EX-10.i.3
ESCROW AGREEMENT
AGREEMENT made this day of , 2002, by and among
American Family Cookies, Inc., a Delaware corporation (the "Issuer"), whose
address appears on the Information Sheet (as defined below) attached to this
Agreement, and Continental Stock Transfer & Trust Company with a principal place
of business at 00 Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Issuer has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 covering a proposed
public offering of its securities as described on the Information Sheet (the
"Registration Statement");
WHEREAS, the Issuer proposes to offer the Securities for sale to the
public on a "best efforts, all or none" basis with respect to the Minimum
Securities Amount and Minimum Dollar Amount and at the price per share set forth
on the Information Sheet;
WHEREAS, the Issuer proposes to establish an escrow account (the "Escrow
Account") to which subscription monies which are received by the Escrow Agent
from the Issuer in connection with such offering are to be credited, and the
Escrow Agent is willing to establish the Escrow Account on the terms AND subject
to the conditions hereinafter set forth; and
WHEREAS, the Escrow Agent has an agreement with X.X. Xxxxxx Xxxxx Bank,
N.A. ("Chase Bank") to establish a special bank account (the "Bank Account")
into which the subscription monies received by the Escrow Account from the
Issuer and credited to the Escrow Account, are to be deposited;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. INFORMATION SHEET. Each capitalized term not otherwise defined in this
Agreement shall have the meaning set forth for such term on the information
sheet attached to this Agreement and incorporated by reference herein and made a
part hereof (the "Information Sheet").
2. ESTABLISHMENT OF THE BANK ACCOUNT.
2.1. The Escrow Agent shall establish a non-interest-bearing bank account
at the branch of X.X.Xxxxxx Xxxxx Bank, N.A. selected by the Escrow Agent, and
bearing the designation set forth on the Information Sheet (the "Bank Account").
The purpose of the Bank Account is for: (a) the deposit of all subscription
monies (checks, cash or wire transfers) which are received by the Issuer and/or
a participating broker-dealer from prospective purchasers of the Securities and
arc delivered by the Issuer and/or a participating broker-dealer to the Escrow
Agent; (b) the holding of of subscription monies collected through the banking
system; and (c) the disbursement of collected funds, all as described herein.
2.2. On or before the date of the initial deposit in the Bank Account
pursuant to this Agreement, the Issuer shall notify the Escrow Agent in writing
of the date the Registration Statement is declared effective (the "Effective
Date"), and the Escrow Agent shall not accept any amounts for credit to the
Escrow Account or for deposit in the Bank Account prior to its receipt of such
notification.
2.3. The offering period, which shall be deemed to commence on the
Effective Date, shall consist of the number of calendar days or business days
set forth on the Information Sheet. The offering period shall be extended by an
extension period only if the Escrow Agent shall have received written notice
thereof at least five (5) business days prior to the expiration of the offering
period, The extension period, which shall be deemed to commence on the next
calendar day following the expiration of the offering period, shall consist of
the number of calendar days or business days set forth on the Information Sheet.
The last day of the offering period, or the last day of the extension period (if
the Escrow Agent has received written notice thereof as herein above provided)
is referred to herein as the "Termination Date." Except as provided in Section
4.3 hereof, after the Termination Date the, Issuer shall not deposit, and the
Escrow Agent shall not accept, any additional amounts representing payments by
the prospective purchasers.
3. DEPOSITS TO THE BANK ACCOUNT.
3.1. The Issuer and/or a participating broker-dealer shall promptly
deliver to the Escrow Agent all monies which it receives from prospective
purchasers of the Securities, which monies shall be in the form of checks, cash,
or wire transfers. Upon the Escrow Agent's receipt of such monies, they shall be
credited to the Escrow Account. All checks delivered to the Escrow Agent shall
be made payable to "CONTINENTAL STOCK TRANSFER & TRUST COMPANY AS ESCROW
AGENT-AMERICAN FAMILY COOKIES, INC." Any check payable other than to the Escrow
Agent as required hereby shall be returned to the prospective purchaser, or if
the Escrow Agent has insufficient information to do so, then to the Issuers
(together with any Subscription Information, as defined below or other documents
delivered therewith) by noon of the next business day following receipt of such
check by the Escrow Agent, and such check shall be deemed not to have been
delivered to the Escrow Agent pursuant to the terms of this Agreement.
