EXHIBIT 10.1
CORNERSTONE {industrial properties income and growth fund I} [realty FUND], LLC
ESCROW AGREEMENT
----------------
This Escrow Agreement ("Agreement") is entered into ____________ ,
{1999} [2000] by and among Southern California Bank (the "Escrow Agent"),
Cornerstone {Industrial Properties Income and Growth Fund I} [Realty Fund], LLC,
a California limited liability company (the "Fund") and {Pacific Cornerstone
Financial Incorporated} [Private Equity Investors Group], a California
corporation (the "Dealer Manager").
R E C I T A L S
---------------
A. The Fund proposes to offer up to {$20,000,000} [$50,000,000] of
limited liability company units ("Units") in the Fund, pursuant to a Prospectus
dated ____________ , {1999} [2000], as amended or supplemented from time to time
(the "Prospectus"), with a minimum investment required of five Units at $500 per
Unit (or two Units at $500 per Unit for tax-qualified retirement plans).
B. The Dealer Manager and others (collectively, the "Participating
Brokers") have been named as Participating Brokers in connection with the
proposed offering of the Units and are entitled to certain commissions and
selling expense allowances set forth in those certain selling agreements among
the Fund, the Participating Brokers and the Managing Member of the Fund,
Cornerstone Industrial Properties, LLC, a California limited liability company
("Managing Member").
C. In compliance with the Prospectus and each Selling Agreement, the
Fund proposes to establish an escrow fund with the Escrow Agent [for the
offering proceeds received prior to the Initial Closing Date (as hereafter
defined).
D. If]{.
D. The offering of Units will terminate no later than _________ __,
2001 (the "Offering Termination Date") and if} subscriptions for at least
$3,000,000 are not accepted by the Fund prior to _______________, {2000 (the}
[2001(the] "Minimum Offering Termination Date"), no Units in the Fund will be
sold.
E. The Escrow Agent has agreed to act as escrow agent in
connection with the proposed offering.
A G R E E M E N T
-----------------
It is agreed as follows:
1
1. Incorporation of Recitals and General Provisions. The recitals
-------------------------------------------------
set forth above and the General Provisions attached hereto as Exhibit "A" shall
constitute and shall be deemed to be an integral part of this Agreement.
2. Escrow.
-----
2.1 Escrow Agent. For a period commencing on the date hereof and
-------------
terminating 15 days after the [Minimum] Offering Termination Date, the Escrow
Agent shall act as an escrow agent and shall receive and disburse the proceeds
from the sale of the Units in accordance with the terms of this Agreement. The
Escrow Agent hereby represents and warrants to each {Selling Agent}
[Participating Broker] that it is a "Bank" as such term is defined in Section
3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Act").
2.2 Escrow Account. Commencing on the date hereof, the parties
---------------
shall establish an interest-bearing escrow account with the Escrow Agent (the
"Escrow Account"). The Participating Brokers will instruct subscribers to make
checks for subscriptions of Units payable to the order of the Escrow Agent. Any
checks received that are made payable to a party other than the Escrow Agent
shall be returned to the {Selling Agent} [Participating Broker] who submitted
the check.
3. Deposits into the Escrow Account. Proceeds from the sale of Units
--------------------------------
(the "Proceeds") shall be received by the Escrow Agent from the Participating
Brokers and deposited promptly in the Escrow Account; provided, however, that
Proceeds received by the Escrow Agent within 48 hours prior to a scheduled
Initial or Additional Closing Date (as hereinafter defined) may be held by the
Escrow Agent until such closing (but not longer than 48 hours) and, upon joint
instruction of the Managing Member and the Dealer Manager, deposited directly
into the Fund's account or returned to the subscriber(s).
