Document:

Subscription Escrow Agreement, dated October 20, 2010

 Exhibit 10.3 

 

 

 SUBSCRIPTION ESCROW AGREEMENT 

THIS SUBSCRIPTION ESCROW AGREEMENT (this “Escrow Agreement”), dated as of October 20, 2010, (the “Effective
Date”) is entered into by and among FundCore Institutional Income Trust, Inc. (the “Company”) and Wells Fargo Bank, N.A., as escrow agent (the “Escrow Agent”). 

WHEREAS, the Company intends to raise funds from investors (the “Investors”) pursuant to a public offering (the
“Offering”) of its shares of Common Stock (the “Securities”) for total aggregate proceeds of not less than $10 million (the “Minimum Amount”) or more than $500 million (the “Maximum Amount”) (excluding, in
each case, the shares of Common Stock to be offered and sold pursuant to the Company’s distribution reinvestment plan). 

WHEREAS, the Company has entered into a Primary Dealer Agreement with Integrity Investments, Inc., a Florida corporation (the
“Primary Dealer”), dated October 20, 2010, pursuant to which the Primary Dealer is authorized to solicit subscriptions in connection with the Offering from Investors to purchase the Securities on behalf of the Company on a
best-efforts basis and, from time to time, to engage participating broker-dealers (the “Dealers). 
 WHEREAS, the
Company desires to establish an escrow account (the “Escrow Account”) with the Escrow Agent, as further described herein, in which funds received from Investors will be deposited with the Escrow Agent, to be held for the benefit of the
Investors and the Company until such time as subscriptions for the Minimum Amount of the Securities have been deposited into the Escrow Account in accordance with the terms of this Escrow Agreement and the Company authorizes the release of funds
from the Escrow Account. 
 WHEREAS, the Escrow Agent is willing to accept appointment as escrow agent upon the terms and
conditions set forth herein. 
 NOW, THEREFORE, in consideration of the premises set forth above and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 
 1. Escrow of Investor Funds.

 (a) On or before the commencement of the Offering, the Company shall establish an escrow account with the Escrow Agent
(the “Escrow Account”), which shall be titled “Wells Fargo Bank N.A., as Escrow Agent for FundCore Institutional Income Trust Inc.” 

 Prior to the Termination Date (as defined in Section 4 of this Escrow Agreement),
Investors subscribing to purchase Securities will be instructed by the Company, the Primary Dealer and Dealers (as applicable) to deliver the full amount of the subscription payment by wire transfer of immediately available funds via The Federal
Reserve Wire Network in U.S. dollars to the Escrow Account as provided in Section 9 of this Escrow Agreement. All funds received from potential Investors in payment for the Securities (“Investor Funds”) shall be retained in the Escrow
Account by the Escrow Agent and invested as stated below, subject to the provisions of Section 3 of this Escrow Agreement. 

(b) Escrow Agent shall have no duty to make any disbursement, investment or other use of Investor Funds until and unless it has actual
receipt of collected funds. The Escrow Agent reserves the right to deny, suspend or terminate participation by an Investor to the extent the Escrow Agent deems it advisable or necessary to comply with applicable laws or to eliminate practices that
are not consistent with the purposes of the Offering. 
 2. Identity of Subscribers. A copy of the Offering document is attached as
Exhibit A to this Escrow Agreement. The Company shall furnish to the Escrow Agent at the time Investors forward Investor Funds to the Escrow Agent, a list of the Investors who have paid for the Securities showing the name, address, tax
identification number, amount of Securities subscribed for and the amount paid and deposited with the Escrow Agent. This information comprising the identity of Investors shall be provided to the Escrow Agent in the format set forth on Exhibit
B to this Escrow Agreement (the “List of Investors”). All Investor Funds so deposited shall not be subject to any liens or charges by the Company, the Primary Dealer or the Escrow Agent, or judgments or creditors’ claims against
the Company, until released to the Company as hereinafter provided. The Company understands and agrees that the Company shall not be entitled to any Investor Funds on deposit in the Escrow Account and no such funds shall become the property of the
Company except when released to the Company pursuant to Section 3 of this Escrow Agreement. The Company, the Primary Dealer and the Escrow Agent will treat all Investor information as confidential. The Escrow Agent shall not be required to
accept any Investor Funds with respect to which it does not receive the information on the List of Investors. 
 3. Disbursement of Funds.

