EXHIBIT 10.2
FORM OF ESCROW AGREEMENT BETWEEN
FIDELITY DIVIDEND CAPITAL INC.
AND
______________ , N.A.
__________, 2004
________________, N.A.
________________
________________
________________
Attn:
Re: Fidelity Dividend Capital Inc. Escrow Agreement
Ladies and Gentlemen:
Fidelity Dividend Capital Inc., a Maryland corporation (the "Company"),
proposes to offer and sell to the public 29,000,000 shares of its common stock
(the "Shares"). __________________________, a registered broker-dealer (the
"Dealer Manager"), will act as Dealer Manager for the offering of the Shares.
The Company will sell a minimum of 200,000 Shares at a price of $10.00 per Share
for a total minimum capital raised of $2,000,000 (the "Required Capital"). The
Company hereby appoints you as Escrow Agent for purposes of holding the proceeds
from the sale of the Shares, and the Company shall deposit with you such
proceeds to be held by you as Escrow Agent on the terms and conditions
hereinafter set forth:
1. Persons subscribing to purchase the Shares will be instructed by the
Dealer Manager or any soliciting dealers to remit the purchase price in the form
of checks, draft or money orders (hereinafter call "instruments of payment")
payable to the order of Fidelity Dividend Capital Inc. Subscribers may also
deliver funds by wire transfer in accordance with wire transfer instructions
which you shall provide to Dealer Manager. Within one 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 the escrow account established by you in
connection with the offering of Shares (the "Escrow Account"), which deposit
shall occur within one business day after you receive such materials.
Instruments of payment and wired funds received from residents of New York and
Pennsylvania shall be placed in a separate escrow account established
specifically for such subscribers.
2. The instruments of payment are to be promptly processed for
collection by you following deposit by the Dealer Manager into the Escrow
Account. The proceeds thereof are to be held in the Escrow Account until such
funds are either returned to the subscribers in accordance with paragraph 3
hereof or otherwise disbursed in accordance with paragraph 6 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, you shall promptly notify the Dealer
Manager in writing of such nonpayment and you are authorized to debit the Escrow
Account in the amount of such returned nonpayment as well as any interest earned
on the investment represented by such payment.
3. In the event that at the close of business on __________, 2006 (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 Shares providing for total
purchase proceeds that equal the Required Capital (exclusive of any funds
received from subscriptions for Shares from entities which we have notified you
are affiliated with the Company or its Affiliates and exclusive of subscriptions
from New York and Pennsylvania residents) from at least 100 investors who we
confirm to you are independent of the Company and independent of each other, you
shall promptly notify the Company that such instruments of payment have not been
received by you. Thereafter, you agree to use your best efforts to obtain an
executed IRS Form W-9 or other applicable tax form from each subscriber.
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Promptly following the Expiration Date, and in any event no later than five
business days after the Expiration Date, you shall promptly return by your check
the funds deposited in the Escrow Account, or shall return the instruments of
payment delivered to you if such instruments have not been processed for
collection prior to such time, directly to each subscriber at the address given
to the Company. Included in the remittance shall be a proportionate share of the
income earned in the account allocable to each subscriber's investment in
accordance with the terms and conditions specified in paragraph 7 hereof, except
that in the case of subscribers who have not provided you an executed Form W-9
or other applicable tax form, you shall withhold the applicable backup
withholding tax from the earnings attributable to those subscribers in
accordance with federal tax rules. Notwithstanding the foregoing, you shall not
be required to remit any payments until funds represented by such payments have
been collected by you.
In the event that the Company rejects any subscription for which you
have already collected funds, you shall promptly issue a refund check to the
rejected subscriber. If the Company or Dealer Manager reject 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. Following receipt by you of cash and instruments of payment (or
wired funds) of the Required Capital from at least 100 separate subscribers
prior to the time provided in paragraph 3 hereinabove, you shall notify the
Company in writing within one business day when such funds have been collected
through normal banking channels and deposited into the Escrow Account.
5. Prior to the disbursement of funds deposited in the Escrow Account
in accordance with the provisions of paragraph 3 or 6 hereof, you shall invest
all of the funds deposited in the 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 any of the 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 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 deposits of national or state banks that have deposits insured
by the Federal Deposit Insurance Corporation which can be readily sold or
otherwise disposed of for cash without any disposition 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. All disbursements from the Escrow Account, except for disbursements
under the provisions of paragraph 3 hereof, shall be made by you only pursuant
to the provisions of this paragraph 6. Except for disbursements authorized upon
court order, you shall hold all funds in the Escrow Account until (i) the date
checks for Required Capital have cleared normal banking channels after receipt
by you of the Required Capital, and (ii) receipt of letter instructions from the
Company directing disbursements of such funds to the Company. Notwithstanding
the foregoing, all subscriptions received from New York and Pennsylvania
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residents must be retained by you until the earlier of (i) 120 days after the
commencement of this offering or (ii) such time as a total of $2,500,000 and
$12,500,000, respectively, has been deposited into the Escrow Account by
subscribers residing in all states. If at the end of such 120 day period the
minimum respective escrow amounts set forth above for New York and Pennsylvania
have not been satisfied, then within 15 calendar days the funds deposited by New
York and/or Pennsylvania investors, as the case may be, shall be returned to
them. In disbursing such funds, you are authorized to rely solely upon such
letter instructions, which you receive from the Company; provided that, if in
your opinion such letter instructions from the Company are unclear, you are
authorized to rely upon the written advice of legal counsel to the Company in
distributing such funds. However, you shall not be required to disburse any
funds attributable to instruments of payment, which have not been collected by
you.