4. Subscriber Information. Each{Selling Agent}[ParticipatinG Broker] shall
----------------------
provide the Escrow Agent with the name, address, social security number or
taxpayer identification number, and the amount to be deposited for each
subscriber whose funds are deposited with the Escrow Agent pursuant to Section 2
hereof. Such {SELLING AGENT} [PARTICIPATING BROKER] broker shall also notify the
Escrow Agent if a properly executed U.S. Treasury Department Form W-9 has not
been received from any subscriber whose funds are deposited with the Escrow
Agent.
5. Investment of Proceeds. The Escrow Agent shall invest all Proceeds
----------------------
deposited with it hereunder as directed by the Fund, in (i) Bank accounts, (ii)
Bank money-market accounts, (iii) short-term certificates of deposit of Banks
located in the United States, or (iv) short-term securities issued or guaranteed
by the U.S. government. The term "Bank" is defined in Section 3(a)(6) of the
Act. Such investments shall be made in a manner consistent with the requirement
that the Proceeds be available for delivery by the Escrow Agent at the times
described herein. After any reductions made in accordance with Section 11
hereof, income received from investment of the Proceeds shall be credited to the
subscribers in proportion to the amounts deposited with respect to each
subscriber and in proportion to the number of days the collected Proceeds from
each subscriber are held in the Escrow Account. Pursuant to the provisions of
this Agreement, Escrow Agent shall disburse all income earned (less any amounts
required to be withheld by the Escrow Agent under the applicable federal income
tax laws) directly to the Fund with respect to the Proceeds, and the Managing
Member shall determine and disburse to each subscriber his or her proportionate
share of such income computed as provided above. The Fund is aware that there
2
may be a forfeiture of interest in the event of early withdrawal from an
interest bearing account of investment.
6. Initial Closing Date. The term "Qualifying Subscriptions" shall
---------------------
refer to all subscriptions which have been received by the Managing Member and
which the Managing Member intends to accept into the Fund. If Qualifying
Subscriptions have been received for at least $3,000,000 of Units on or before
the Minimum Offering Termination Date, the Managing Member shall notify the
Escrow Agent and by instructions (which may accompany such notice or be provided
subsequently) given at least 2 business days in advance, shall specify the
"Initial Closing Date" (which must be not more than 10 days after the Minimum
Offering Termination Date), the approximate amount of Qualifying Subscriptions
for the Fund to be accepted as of such Initial Closing Date, the identity of the
subscribers whose subscriptions are anticipated to be accepted as of the Initial
Closing Date, and the approximate amount of the Proceeds to be paid to the Fund
and to each {Selling Agent} [Participating Broker], respectively. On the Initial
Closing Date, the Escrow Agent, upon telephonic notice from the Managing Member
and the Dealer Manager that all contingencies for payment have been satisfied as
required by Rule 15c2-4 under the Act (which notice the Managing Member shall
promptly confirm in writing) shall pay to the Fund and each {Selling Agent}
[Participating Broker] the amounts specified by such notice, and shall
additionally pay to the Fund the interest earned on such Proceeds for
disbursement to subscribers pursuant to Section 5 hereof.
7{. 7. Additional Closing Dates. Thereafter, from time to time prior to
the Offering Termination Date, the Managing Member may notify the Escrow Agent
and, by instructions given at least 2 business days in advance of each, specify
Additional Closing Dates, the approximate amount of Qualifying Subscriptions for
such Fund to be accepted as of each Additional Closing Date, the identity of the
Subscribers whose subscriptions are anticipated to be accepted as of each
Additional Closing Date, and the approximate amount of the Proceeds to be paid
to the Fund and to the Participating Brokers, respectively. On each such
Additional Closing Date, the Escrow Agent, upon telephonic notice from the
Managing Member and the Dealer Manager that all contingencies for payment have
been satisfied as required by Rule 15c2-4 under the Act (which notice the
Managing Member promptly shall confirm in writing) shall pay to the Fund and
each Selling Agent the amounts specified by such notice, and shall additionally
pay to the Fund the interest earned on such Proceeds for disbursement to the
subscribers pursuant to Section 5 hereof.