 (a) In the event the Escrow Agent receives written notice from the Company that the Company has rejected an
Investor’s subscription, the Escrow Agent shall pay to the applicable Investor, within ten (10) business days after receiving notice of the rejection, by first class United States Mail at the address appearing on the List of Investors, or
at such other address or Federal Reserve Wire instructions as are furnished to the Escrow Agent by the Investor in writing, all collected sums paid by the Investor for Securities and received by the Escrow Agent. 

(b) Once the Escrow Agent is in receipt of Investor Funds sent via wire totaling at least the Minimum Amount, the Escrow Agent shall
notify the Company of the same in writing. If the Minimum Amount or more is received into the Escrow Account at any time before the Termination Date (as defined in Section 4 of this Escrow Agreement), then the Escrow Agent shall pay out the
Investor Funds when and as directed in writing by the Company. The Escrow Agent shall continue to release funds from the Escrow Account as directed by the Company pursuant to written instruction that the Company shall provide to the Escrow Agent
from time to time. 

 (c) If the Minimum Amount has not been received by the Escrow Agent before the Termination
Date, the Escrow Agent shall, within ten (10) business days after the Termination Date, refund to each Investor by first class United States Mail at the address appearing on the List of Investors, or at such other address or Federal Reserve
Wire instructions as are furnished to the Escrow Agent by the Investor in writing, all sums paid by the Investor for Securities and received by the Escrow Agent, and shall then notify the Company in writing of such refunds. 

(d) Notwithstanding anything else in this Escrow Agreement, the earnings earned on such Investor Funds (except for de minimis
interest that does not exceed the costs and expenses associated with such payment, which the Company and Escrow Agent agree for the purpose of this Agreement shall be $400.00) shall be paid pro rata to each Investor upon, as applicable, the refund
of Investor Funds under either Section 3(a) or 3(c) or promptly following notification by the Escrow Agent to the Company that the Escrow Agent is in receipt of Investor Funds totaling at least the Minimum Amount pursuant to Section 3(b).

 4. Term of Escrow. The “Termination Date” shall be the earlier of (i) 1:00 p.m. MT on October 20, 2011;
(ii) such time as the Company has raised the Minimum Amount or more and all Investor Funds and the earnings thereon have been released pursuant to Section 3(b) and 3(d) above, respectively; (iii) the date the Escrow Agent receives
written notice from the Company that the Company is abandoning the Offering; (iv) the date the Escrow Agent receives notice from the Securities and Exchange Commission or any other federal or state regulatory authority that a stop or similar
order has been issued with respect to the Offering; or (v) the date the Escrow Agent institutes an interpleader or similar action. After the Termination Date, the Company and the Primary Dealer shall not deposit, and the Escrow Agent shall not
accept, any additional amounts representing payments by prospective Investors. 
 5. Duty and Limitation on Liability of the Escrow Agent.

 (a) The Escrow Agent’s rights and responsibilities shall be governed solely by this Escrow Agreement. Neither the
Offering document, nor any other agreement or document shall govern the Escrow Agent even if such other agreement or document is referred to herein, is deposited with, or is otherwise known to, the Escrow Agent. 

(b) The Escrow Agent shall be under no duty to determine whether the Company or the Primary Dealer is complying with the requirements of
the Offering or applicable securities or other laws that relate to the forwarding of Investor Funds to the Escrow Agent. The Escrow Agent shall not be responsible for, or be required to enforce, any of the terms or conditions of any Offering
document or other agreement between the Company or the Primary Dealer and any other party. 
 (c) The Escrow Agent may
conclusively rely upon and shall be fully protected in acting upon any statement, certificate, notice, request, consent, order or other document believed by it to be genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall have no duty or liability to verify any such statement, certificate, notice, request, consent, order or other document. Upon or before the execution of this Escrow Agreement, the Company shall deliver to the Escrow Agent
authorized signers’ lists in the form of Exhibit C to this Escrow Agreement. 

 (d) The Escrow Agent shall be under no obligation to institute and/or defend any action,
suit or proceeding in connection with this Escrow Agreement unless first indemnified to its satisfaction. 
 (e) The Escrow
Agent may consult counsel of its own choice with respect to any question arising under this Escrow Agreement and the Escrow Agent shall not be liable for any action taken or omitted in good faith upon the advice of such counsel. 

(f) The Escrow Agent shall not be liable for any action taken or omitted by it except to the extent that a court of competent
jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of loss. 

