ESCROW AGREEMENT IN ACCORDANCE WITH RULE 419
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
ESCROW AGREEMENT dated as of __________, 2000 (the "Agreement") by and
between SPECIAL ACQUISITIONS, INC., a Nevada corporation (the "Company") and
COLORADO BUSINESS BANK, (the "Escrow Agent").
The Company, through its officers and directors and selected broker-dealers,
will sell up to 60,000 shares of Common Stock, par value $.001 (the
"Shares"), as more fully described in the Company's definitive Prospectus
dated February ___, 2000 comprising part of the company's Registration
Statement on Form SB-2, as amended (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act") (File No. 333-93045) declared
effective on __________________ (the "Prospectus").
The Company desires that the Escrow Agent accept all offering proceeds, after
deduction of cash paid for underwriting commissions, underwriting expenses
and dealer allowances and amounts permitted to be released to the Company
pursuant to Rule 419(b)(2)(vi), a copy of which rule is attached hereto and
made a part hereof, to be derived by the company from the sale of the Shares
(the "Offering Proceeds"), as well as the share certificates representing the
Shares issued in connection with the company's offering, in escrow, to be
held and disbursed as hereinafter provided.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Escrow Agent. The company hereby appoints the
Escrow Agent to act in accordance with and subject to the terms of this
Agreement, and the Escrow Agent hereby accepts such appointment and agrees to
act in accordance with and subject to such terms.
2. Establishment of Escrow Account. The Escrow Agent shall open an
escrow account (the "Escrow Account") for the deposit of the net proceeds to
be derived by the Company from the sale of the Shares, being the Offering
Proceeds, subject to the terms and conditions of this Agreement.
3. Deposit of Offering Proceeds and Share Certificates. Subject to
Rule 419, upon the Company's receipt and acceptance of subscriptions and
Offering Proceeds, the Company shall promptly deliver to the Escrow Agent a
certified or bank check in the amount of the Offering Proceeds drawn to the
order of the Escrow Agent or, alternatively, drawn to the order of the
company but endorsed by the company for collection by the Escrow Agent and
credited to the Escrow Account.
All share certificates representing the Shares issued in connection
with the Company's offering shall also be deposited by the Company directly
into the Escrow Account promptly upon issuance. The identity of the
purchasers of the securities shall be included on the stock certificates or
other documents evidencing such securities. Securities held in the Escrow
Account are to remain as issued and deposited and shall be held for the sole
benefit of the purchasers, who shall have voting rights with respect to
securities held in their names, as provide be applicable state law. No
transfer or other disposition of securities held in the Escrow Account or any
interest related such securities shall be permitted other than by will or the
laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined by the Internal Revenue code of 1986 as amended
[26 U.S.C. 1 et seq.], or Title 1 of the Employee Retirement Income Security
Act [29 U.S.C. 1001 et seq.], or the rules thereunder.
Warrants, convertible securities or other derivative securities, if
nay, relating to securities held in the Escrow Account may be exercised or
converted in accordance with their terms; provided however, that securities
received upon exercise or conversion, together with any cash or other
consideration paid in connection with the exercise or conversion, are
promptly deposited into the Escrow Account.
4. Disbursement of the Escrow Account. Upon the earlier of (i)
receipt by the Escrow Agent of a signed representation from the Company to
the Escrow Agent, that the requirements of Rule 419(e)(1) and (e)(2) have
been met, and consummation of an acquisition(s) meeting the requirements of
Rule 419(e)(2) or (ii) written notification from the Company to the Escrow
Agent to deliver the Offering Proceeds to another escrow agent in accordance
with Paragraph 5.8 then, in such event, the Escrow Agent shall disburse the
Offering Proceeds (inclusive of any interest thereon) to the Company and the
securities to the purchasers or registered holders identified on the
deposited securities or deliver the Offering Proceeds and securities to such
other escrow agent, as the case may be, whereupon the Escrow Agent shall be
released from further liability hereunder.