8}. Rejected Subscriptions. From time to time, upon instructions from
-----------------------
the Managing Member identifying those subscribers whose subscriptions have been
rejected, the Escrow Agent shall return such funds to the subscribers so
identified with such interest as has been credited to them pursuant to Section 5
hereof. If the Managing Member rejects any subscription for which the Escrow
Agent has already collected funds, the Escrow Agent shall promptly issue a
refund check to the rejected subscriber. If the Managing Member rejects any
subscription for which the Escrow Agent has not yet collected funds but has
submitted the subscriber's check for collection, the Escrow Agent shall promptly
issue a check in the amount of the subscriber's check to the rejected subscriber
after the Escrow Agent has cleared such funds. If the Escrow Agent has not yet
submitted a rejected subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber.
{9} [8]. Failure to Meet Minimum Subscription. If Qualifying
-----------------------------------------
Subscriptions for at least $3,000,000 of Units have not been received by the
Minimum Offering Termination Date, then the Escrow Agent, upon instructions from
the Managing Member, shall promptly return all collected funds and uncollected
4
checks and other instruments to the subscribers, with such interest as has been
credited to them pursuant to Section 5 hereof. Prior to the Initial Closing
Date, the Fund is aware and understands that it is not entitled to any funds
received into escrow and no amounts deposited in the Escrow Account shall become
the property of the Fund or any other entity, or be subject to the debts of the
Fund or any other entity.
{10} [9]. Notice of Extension or Termination of Offering. Upon final
termination of the offering, the Managing Member shall instruct Escrow Agent
pursuant to Section 6 as to the disposition of any remaining funds and interest
thereon.
{11} [10]. Fees. The Escrow Agent, for services rendered under this
----
Agreement, shall receive a fee as set forth on Exhibit "B" hereto. The fees of
the Escrow Agent shall be {deducted from the aggregate interest earned on the
Proceeds of the subscribers whose subscriptions are accepted} [paid by the Fund.
If Qualifying Subscriptions for at least $3,000,000 of Units have not been
received by the Minimum Offering Termination Date, then the fees of the Escrow
Agent shall be paid] by the Managing Member {prior to crediting the interest
earned to such subscribers pursuant to Section 5, and the Managing Member shall
pay on demand any unpaid portion of the Escrow Agent's fees}. In no event shall
the fees of the Escrow Agent be deducted from or otherwise offset against the
Proceeds (or interest earned thereon) of subscribers {whose subscriptions are
not accepted by the Managing Member.}[.]
{12} [11]. Resignation. The Escrow Agent shall have the right to resign
-----------
at any time and be discharged from its duties as escrow agent hereunder by
giving the Fund at least 30 days prior written notice thereof; provided,
however, that if the Escrow Agent shall exercise its right of resignation
hereunder, it shall receive as its fee for services rendered as escrow agent a
fee as provided in Section {11} [10] hereof.
{13} [12]. Duties and Responsibilities of Escrow Agent. The Escrow
----------------------------------------------
Agent shall have no duties or responsibilities other than those set forth herein
and shall:
(a) Be under no duty to enforce payment of any subscription
which is to be paid to and held by it hereunder;
(b) Be under no duty to accept funds, checks, drafts or
instruments for the payment of money from anyone other than the Participating
Brokers or the Managing Member or to give any receipt therefor except to the
Participating Brokers or the Managing Member;
(c) Be protected in acting upon any notice, request,
certificate, approval, consent or other paper believed by it to be genuine,
signed by the proper party or parties and in accordance with the terms of this
Agreement;
(d) Be deemed conclusively to have given and delivered any
notice required to be given or delivered hereunder if the same is in writing,
signed by any one of its authorized officers and mailed, by registered or
certified mail, in a sealed postpaid wrapper, addressed to the Fund at the
following address:
Cornerstone [Realty Fund] {Industrial Properties
Income and Growth Fund I}, LLC
4590 MacArthur Blvd.
Suite 610
Newport Beach, CA 92660
4
(e) Be indemnified and held harmless by the Managing Member
from any and all claims made against it (including claims regarding the
disbursement of funds), or any and all expenses incurred by it (including
reasonable attorneys' fees), by reason of its acting or failing to act in
connection with any of the transactions contemplated hereby and against any loss
it may sustain in carrying out the terms of this Agreement, except such claims,
expenses or losses which are occasioned by its bad faith, negligence or willful
misconduct; and
(f) Not be liable for any forgeries or impersonations concern-
ing any documents to be handled by it.
{14} [13]. Disputes. If the Managing Member, the Participating Brokers,
or anyone else, disagree on any matter connected with this escrow, (i) Escrow
Agent will not have to settle the matter, (ii) Escrow Agent may wait for a
settlement by appropriate legal proceedings or other means Escrow Agent may
require, and in such event Escrow Agent will not be liable for interest or
damage, (iii) Escrow Agent will be entitled to such reasonable compensation for
services, costs and attorneys' fees as a court may award if Escrow Agent
intervenes in or is made a party to any legal proceedings, (iv) Escrow Agent
shall be entitled to hold documents and funds deposited in this escrow pending
settlement of the disagreement by any of the above means, and (v) Escrow Agent
shall be entitled to file an interpleader action and deposit any Proceeds or
property with an appropriate court.
{15} [14]. No Legal Advice. This transaction is an escrow and
Escrow Agent is an escrow holder only and as escrow holder Escrow Agent may not
give legal advice as to any conditions or requirements in this escrow.
{16} [15]. Notices to Escrow Agent. Any written notice required to be
given or delivered to the Escrow Agent shall be deemed conclusively given and
delivered hereunder if the written notice is mailed, by registered or certified
mail, in a sealed postpaid wrapper, addressed as follows:
Southern California Bank
4100 Newport Place
Suite 130
Newport Beach, CA 92660
Attn: Gloria Garriott
{17} [16]. Instructions; Copies of Notices. Any instructions or other
------------
communications to the Escrow Agent provided for herein shall be in writing, but
may be in telegraphic or telex form if promptly confirmed in writing. A copy of
this Agreement, or any amendment or addendum hereto, or closing statement or
document deposited in this escrow shall be furnished by Escrow Agent to those
persons outside of this escrow designated from time to time by the Fund.
5
{18} [17]. Payments. All disbursements from the escrow account shall
--------
be made to the party concerned, by Escrow Agent's cashier's check to such
party's order or to deposit to such party's bank account. All checks, documents,
and correspondence shall be mailed to such party at the address given by the
Managing Member.
{19} [18]. Miscellaneous. Nothing in this Agreement is intended to
------------
or shall confer upon anyone other than the parties hereto any legal or equitable
right, remedy or claim. This Agreement shall be construed in accordance with the
laws of the State of California and may be modified only in writing.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed on the day and year first hereinabove written.
CORNERSTONE [REALTY FUND] {INDUSTRIAL PROPERTIES
INCOME AND GROWTH FUND I}, LLC,
a California limited liability company
By: CORNERSTONE INDUSTRIAL PROPERTIES, LLC,
a California limited liability company
By: CORNERSTONE VENTURES, INC.,
its Operating Partner
By: /s/ TERRY G ROUSSEL
---------------------------------
Terry G. Roussel, President
6
{PACIFIC CORNERSTONE FINANCIAL INCORPORATED} [PRIVATE EQUITY INVESTORS GROUP],
a California corporation
By:
--------------------------------------------------
{Terry G. Roussel} [Leonard Robbins], President
ACKNOWLEDGED AND AGREED
SOUTHERN CALIFORNIA BANK
By:
-----------------------------
-6-
GENERAL PROVISIONS
DEPOSITS - All funds received in escrow shall be deposited in an interest
- --------
bearing escrow account of Southern California Bank.