(g) The Escrow Agent is acting solely as escrow agent hereunder and owes no duties, covenants or obligations, fiduciary or otherwise, to
any person by reason of this Escrow Agreement, except as otherwise explicitly set forth in this Escrow Agreement, and no implied duties, covenants or obligations, fiduciary or otherwise, shall be read into this Escrow Agreement against the Escrow
Agent.
 (h) In the event of any disagreement between any of the parties to this Escrow Agreement, or between any of them and
any other person, including any Investor, resulting in adverse or conflicting claims or demands being made in connection with the matters covered by this Escrow Agreement, or in the event that the Escrow Agent is in reasonable doubt as to what
action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder, so long as such disagreement continues or such reasonable doubt exists, and in any
such event, the Escrow Agent shall not be or become liable in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue so to refrain from acting until (i) the rights of all interested
parties shall have been fully and finally adjudicated by a court of competent jurisdiction, or (ii) all differences shall have been adjudged and all doubt resolved by agreement among all of the interested persons, and the Escrow Agent shall
have been notified thereof in writing. Notwithstanding the foregoing, the Escrow Agent may in its discretion obey the order, judgment, decree or levy of any court, whether with or without jurisdiction and the Escrow Agent is hereby authorized in its
sole discretion to comply with and obey any such orders, judgments, decrees or levies. 
 (i) In the event that any controversy
should arise with respect to this Escrow Agreement, the Escrow Agent shall have the right, at its option, to institute an interpleader action in any court of competent jurisdiction to determine the rights of the parties. 

(j) IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES OF
ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION. 

 (k) The parties agree that the Escrow Agent had 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 (except for information provided by the Escrow Agent in writing to the Company for
inclusion in the Offering document). 
 (l) 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 Securities. 
 (m) The Escrow Agent shall have no duty or obligation to monitor the application and use of the Investor Funds once transferred to the Company, that being the sole obligation and responsibility of the
Company. 
 6. Escrow Agent’s Fee. The Escrow Agent shall be entitled to compensation for its services as stated in the fee schedule
attached hereto as Exhibit D, which compensation shall be paid by the Company. The fee agreed upon for the services rendered hereunder is intended as full compensation for the Escrow Agent’s services as contemplated by this Escrow
Agreement; provided, however, that in the event that the conditions for the disbursement of funds under this Escrow Agreement are not fulfilled, or the Escrow Agent renders any material service not contemplated in this Escrow Agreement, or there is
any assignment of interest in the subject matter of this Escrow Agreement, or any material modification hereof, or if any material controversy arises hereunder, or the Escrow Agent is made a party to any litigation relating to this Escrow Agreement,
or the subject matter hereof, then the Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all reasonable costs and expenses, including attorney’s fees and expenses, occasioned by any delay,
controversy, litigation or event, and the same shall be paid by the Company. The Company’s obligations under this Section 6 shall survive the resignation or removal of the Escrow Agent and the assignment or termination of this Escrow
Agreement. 
 7. Investment of Investor Funds; Income Allocation and Reporting. 

(a) The Escrow Agent shall invest the Investor Funds, including any and all earnings thereon, in accordance with the written instructions
provided to the Escrow Agent and signed by the Company in the form of Exhibit E, attached hereto and incorporated by reference herein. For federal income tax purposes, the Investor Funds will be treated as property of each Investor, and all items of
income, gain or loss related thereto shall be treated as items of income, gain or loss of each such Investor. Any payments of earnings from this Escrow Account shall be subject to withholding regulations then in force with respect to United States
taxes. The Escrow Agent shall make any federal, state, local or foreign tax filings consistent with such treatment. 
 (b) The
Escrow Agent shall be entitled to sell or redeem any such investments as the Escrow Agent deems necessary to make any payments or distributions required under this Escrow Agreement. The Escrow Agent shall have no responsibility or liability for any
loss which may result from any investment or sale of investment made pursuant to this Escrow Agreement. The parties acknowledge that the Escrow Agent is not providing investment supervision, recommendations, or advice. 