3.2. Promptly after receiving subscription monies as described in Section
3.1, the Escrow Agent shall deposit the same into the Bank Account. Amounts of
monies so deposited are hereinafter referred to as "Escrow Amounts." The Escrow
Agent shall cause Chase Bank. to process all Escrow Amounts for collection
through the banking system. Simultaneously with each deposit to the Escrow
Account, the Issuer shall inform the Escrow Agent in writing of the name and
address of the prospective purchaser, the amount of Securities subscribed for by
such purchaser, and the aggregate dollar amount of such subscription
(collectively, the "Subscription Information"),
3.3. The Escrow Agent shall not be required to accept for credit to the
Escrow Account or for deposit into the Bank Account checks which are not
accompanied by the appropriate Subscription Information. Wire transfer and cash
representing payments by
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prospective purchasers shall not be deemed deposited in the Escrow Account until
the Escrow Agent has received in writing the Subscription Information required
with respect to such payments,
3.4. The Escrow Agent shall not be required to accept in the Escrow
Account any amounts representing payments by prospective purchasers, whether by
check, cash or wire, except during the Escrow Agent's regular business hours.
3.5. Only those Escrow Amounts, which have been deposited in the Bank
Account and which have cleared the banking system and have been collected by the
Escrow Agent, are herein referred to as the "Fund."
3.6. If the proposed offering is terminated before the Termination Date,
the Escrow Agent shall refund any portion off the Fund prior to disbursement of
the Fund in accordance with Article 4 hereof, upon instructions in writing
signed by the Issuer.
4. DISBURSEMENT FROM THE BANK ACCOUNT.
4.1. Subject to Section 4.3 below, if by the close of regular banking
hours on the Termination Date, the Escrow Agent determines that the amount in
the Fund is less than the Minimum Dollar Amount or the Minimum Securities
Amount, as indicated by the Subscription Information submitted to the Escrow
Agent, then in either such case, the Escrow Agent shall promptly refund to each
prospective purchaser the amount of payment received from such purchaser which
is then held in the Fund or which thereafter clears the banking system, without
interest thereon or deduction therefrom, by drawing checks on the Bank Account
for the amounts of such payments and transmitting them to the purchasers. In
such event, the Escrow Agent shall promptly notify the Issuer of such
distribution from the Fund.
4.2. Subject to Section 4.3 below, if at any time up to the close of
regular banking hours on the Termination Date, the Escrow Agent determines that
the amount in the Fund is at least equal to the Minimum Dollar Amount and
represents the sale of not less than the Minimum Securities Amount, the Escrow
Agent shall promptly notify the Issuer of such fact in writing. The Escrow Agent
shall promptly after it receives such instructions, disburse the Fund by drawing
checks on the Bank Account in accordance with written instructions from the
Issuer.
4.3. If the Escrow Agent or the Issuer has on hand at the close of
business on the Termination Date any uncollected amounts which, when added to
the Fund, would raise the amount in the Fund to the Minimum Dollar Amount, and
result in the Fund representing the sale of the Minimum Securities Amount, the
Collection period (consisting of the number of business days set forth on the
Information Sheet) shall be utilized to allow such uncollected amounts to clear
the banking system. During the collection period, the Issuer shall not deposit,
and the Escrow Agent shall not accept, any additional amounts; provided,
however, that such amounts as were received by the Issuer and/or a participating
broker-dealer by the close of business on the Termination Date may be deposited
with the Escrow Agent by noon of the next business day following the Termination
Date. If, at the close of business on the last day of the Collection Period, an
amount sufficient to raise the amount in the Fund to the Minimum Dollar Amount
and which would result in the Fund representing the sale of the Minimum
Securities
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Amount shall not have cleared the banking system, the Escrow Agent shall
promptly notify the Issuer of such fact and shall promptly return all amounts
then in the Fund, and any amounts which thereafter clear the banking system, to
the prospective purchasers as provided in Section 4.2 hereof
4.4. Upon disbursement of the Fund pursuant to the terms of this Article
4, the Escrow Agent shall be relieved of all further obligations and released
from all liability under this Agreement. It is expressly agreed and understood
that in no event shall the aggregate amount of payments made by the Escrow Agent
exceed the amount of the Fund.
5. RIGHTS, DUTIES AND RESPONSIBILITIES OF ESCROW AGENT .
It is understood and agreed that the duties of the Escrow Agent are purely
ministerial in nature, and that:
5.1. The Escrow Agent shall notify the Issuer, on a daily basis, of the
Escrow Amounts which have been deposited in the Bank Account and of the amounts,
constituting the Fund, which have cleared the banking system and have been
collected by the Escrow Agent
5.2. The Escrow Agent shall be responsible for the performance by the
Issuer of their respective obligations under this Agreement.