RESPONSIBILITY FOR DEPOSITED PROPERTY - Escrow Agent is not a party to, or bound
- -------------------------------------
by, any provisions contained in any agreements which may be deposited under,
evidenced by, or arise out of these instructions, and with respect thereto, acts
as a depository only and is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness, or validity of any Property or
with respect to the form or execution of any agreements, or the identity,
authority or right of any person executing or depositing any property herein.
DEFAULTS - Escrow Agent shall not be required to take or be bound by notice of
- --------
any default of any person, including any Principal, or to take any action with
respect to such default whether or not such action involves any expense or
liability. These instructions shall not be subject to modification or rescission
except upon receipt by Escrow Agent (at the office named above) of written
instructions from each of the Principals or their successors in interest, and no
such rescission or modification shall be effective unless and until consented to
by Escrow Agent in writing.
NOTICES - Principals hereby indemnify and hold Escrow Agent harmless against any
- -------
loss, liability, damage, cost or expense, including reasonable attorneys' fees,
(a) related in any way to Escrow Agent's acting upon any notice, request,
waiver, consent, receipt or other paper or document believed by Escrow Agent to
be signed by Principals or any other proper person, and (b) incurred in
connection with any act or thing done hereunder.
EXERCISE OF JUDGMENT - Escrow Agent shell not be liable for any error of
- ----------------------
judgment or for any act done or step taken or omitted by it in good faith or for
any mistake of fact or law or for anything which Escrow Agent may do or refrain
from doing in connection herewith, except its own gross negligence or willful
misconduct. Escrow Agent shall have duties only to Principals, and no person or
entity shall be deemed a third party beneficiary of these instructions.
COUNSEL - Escrow Agent may consult with legal counsel in the event of any
- -------
dispute or question as to the construction of these instructions or Escrow
Agent's duties thereunder, and Escrow Agent shall incur no liability and shall
be fully protected in acting in accordance with the opinion and instructions of
counsel,
DISAGREEMENTS - In the event of any disagreement between the Principals, or any
- -------------
of them or any other person or persons whether or not named in these
instructions, and adverse claims or demands are made in connection with or for
any of the Property, Escrow Agent shall be entitled at its option to refuse to
comply with any such claim or demand so long as such disagreement shall
continue, and in so doing, Escrow Agent shall not be or become liable for
damages or interest to the Principals, or any of them, or to any other person or
persons for Escrow Agent's failure or refusal to comply with such conflicting or
adverse claims or demands. Escrow Agent shall be entitled to continue so to
refrain and refuse so to act until:
A-1
a. the rights of the adverse claimants have been fully adjudicated in a
court assuming and having jurisdiction of the claimants and the Property; or
b. all differences shall have been adjusted by agreement, and Escrow
Agent shall have been notified thereof in writing by all persons deemed by
Escrow Agent, in its sole discretion, to have an interest therein.
In addition, Escrow Agent, in its sole discretion, may file a suit in
interpleader for the purpose of having the respective rights of all claimants
adjudicated, and may deposit with the court all of the Property deposited in
escrow; and the Principals agree to pay all costs and counsel fees incurred by
Escrow Agent in such action, such costs and fees to be included in the judgment
in any such action.
INDEMNITY - In consideration of this appointment by Escrow Agent, the Principals
- ---------
agree to indemnify and hold Escrow Agent harmless as to any liability incurred
by Escrow Agent to any person, firm or corporation by reason of its having
accepted same or in carrying out any of the terms hereof, and to reimburse
Escrow Agent for all its expenses, including among other things, counsel fees
and court costs incurred by reason of its position or actions taken pursuant to
these Escrow Instructions. The Principals hereby agree that the Escrow Agent
shall not be liable to any of them for any actions taken by Escrow Agent
pursuant to the terms hereof.