 (c) Prior to the execution of this Escrow Agreement, the Company shall provide the Escrow
Agent with certified tax identification numbers by furnishing appropriate IRS forms W-9 or W-8 and other forms and documents that the Escrow Agent may reasonably request. The Company understands that if such tax reporting documentation is not so
certified to the Escrow Agent, the Escrow Agent may be required by the Internal Revenue Code of 1986, as amended, to withhold a portion of any interest or other income earned on the Investor Funds pursuant to this Escrow Agreement. The Company shall
also provide tax reporting documentation for the Investors as the Escrow Agent may reasonably request. 
 (d) The Company agrees
to indemnify and hold the Escrow Agent harmless from and against any and all taxes, additions for late payment, interest, penalties and other expenses that may be assessed against the Escrow Agent on or with respect to the Investor Funds unless any
such tax, addition for late payment, interest, penalties and other expenses shall be determined by a court of competent jurisdiction to have been primarily caused by the Escrow Agent’s gross negligence or willful misconduct. The terms of this
paragraph shall survive the assignment or termination of this Escrow Agreement and the resignation or removal of the Escrow Agent. 
 8.
Notices. All notices, requests, demands, and other communications under this Escrow Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the party to whom notice is to
be given, (b) on the day of transmission if sent by facsimile to the facsimile number given below, with written confirmation of receipt, (c) on the day after delivery to Federal Express or similar overnight courier or the Express Mail
service maintained by the United States Postal Service, (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return
receipt requested, to the party, or (e) by electronic transmission, including by way of e-mail (as long as such email is accompanied by a PDF or similar version of the relevant document bearing an authorized signature, which such signature
shall, in the case of each of the Parties, be a signature set forth on Exhibit B-1 or B-2, as applicable), with e-mail confirmation of receipt, and, in the case of the Escrow Agent, notice will be deemed given when actually received by the Escrow
Agent, as follows: 
 If to the Company: 
 FundCore Institutional Income Trust Inc. 
 One World Financial Center,
30th Floor 

New York City, NY 10281 
 Attn: Steven Ball,
President and Chief Investment Officer 
 If to Primary Dealer: 
 Integrity Investments Inc. 
 221 Pensacola Road 

Venice, Florida 34285 
 Attn: Richard F. Curcio,
President 

 If to Escrow Agent: 
 Wells Fargo Bank, N. A. 
 Corporate Trust Dept. 

1700 Lincoln St., 10th fl. 
 MAC
C7300-107 
 Denver, CO 80203-4500 

Attn: Bruce F. Lewis 
 Telephone: 303-863-4944

 Fax: 303-863-5645 
 Any party may
change its address for purposes of this section by giving the other party written notice of the new address in the manner set forth above. 

9. Instructions for Forwarding Federal Reserve Wire Payments to Escrow Agent. 
 Wells Fargo Bank, N. A. 
 ABA Routing No.: 121000248 

Account No.: 0001038377 
 BNF: Corporate Trust
Clearing 
 F/F/C: Account Name: FundCore Institutional Income Trust Inc. Escrow 
             Account No.: 80517100 

Attn: Bruce F. Lewis 
 10. Indemnification of
Escrow Agent. The Company indemnifies, defends and holds harmless the Escrow Agent from and against, any and all loss, liability, cost, damage and expense, including, without limitation, reasonable counsel fees and expenses, which the Escrow
Agent may suffer or incur by reason of any action, claim or proceeding brought against the Escrow Agent arising out of or relating in any way to this Escrow Agreement or any transaction to which this Escrow Agreement relates unless such loss,
liability, cost, damage or expense is finally determined by a court of competent jurisdiction to have been primarily caused by the gross negligence or willful misconduct of the Escrow Agent. The terms of this Section 10 shall survive the
assignment or termination of this Escrow Agreement and the resignation or removal of the Escrow Agent. 
 11. Resignation. The Escrow
Agent may resign upon thirty (30) days’ advance written notice to the Company. If a successor escrow agent is not appointed within the thirty (30) day period following such notice, the Escrow Agent may petition any court of competent
jurisdiction to name a successor escrow agent or interplead the Investor Funds with such court, whereupon the Escrow Agent’s duties hereunder shall terminate. 

 12. Successors and Assigns. Except as otherwise provided in this Escrow Agreement, no party hereto
shall assign this Escrow Agreement or any rights or obligations hereunder without the prior written consent of the other party hereto and any such attempted assignment without such prior written consent shall be void and of no force and effect. This
Escrow Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto. No other parties shall have any rights hereunder. Any corporation or association into which the Escrow Agent may be
converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets in whole or in part, or any corporation or association resulting from any such
conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor Escrow Agent under this Escrow Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges
as its predecessor, without the execution or filing of any instrument or paper or the performance any further act, any provision herein to the contrary notwithstanding. 
 13. Governing Law; Jurisdiction. This Escrow Agreement shall be construed, performed, and enforced in accordance with, and governed by, the internal laws of the State of New York, without giving
effect to the principles of conflicts of laws thereof. 
 14. Severability. In the event that any part of this Escrow Agreement is
declared by any court or other judicial or administrative body to be null, void, or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this Escrow Agreement shall remain in full force
and effect. 
 15. Amendments; Waivers. This Escrow Agreement may be amended or modified, and any of the terms, covenants,
representations, warranties, or conditions hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving compliance. Any waiver by any party of any condition, or of the breach of
any provision, term, covenant, representation, or warranty contained in this Escrow Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation, or warranty of this Escrow Agreement. The Company agrees that any requested waiver, modification or amendment of this Escrow Agreement shall be consistent with the terms of the Offering. 