5.3. The Escrow Agent shall not be required to accept from the Issuer any
Subscription Information pertaining to prospective purchasers unless such
Subscription Information is accompanied by checks, cash or wire transfers
meeting the requirements of Section 3.1, nor shall the Escrow Agent be required
to keep records of any information with respect to payments deposited by the
Issuer except as to the amount of such payments; however, the Escrow Agent shall
notify the Issuer within a reasonable time of any discrepancy between the amount
set forth in any Subscription Information and the amount delivered to the Escrow
Agent therewith. Such amount need not be accepted for deposit in the Escrow
Account until such discrepancy has been resolved
5.4. The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent, within a
reasonable time, shall return to the Issuer any check which is dishonored,
together with the Subscription information, if any, which accompanied such
check.
5.5. The Escrow Agent shall be, entitled to rely upon the accuracy, act in
reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature, instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document.
5.6. If the Escrow Agent is uncertain as to its duties or rights hereunder
or shall receive instructions with respect to the Bank Account, the Escrow
Amounts or the Fund which,
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in its sole determination, are in conflict either with other instructions
received by it or with any provision of this Agreement, it shall be entitled to
hold the Escrow Amounts, the Fund, or a portion thereof, in the Bank Account
pending the resolution of such uncertainty to the Escrow Agent's sole
satisfaction, by final judgment of a court or courts of competent jurisdiction
or otherwise; or the Escrow Agent, at its sole option, may deposit the Fund (and
any other Escrow Amounts that thereafter become part of the Fund) with the Clerk
of a court of competent jurisdiction in a proceeding to which all parties in
interest are joined. Upon the deposit by the Escrow Agent of the Fund with the
Clerk of any court, the Escrow Agent shall be relieved of all further
obligations and released from all liability hereunder.
5.7. The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct or gross negligence. The Escrow
Agent shall be entitled to consult with counsel of its own choosing and shall
not be liable for any action taken, suffered or omitted by it in accordance with
the advice of such counsel.
5.8. The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Escrow Amounts, the
Fund or any part thereof or to file any financing statement under the Uniform
Commercial Code with respect to the Fund or any part thereof.
6. AMENDMENT; RESIGNATION This Agreement may be altered or amended only
with the written consent of the Issuer and the Escrow Agent. The Escrow Agent
may resign for any reason upon (3) business days' written notice to the Issuer.
Should the Escrow Agent resign as herein provided it shall not be required to
accept any deposit, make any disbursement or otherwise dispose of the Escrow
Amounts or the Fund but its only duty shall be to hold the Escrow Amounts until
they clear the banking system and Fund for a period of not more than five (5)
business days following the effective date of such resignation, at which time:
(a) if a successor escrow agent shall have been appointed and written notice
thereof (including the name and address of such successor escrow agent) shall
have been given to the resigning Escrow Agent by the Issuer and a successor
escrow agent, then the resigning Escrow Agent shall pay over to the successor
escrow agent the Fund less any portion thereof previously paid out in accordance
with this Agreement; or (b) if the resigning Escrow Agent shall not have
received written notice signed by the Issuer and a successor escrow agent, then
the resigning Escrow Agent shall promptly refund the amount in the Fund to each
prospective purchaser, without interest thereon or deduction therefrom, and the
resigning Escrow Agent shall promptly notify the Issuer in writing of its
liquidation and distribution of the Fund; whereupon, in either case, the Escrow
Agent shall be relieved of all further obligations and released from all
liability under this Agreement. Without limiting the provisions of Section 8
hereof, the resigning Escrow Agent shall be entitled to be reimbursed by the
Issuer for any expenses incurred in connection with its resignation, transfer of
the Fund to a successor escrow agent or distribution of the Fund pursuant to
this Section 6.
7. REPRESENTATIONS AND WARRANTIES. The Issuer hereby represents and
warrants to the Escrow Agent that:
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7.1. No Party other than the parties hereto and the prospective
purchasers have, or shall have, any lien, claim or security interest in the
Escrow Amounts or the Fund or any part thereof
7.2. No financing statement under the Uniform Commercial Code is on file
in any jurisdiction claiming a security interest in or describing (whether
specifically or generally) the Escrow Amounts or the Fund or any part thereof.
7.3. The Subscription Information submitted with each deposit shall, at
the time of the submission and at the time of the disbursement of the Fund, be
deemed a representation and warranty that such deposit represents a bona fide
payment by the purchaser described therein for the amount of Securities set
forth in such Subscription Information.