7. In the event the offering of Shares terminates prior to receipt of
the Required Capital, income earned on subscription proceeds deposited in the
Escrow Account ("Gross Escrow Income") minus the total escrow expenses ("Net
Escrow Income") shall be remitted to subscribers in compliance with paragraph 3.
Each subscriber's pro rata portion of Net Escrow Income shall be determined as
follows: The total amount of Net Escrow Income shall be multiplied by a
fraction, the numerator of which is determined by multiplying the number of
Shares purchased by said subscriber times the number of days said subscriber's
proceeds are invested prior to termination of the offering, and the denominator
of which is the total of the numerators for all such subscribers.
Notwithstanding the foregoing, (i) escrow expenses may be deducted from the
Escrow Account only to the extent of Gross Escrow Income, and the Company shall
reimburse the Escrow Agent for any escrow expenses in excess of such amount, and
(ii) Maine, Missouri, North Carolina, Ohio and Pennsylvania residents will be
paid their pro rata portion of income earned on subscription proceeds deposited
in the Escrow Account without any deductions for escrow expenses. You shall
promptly notify the Company of the amount of Net Escrow Income which subscribers
who are Maine, Missouri, Ohio or Pennsylvania residents would have received if
escrow expenses were not deducted from Gross Escrow Income, and the Company
shall reimburse you for such pro rata escrow expenses attributable to
subscribers who are Maine, Missouri, Ohio or Pennsylvania residents. You shall
promptly remit all such Net Escrow Income in accordance with paragraph 3.
8. In performing any of your duties hereunder, you shall not incur any
liability to anyone for any damages, losses or expenses, except for willful
default, breach of trust, or gross negligence, and accordingly you shall not
incur any such liability with respect to any action taken or omitted (1) in good
faith upon advice of your counsel given with respect to any questions relating
to your duties and responsibilities under this Agreement, or (2) in reliance
upon any instrument 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.
9. 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
the willful default, breach of trust or gross negligence of the Escrow Agent or
any of its officers, employees or agents.
10. 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 the District Court for ________ County 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 shall be brought in the District Court for Broward County. The
filing of any such legal proceedings shall not deprive you of your compensation
earned prior to such filing.
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11. All written notices required hereunder to you shall only be
effective if delivered personally or by certified mail, return receipt requested
to your address stated above. All written notices and letters required hereunder
to the Company or the Dealer Manager shall only be effective if delivered
personally or by certified mail, return receipt requested, to Fidelity Dividend
Capital Inc., at Suite ▇▇-▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇.
12. This Agreement shall be governed by the laws of the State of
Delaware as to both interpretation and performance.
13. The provisions of this Agreement shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.
14. The Company hereby acknowledges that you are serving as Escrow
Agent only for the limited purposes herein set forth, and hereby agrees that it
will not represent or imply that you, by serving as Escrow Agent hereunder or
otherwise, have investigated the merits of an investment in the Company, or have
approved, endorsed or passed upon the merits of the Shares. The Company further
agrees that it shall not use your name in any manner whatsoever in connection
with the offer or sale of the Shares other than by acknowledgment that you have
agreed to serve as Escrow Agent for the limited purposes herein set forth.
15. 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.
16. 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 to a deposit account as directed by the
Company.
17. The Escrow Agent shall be bound only by the terms of this Escrow
Agreement and shall not be bound or incur any liability with respect to any
other agreement or understanding between any other parties, whether or not the
Escrow Agent has knowledge of any such agreements or understandings.
18. Indemnification provisions set forth herein shall survive the
termination of this Agreement.
19. Upon acceptance and distribution of the Required Capital, this
Escrow Agreement shall terminate and the Escrow Agent shall have no further
responsibility or liability with regard to the terms of this Agreement.
20. The Escrow Agent has no responsibility for accepting, rejecting or
approving subscriptions.
21. 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.
22. The Escrow Agent may resign at any time from its obligation 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. 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 wither (a) to the Company pursuant to paragraph 6
hereof, or (b) to subscribers pursuant to paragraphs 3 and 7 hereof.
23. 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 notice. The
removal of the Escrow Agent shall not deprive the Escrow Agent of its
compensation earned prior to such removal.
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Agreed to as of the ____ day of _____________, 2004.
FIDELITY DIVIDEND CAPITAL INC.,
a Maryland corporation
By:
--------------------------------
(NAME OF BROKER-DEALOR)
a _____________________ company
By:
--------------------------------
The terms and conditions contained
above are hereby accepted and agreed
to by:
______________ BANK, N.A.
By:
--------------------
Name:
Title:
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