16. Entire Agreement. This Escrow Agreement contains the entire understanding among the parties hereto with respect to the escrow contemplated
hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with regard to such escrow. 

17. References to Escrow Agent. The Company and the Primary Dealer agree that they or others acting on their instructions and behalf will not
identify the Escrow Agent’s name in the any printed or other matter in any language (including, without limitation, the Offering document, any supplement or amendment relating thereto, notices, reports and promotional material) unless the
Escrow Agent shall first have given its specific written consent thereto. 
 18. Section Headings. The section headings in this Escrow
Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Escrow Agreement. 

 19. Counterparts. This Escrow Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute the same instrument. 
 20. No Third-Party Beneficiaries. This Agreement is
for the sole benefit of the Company and the Escrow Agent and their permitted successors and assigns and nothing herein, express or implied, shall give or be construed to give to any person, other than the Escrow Agent or the Company and such
permitted successors and assigns, any legal or equitable rights or remedies hereunder provided, however, that the parties acknowledge and agree that Section 3(d) and Section 7 are included for the benefit of the Investors.

 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed the day and year first set forth above.

  

			
	FundCore Institutional Income Trust Inc.
		
	By:	 	/s/ Lee Jay Taragin
	Its:	 	CFO / COO
	
	Wells Fargo Bank, N.A., as Escrow Agent
		
	By:	 	/s/ Bruce F. Lewis
	Its:	 	Vice President
		
	Date:	 	10-20-10

 EXHIBIT A 
 COPY OF OFFERING DOCUMENT 

 EXHIBIT B 
 List of Investors 
 Pursuant to the Escrow Agreement dated October
120, 2010 by and between FundCore Institutional Income Trust Inc. (the “Company”) and Wells Fargo Bank, N.A., as escrow agent (the “Escrow Agent”), the Company hereby certifies that the following Investors have paid money for the
purchase of shares of Common Stock of the Company (the “Securities”), and the money has been deposited with the Escrow Agent: 
  

	1.	Name of Investor 

 Address

 Tax Identification Number (as set forth in Investor W-9 or W-8, as applicable, attached) 

Amount of Securities subscribed for 
 Amount of money paid and deposited with Escrow Agent 
  

	2.	Name of Investor 

 Address

 Tax Identification Number (as set forth in Investor W-9 or W-8, as applicable, attached) 

Amount of Securities subscribed for 
 Amount of money paid and deposited with Escrow Agent 
  

			
	Company: FundCore Institutional Income Trust Inc.
		
	By:	 	 
	Its:	 	 
	Date:	 	 

 EXHIBIT C 
 CERTIFICATE AS TO AUTHORIZED SIGNATURES 
 The specimen signatures shown below are the specimen
signatures of the individuals who have been designated as authorized representatives of FundCore Institutional Income Trust Inc. and are authorized to initiate and approve transactions of all types for the escrow account or accounts established
under the Escrow Agreement to which this Exhibit C is attached, on behalf of FundCore Institutional Income Trust Inc. 
  

					
	 Name / Title
	 	 	 	 Specimen Signature

			
	Lee Jay Taragin	 		 	/s/ Lee Jay Taragin
	Name	 		 	Signature
			
	CFO / COO	 		 	 
	Title	 		 	 
			
	Steven Ball	 		 	/s/ Steven Ball
	Name	 		 	Signature
			
	President and CIO	 		 	 
	Title	 		 	 
			
	Michael Vessels	 		 	/s/ Michael Vessels
	Name	 		 	Signature
			
	Executive VP and Secretary	 		 	 
	Title	 		 	 
			
	  	 		 	 
			
	  	 		 	  
	Name	 		 	Signature
			
	  	 		 	 
			
	  	 		 	 
	Title	 		 	

 EXHIBIT D 
 FEES OF ESCROW AGENT 
 FundCore Institutional Income Trust Inc.
Subscription Escrow 
  

					
	Acceptance Fee:	  	$	500.00	  

 Initial Fees as they relate to
Wells Fargo Bank acting in the capacity of Escrow Agent – includes review 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(s). 
 Acceptance Fee payable at time of Escrow Agreement execution. 