COURT ORDERS - Escrow Agent is hereby authorized, in its exclusive discretion,
- ------------
to obey and comply with all writs, orders, judgments or decrees issued by any
court or administrative agency affecting any money, documents or things held by
Escrow Agent, Escrow Agent shall not be liable to any of the parties hereto,
their successors, heirs or personal representatives by reason of Escrow Agent's
compliance with such writ, order, judgment or decree, notwithstanding if such
writ, order, judgment or decree is later reversed, modified, set aside or
vacated.
ATTORNEY'S FEES - If any action be brought to interpret or enforce these
- -----------------
instructions, or any part thereof, the Principals jointly and severally agree to
pay to Escrow Agent all Escrow Agent's attorney fees, accounting fees, special
and extra service fees and other costs related to such action.
CANCELLATION - In the event the escrow established hereby is cancelled, the
- ------------
Principals jointly and severally shall nevertheless pay to the Escrow Agent the
initial fee together with all costs end expenses of Escrow Agent, including
attorney fees. Notwithstanding anything in these instructions to the contrary,
Escrow Agent may, in its sole discretion, upon ten (10) days written notice to
any of the Principals, resign as Escrow Agent and shall be entitled to
reimbursement for those costs and expenses incurred to the date of such
resignation. Upon cancellation by the Principals or resignation by Escrow Agent,
after deducting Escrow Agent's fees, costs and expenses, the balance of any
funds or Property shall be returned to the respective Principals who shall have
deposited same.
FEES AND CHARGES - In the event that (a) Escrow Agent performs any services not
- ----------------
specifically provided for herein or (b) there is an assignment or attachment of
any interest in the subject matter of the escrow established hereby or any
modification thereof, or (c) any dispute or controversy arises hereunder, or (d)
Escrow Agent is named a party to, or intervenes in, any litigation pertaining to
this escrow or the subject matter thereof, Escrow Agent shall, in addition to
fees and charges for ordinary services, be reasonably compensated therefore and
reimbursed for all costs and expenses, including attorneys' fees, occasioned
thereby. Escrow Agent shall have a first lien on the Property for such
compensation and expenses, and the Principals agree jointly and severally to pay
the same for its ordinary services hereunder.
A-2
Escrow Agent shall be entitled to an initial, non-refundable set-up fee
("initial fee") of $1,500.00, payable concurrently with its acceptance, and to
additional compensation for wire fees, messenger fees, $250.00 yearly hold-open
fee (due if escrow open over 1 year from the date of these instructions), and/or
any other reasonable and necessary out-of-pocket expenses incurred by Escrow
Agent.
The Principals understand that Escrow Agent will charge additional fees,
including premium hourly fees, for any services performed according to these
Escrow Instructions, or any modification or any service not specifically
provided therein, that involve concerted effort, employees working overtime,
expedited handling of any aspect of the Escrow, or other similar services.
SIGNATURES - These instructions may be executed in counterparts, each of which
- ----------
so executed shall be deemed as original, irrespective of the date of its
execution and delivery, and said counterparts together shall constitute one and
the same instrument.
A-3
SOUTHERN CALIFORNIA BANK
SCHEDULE OF FEES
FOR
CORNERSTONE {INDUSTRIAL PROPERTIES INCOME AND GROWTH
FUND I} [REALTY FUND], LLC
Acceptance Fee (Non-Refundable)......................................$1,500.00
Additional Escrow Fees of $1.00 per $1,000.00 subscription funds
as received in escrow in excess of $1,500,000.00.{********}
Yearly Hold-Open Fee (due if escrow open over 1 year from
the date of these instructions)......................................$ 250.00
Wire fee, per wire...................................................$ 25.00
Disbursement fee, per check..........................................$ 15.00
Reasonable and customary charges for unscheduled services, including messenger
fees, federal express charges or other out-of pocket expense..........various
{********When subscription funds reach $10,000,000, theadditional escrow fee of
$1.00 per $1000.00 of fund deposited in escrow shall be waived.}
A-4