from Escrow Fund: Approximately Three Hundred (300)
- Term of Escrow: Up to One (1) Year
- THIS FEE SCHEDULE ASSUMES THAT BALANCES IN THE ESCROW ACCOUNT WILL BE
INVESTED IN MONEY MARKET MUTUAL FUNDS OR MONEY MARKET DEMAND ACCOUNTS
- ALL FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC ENTITY
- IF THE ACCOUNT(S) DOES NOT OPEN WITHIN THREE (3) MONTHS OF THE DATE SHOWN
BELOW, THIS PROPOSAL WILL BE DEEMED TO BE NULL AND VOID
OUT OF POCKET EXPENSES:
We only charge for out-of-pocket expenses in response to specific tasks assigned
by the client. Therefore, we cannot anticipate what specific out-of-pocket items
will be needed or what corresponding expenses will be incurred. Possible
expenses would be, but are not limited to, express mail and messenger charges,
travel expenses to attend closing or other meetings. There are no charges for
indirect out-of- pocket expenses.
THIS FEE SCHEDULE IS BASED UPON THE ASSUMPTIONS LISTED ABOVE WHICH PERTAIN
TO THE RESPONSIBILITIES AND RISKS INVOLVED IN XXXXX FARGO UNDERTAKING THE ROLE
OF ESCROW AGENT. THESE ASSUMPTIONS ARE BASED ON INFORMATION PROVIDED TO US AS OF
THE DATE OF THIS FEE SCHEDULE. OUR FEE SCHEDULE IS SUBJECT TO REVIEW AND
ACCEPTANCE OF THE FINAL DOCUMENTS. SHOULD ANY OF THE ASSUMPTIONS, DUTIES OR
RESPONSIBILITIES CHANGE, WE RESERVE THE RIGHT TO AFFIRM, MODIFY OR RESCIND OUR
FEE SCHEDULE.
SUBMITTED BY: Xxxx X. Xxxxxx - September 12, 2006
Vice President/Business Development
(000) 000-0000
p# 44587
14
SCHEDULE B
AUTHORIZED REPRESENTATIVES OF SHOPOFF PROPERTIES TRUST, INC.
Name
______________________________________________
Title
______________________________________________
Specimen Signature
Name
______________________________________________
Title
______________________________________________
Specimen Signature
Name
______________________________________________
Title
______________________________________________
Specimen Signature
15
EXHIBIT A
SUBSCRIPTION AGREEMENT
A-1
EXHIBIT B
WIRE TRANSFER INSTRUCTIONS
B-1
EXHIBIT C
LIST OF INVESTORS
Pursuant to the Escrow Agreement dated by and between Shopoff Properties
Trust, Inc., (the "Company"), Shopoff Securities, Inc., and Xxxxx Fargo Bank,
N.A. (the "Escrow Agent"), the Company hereby certifies that the following
Investors have paid the following amounts of money for the purchase of
(the"Shares"), and the money has been deposited with the Escrow Agent:
1. Name of Subscriber
Mailing Address
State of Residence
Tax Identification Number
Amount of Shares subscribed for
Amount of money paid and deposited with Escrow Agent
2. Name of Subscriber
Mailing Address
State of Residence
Tax Identification Number
Amount of Shares subscribed for
Amount of money paid and deposited with Escrow Agent
C-1
EXHIBIT D
MINIMUM OFFERING NOTICE
[Company Letterhead]
[DATE]
Xxxxx Fargo Bank, N.A.
1445 Xxxx Avenue, 2nd Floor
MAC T5303-022
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxx, Corporate Trust & Escrow Services
Telecopy: (000) 000-0000
You are hereby notified that the Company has received and accepted
Subscription Agreements for the Minimum Amount of Shares. You are further
notified that all conditions precedent to the issuance by the Company of this
Minimum Offering Notice, under the Escrow Agreement or any other agreement, have
been met. We therefore direct Xxxxx Fargo Bank, N.A., as Escrow Agent, to
distribute the Escrow Property in the following manner:
[Insert Wire Instructions]
Sincerely,
Authorized Person
Print Name
Authorized Person
Print Name
D-1