 

					
	Escrow Agent Annual Administration Fee:	  	$	4,000.00	  

 For ordinary administrative
services by Escrow Agent – includes daily routine account management; investment transactions; cash transaction processing (including wire and check processing); disbursement of funds in accordance with the agreement; and mailing of trust
account statements to all applicable parties. 
 This fee is payable in advance, with the first installment due at the time of Escrow Agreement
execution. The Annual Fee covers a full year or any part thereof, and therefore will not be prorated or refunded in the year of early termination. 
 Transaction Fees: 
 Return of subscribers’ funds if Minimum Amount not reached:
$15 per check or wire 
 :$25 per 1099 (if applicable) 

 

					
	Out-of Pocket Expenses:	  	 	At Cost	  

 We will charge for reasonable
out-of-pocket expenses in response to specific tasks assigned by the client or provided for in the escrow agreement, or for out-of-pocket expenses such as express mail or courier charges if deemed excessive. Time incurred in handling non-routine
matters, such as amendments to the documents or litigation administration, may result in additional charges. Fees are subject to periodic review and adjustment. 
 NOTE: The transaction underlying this proposal, and all related legal documentation, is subject to review and acceptance by Wells Fargo Bank in accordance with industry standards.
Should the actual transaction materially differ from the assumptions used herein, Wells Fargo Bank reserves the right to modify this proposal. This fee schedule is specifically based on the assumption that the number of subscribers shall not exceed
30 and that the funds on deposit are invested in the Wells Fargo Money Market Demand Account; if otherwise, we reserve the right to adjust this fee. Acceptance of the appointment as Escrow Agent is subject to the receipt of requested Due Diligence
information on each of the signing parties to the agreement as required by the USA Patriot Act. All funds will be received from or distributed to a domestic or an approved foreign entity. If the account does not open within three (3) months of
the date shown below, this fee proposal will be deemed to be null and void. 

 EXHIBIT E 
 Agency and Custody Account Direction 
 For Cash Balances 

Wells Fargo Money Market Deposit Accounts 
 Direction to use the following Wells Fargo Money Market Deposit Accounts for Cash Balances for the escrow account or accounts (the “Account”) established under the Escrow Agreement to which this
Exhibit E is attached. 
 You are hereby directed to deposit, as indicated below, or as I shall direct further in writing from time to time, all
cash in the Account(s) in the following money market deposit account of Wells Fargo Bank, N.A. (Bank): 
 Wells Fargo Money
Market Deposit Account (MMDA) 
 I understand that amounts on deposit in the MMDA are insured, subject to the applicable rules and regulations
of the Federal Deposit Insurance Corporation (FDIC), in the basic FDIC insurance amount of $250,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $250,000. 

I acknowledge that I have full power to direct investments of the Account(s). 
 I understand that I may change this direction at any time and that it shall continue in effect until revoked or modified by me by written notice to you. 

 

	
	/s/ Lee Jay Taragin
	Authorized Representative
	FundCore Institutional Income Trust Inc.
	
	11/2/10
	DateForm of Common Stock Warrant

 Exhibit 4.3 
 THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, 
 PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED. 
 STOCK PURCHASE WARRANT 

To Subscribe for and Purchase 
 Common Stock of 
 ENTEROMEDICS INC. 

THIS CERTIFIES THAT, for value received,
                    , or its registered assigns, (herein referred to as the “Purchaser” or “holder”), is
entitled to subscribe for and purchase from EnteroMedics Inc. (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware,
                    
(                    )1 fully paid and nonassessable shares (“Shares”) of common stock (herein the “Common
Stock”) (subject to the limitation in Section 2(b) and to adjustment as noted below) at the exercise price of $[            ]2 per Share (the “Warrant Purchase Price”) (subject to
adjustment as noted below). This Warrant may only be exercised during the Exercise Period specified herein. This Warrant has been issued together with Shares of the Common Stock in a public offering of 12,000,000 Shares of the Common Stock and
12,000,000 Warrants registered on the Company’s Registration Statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 10, 2010, as
amended (the “Offering”). 
 This Warrant is subject to the following provisions, terms and conditions:

 1. The Warrant exercise period (the “Exercise Period”) for this Warrant shall begin on the date that is 181
days from the date of the issuance of this Warrant at the closing of the Offering and shall end on the fifth anniversary of the date on which the Exercise Period begins. 
 2. The rights represented by this Warrant may be exercised by the holder hereof as follows: 
 (a) The rights represented by this Warrant may be exercised by the holder hereof, in whole or in part, by written notice of exercise delivered to the Company and by the surrender of this Warrant (properly
endorsed if required) at the principal office of the Company and upon payment to it by check of the Warrant Purchase Price for such Shares. The Company agrees that the Shares so purchased shall be and are deemed to be issued to the holder hereof as
the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such Shares as aforesaid. Subject to the provisions of the next succeeding paragraph, within 10 business
days after the rights represented by this Warrant shall have been exercised the Company shall cause its transfer agent to issue the Shares of stock so 

 

	1	 Equal to number of shares of common stock purchased by Purchaser. 

	2	 Equal to 125% of the original purchase price paid for the common stock. 

 
purchased to Purchaser in book–entry format and deliver evidence of such issuance to Purchaser, and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any,
with respect to which this Warrant shall not then have been exercised shall also be delivered to the holder hereof within such time. 
 (b) Notwithstanding any other provision in this Warrant, no holder shall be permitted to exercise this Warrant for an amount of Common Stock that would result in such holder owning more than 19.99% of the
Company’s Common Stock outstanding after such exercise. 
 3. The Company represents and warrants that this Warrant has
been duly authorized by all necessary corporate action, has been duly executed and delivered and is a legal and binding obligation of the Company, enforceable against the Company in accordance with the terms of this Warrant, except to the extent
(i) such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and (ii) such enforceability may be subject to
general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Company covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this
Warrant according to the terms hereof or represented by the Common Stock will, upon issuance and payment therefor, be duly authorized and issued, fully paid and nonassessable. The Company further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant, free from preemptive rights or other actual contingent purchase rights other than those held by a holder of this Warrant (as a result of holding
this Warrant). 
 4. The Company will pay any documentary stamp taxes attributable to the issuance of Shares of Common Stock
upon the exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrants, or shares of Common
Stock issued upon exercise of this Warrant, in a name other than that of the Purchaser. The Purchaser shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Shares of Common
Stock upon exercise hereof. 
 5. The above provisions are, however, subject to the following: 

(a) The Warrant Purchase Price shall, from and after the date of issuance of this Warrant, be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of the Warrant Purchase Price, the holder of this Warrant shall thereafter be entitled to purchase, at the Warrant Purchase Price resulting from such adjustment, the number of Shares
obtained by multiplying the Warrant Purchase Price in effect immediately prior to such adjustment by the number of Shares purchasable pursuant hereto immediately prior to such adjustment and dividing the product thereof by the warrant purchase price
resulting from such adjustment. 

  
 2 

 (b) In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the Warrant Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the Warrant Purchase Price in effect immediately prior to such combination shall be proportionately increased. 
 (c) If any capital reorganization or reclassification of the capital stock of the Company, shall be effected in such a way that holders of Common Stock shall be entitled to receive stock or securities
with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification or consolidation, lawful and adequate provision shall be made whereby the holder hereof shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in this Warrant and in lieu of the Shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock or securities as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby had such reorganization, reclassification or consolidation not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant
to the end that the provisions hereof (including without limitation provisions for adjustments of the warrant purchase price and of the number of shares purchasable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock or securities thereafter deliverable upon the exercise hereof. 
 (d) Upon
any adjustment of the Warrant Purchase Price or any adjustment of any material terms hereof, then and in each such case an officer of the Company shall, as soon as practicable after the occurrence of any event that requires an adjustment or
readjustment, give signed written notice thereof, by first–class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company, which notice shall state the Warrant
Purchase Price resulting from such adjustment, any material change in the terms of the Warrant, and the increase or decrease, if any, in the number of Shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is based. 
 (e) In case any time:

 (i) there shall be any capital reorganization, or reclassification of the capital stock of the Company; or

 (ii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 then, in any one or more of said cases, the Company shall give written notice, by first–class mail,
postage prepaid, addressed to the registered holder of 