7.4. All of the information contained in the Information Sheet is, as
of the date hereof, and will be, at the time of any disbursement of the Fund,
true and correct,
8. FEES AND EXPENSE. The Escrow Agent shall be entitled to the Escrow
Agent Fees set forth on the Information Sheet, payable as and when stated
therein. In addition, the Issuer agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement, including, but
not limited to, reasonable counsel fees. Upon receipt of the Minimum Dollar
Amount, the Escrow Agent shall have a lien upon the Fund to the extent of its
fees for services as Escrow Agent.
9 . INDEMNIFICATION AND CONTRIBUTION .
9.1. The Issuer agrees to indemnify the Escrow Agent and its officers,
directors, employees, agents and shareholders (collectively referred to as the
"Indemnitees") against, and hold them harmless of and from any and all loss,
liability, cost, damage and expense, including without limitation, reasonable
counsel fees, which the Indemnitees may suffer or incur by reason of any action,
claim or proceeding brought against the Indemnitees arising out of or relating
in any way to this Agreement or any transaction to which this Agreement relates,
unless such action, claim or proceeding is the result of the willful misconduct
or gross negligence of the Indemnitees.
9.2. If the indemnification provided for in Section 9.1 is applicable, but
for any reason is held to be unavailable, the Issuer shall contribute such
amounts as are just and equitable to pay, or to reimburse the Indemnitees for,
the aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of, any action, claim or
proceeding arising out of or relating in any way to any actions or omissions of
the Indemnitors.
9.3. The provisions of this Article 9 shall survive any termination of
this Agreement, whether by disbursement of the Fund, resignation of the Escrow
Agent or otherwise.
10. GOVERNING LAW AND ASSIGNMENT. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York and shall be
binding upon the parties
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hereto and their respective successors and assigns, provided, however, any
assignment or transfer by any party of its rights under this Agreement or with
respect to the Escrow Amounts or the Fund shall be void as against the Escrow
Agent unless: (a) written notice thereof shall be given to the Escrow Agent; and
(b) the Escrow Agent shall have consented in writing to such assignment or
transfer.
11. NOTICES. All notices required to be given in connection with this
Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office or other recognized overnight
courier, and addressed, if to the Issuer, at its respective addresses set forth
on the Information Sheet, and if to the Escrow Agent, at its address set forth
above, to the attention of the Trust Department.
12. SEVERABILITY. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be effected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
13. COUNTERPARTS. This Agreement may be executed in several counterparts
or by separate instruments, and all of such counterparts and instruments shall
constitute one agreement, binding on all of the parties hereto.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings (written or oral) of the
parties in connection therewith,
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written,
AMERICAN FAMILY COOKIES, INC.
By:
-------------------------
Xxxxxx Xxxxxxx, President
CONTINENTAL STOCK
TRANSFER & TRUST COMPANY
BY:
-------------------------
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ESCROW AGREEMENT INFORMATION SHEET
1. THE ISSUER
Name: American Family Cookies, Inc.
Address: 000 Xxxxxxx Xxxxxx, XxXxxxxx, XX 00000
State of incorporation of organization: Delaware
2. THE SECURITIES
Description of the securities to be offered : Common Stock; A
minimum of 600,000 shares and a maximum of 750,000 shares, par value
$.001 per share. 3
3. MINIMUM AMOUNTS REQUIRED FOR DISBURSEMENT OF THE ESCROW ACCOUNT
Aggregate dollar amount which must be collected before the Escrow
Account may be disbursed to the Issuer ( "Minimum Dollar
Amount"): $1,200,000
Total amount of securities which must be subscribed for before the
Escrow Account may be disbursed to the Issuer("Minimum Securities
Amount") 600,000 shares
4. PLAN OF DISTRIBUTION OF SECURITIES
Offering Period 90 days
Extension Period, if any:30 days
Collection Period, if any: 10 business days
5. TITLE OF ESCROW ACCOUNT: Continental Stock Transfer & Trust
Company, Escrow American Family Cookies, Inc.
6. ESCROW AGENT FEES
Amount due on execution of the Escrow Agreement:$1,000;
Amount due upon upon completion of the escrow, $1,000
(Includes one closing); $500 for each additional closing.
Fee for each check disbursed pursuant to the terms of the Escrow
Agreement $10;
Feefor each check returned pursuant to the terms of the Escrow
Agreement $10