  
 3 

 
this Warrant at the address of such holder as shown on the books of the Company, of the date on which (A) the books of the Company shall close or a record shall be taken for such
distribution or subscription rights, or (B) such reorganization, reclassification or consolidation, dissolution, liquidation or winding up, or conversion or redemption shall take place, as the case may be. Such notice shall also specify the
date as of which the holders of capital stock of record shall participate in such distribution or subscription rights, or shall be entitled to exchange their capital stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, dissolution, liquidation or winding up, or conversion or redemption, as the case may be. Such written notice shall be given at least 20 days prior to the action in question and not less than 20 days prior to the
record date or the date on which the Company’s transfer books are closed in respect thereto. 
 (f) If any
event occurs as to which in the opinion of the Board of Directors of the Company the other provisions of this Section 5 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the holder of this
Warrant or of Common Stock in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and
principles, so as to protect such purchase rights as aforesaid. 
 6. This Warrant shall not entitle the holder hereof to any
voting rights or other rights as a stockholder of the Company. 
 7. This Warrant may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred and must be held by the Purchaser until it is exercised for Shares of Common Stock in accordance with paragraphs 1 and 2 above. 
 8. This Warrant is exchangeable, upon the surrender hereof by the holder hereof at the principal office of the Company, for new Warrants of like tenor representing in the aggregate the right to subscribe
for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holder hereof at the time
of such surrender. 
 9. This Warrant has been registered with the SEC and qualified by state authorities, or an exemption from
such registration and qualification requirements is available. The Shares of Common Stock issuable upon exercise of the Warrant may be transferred and sold in reliance on the Registration Statement. The Company will attempt to maintain the
effectiveness of a current prospectus covering the Common Stock issuable upon exercise of the Warrants until the expiration of the Warrants. 
 10. The Company will not be required upon the exercise of this Warrant to issue fractions of shares of Common Stock, but may, at its option, either (a) purchase such fraction for an amount in cash
equal to the current value of such fraction computed on the basis of the closing market price of a share of Common Stock as quoted on the principal exchange or trading 

  
 4 

 
facility on which shares of Common Stock are traded on the trading day immediately preceding the day upon which this Warrant was surrendered for exercise in accordance with Section 2 hereof,
or (b) issue the required share. By accepting this Warrant, the holder hereof expressly waives any right to receive any fractional share upon exercise of a Warrant, except as expressly provided in this Section 10. 

11. If this Warrant is exercised for less than all of the then-current number of shares purchasable hereunder, then the Company shall,
concurrently with the issue of the Shares of stock purchased by Purchaser upon such exercise in accordance with Section 2, issue a new warrant exercisable for the remaining number of shares purchasable under this Warrant. 

12. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and security reasonably satisfactory to it, the Company shall execute and deliver a new warrant of like tenor as the Warrant so lost, stolen, destroyed or mutilated. 
 13. All questions concerning this Warrant will be governed and interpreted and enforced in accordance with the internal law, not the law of conflicts, of the State of Delaware. 

  
 5 

 IN WITNESS WHEREOF, EnteroMedics Inc. has caused this Warrant to be signed by its duly
authorized officer and this Warrant to be dated as of the date set forth above. 
  

					
	ENTEROMEDICS INC.
		
	By	 	  

			
		 	Its	 	  

 SUBSCRIPTION FORM 

To be Executed by the Holder of this Warrant if such Holder 
 Desires to Exercise this Warrant in Whole or in Part 

To:        EnteroMedics Inc. (the “Company”) 

The undersigned
                                         
                                    

Please insert Social Security or other 
 identifying number of Subscriber: 
  

 
 hereby irrevocably elects to
exercise the right of purchase represented by this Warrant for, and to purchase thereunder,                      shares of the Common Stock
(the “Common Stock”) provided for therein and tenders payment herewith to the order of the Company in the amount of $            , such payment being made as
provided on the face of this Warrant. 
 The undersigned requests that such shares of Common Stock be issued in book-entry
format as follows: 
  

			
		
	Name:	 	  

			
		
	Address:	 	  

			
		
	Deliver to:	 	  

			
		
	Address:	 	  

 and, if such number of shares of Common Stock shall not be all the shares of Common Stock purchasable hereunder, that a new Warrant for the balance remaining of the shares of Common Stock purchasable
under this Warrant be registered in the name of, and delivered to, the undersigned at the address stated above. 
 Dated:
                     
 Signature
                                         
                                         
   
 Note: The signature on this Subscription Form 

must correspond with the name as written upon the 

face of this Warrant in every particular, without 

alteration or enlargement or any change whatever.

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