Notwithstanding the foregoing, if an acquisition meeting the
requirements of Rule 419(e)(1) has not occurred by a date within 18 months
after the effective date of the Registration Statement, funds held in the
Escrow Account shall be returned by first class mail or equally prompt means
to the purchasers within five business days following that date.
5. Concerning the Escrow Agent.
5.1 The Escrow Agent shall not be liable for any actions taken
or omitted by it, or any action suffered by it to be taken or omitted by it,
in good faith and in the exercise of its own best judgment, and may rely
conclusively and shall be protected in acting upon any order, notice demand,
certificate, opinion or advice of counsel (including counsel chosen by the
Escrow Agent), statement , instrument , report or other paper or document
(not only as to its due execution and the validity and effectiveness of its
provision, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to
be signed or presented by the proper person or person. The Escrow Agent
shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this Agreement unless evidenced by a writing
delivered to the Escrow Agent signed by the proper party or partes and, if
the duties or rights of the Escrow Agent are affected, unless it shall have
given its prior written consent thereto.
5.2 The Escrow Agent shall not be responsible for the
sufficiency or accuracy, the form of, or the execution validity, value or
genuineness of any document or property received, held or delivered by it
hereunder, or of any signature or endorsement thereon, or for any lack of
endorsement thereon, or for any description therein, nor shall the Escrow
Agent be responsible or liable in any respect on account of the identity,
authority or rights of the person executing or delivering or purporting to
execute or deliver any document or property paid or delivered by the Escrow
Agent pursuant to the provisions hereof. The Escrow Agent shall not be
liable for any loss which may be incurred by reason of any investment of any
monies or properties which it holds hereunder.
5.3 The Escrow Agent shall have the right to assume, in the
absence of written notice to the contrary from the proper person or persons,
that a fact or an event by reason of which an action would or might be taken
by the Escrow Agent does not exist or has not occurred, without incurring
liability for any action taken or omitted, in good faith and in the exercise
of its own best judgment, in reliance upon such assumption.
5.4 The Escrow Agent shall be indemnified and held harmless by
the Company form and against any expenses, including counsel fees and
disbursements, or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding involving any claim, or in connection with
any claim or demand, which in any way directly or indirectly arises out of or
relates to this Agreement, the services of the Escrow Agent hereunder, the
monies or other property held by it hereunder or any such expense or loss.
Promptly after the receipt by the Escrow Agent of notice of any demand or
claim or the commencement of any action, suit or proceeding, the Escrow Agent
shall, if a claim in respect thereof shall be made against the other parties
hereto, notify such parties thereof in writing; but the failure by the Escrow
Agent to give such notice shall not relieve any party form any liability
which such party may have to the Escrow Agent hereunder. In the event of the
receipt of such notice, the Escrow Agent, in its sole discretion, may
commence an action in the nature of interpleader in an appropriate court to
determine ownership or disposition of the Escrow Account or it may deposit
the Escrow Account with the clerk of any appropriate court or it may retain
the Escrow Account pending receipt of a final, non-appealable order of a
court having jurisdiction over all of the parties hereto directing to whom
and under what circumstances the Escrow Account is to be disbursed and
delivered.
5.5 During the term hereof, the Escrow Agent shall invest the
Offering Proceeds pursuant to the requirements of Rule 419(b)(2)(iv). In the
event the Escrow Agent receives no direction from the Company with respect to
the investment of the Offering Proceeds, the Escrow Agent shall invest the
Offering Proceeds in direct obligations of, or obligations guaranteed as to
principal or interest by the United States. Interest or dividends earned or
the deposited funds, if any, shall be held in the Escrow Account until the
funds are released in accordance with Rule 419(b)(2)(v) and (e)(3) and as
provided for in Paragraph 4 hereof. Deposited proceeds and interest or
dividends thereof, if any, shall be held for the sole benefit of the
purchasers of the securities. If funds held in the Escrow Account are
released to a purchaser of the securities, the purchaser shall receive
interest or dividends earned, if any, on such funds up to the date of
release. If funds held in the Escrow Account are released to the Company,
interest or dividends earned or such funds up to the date of the release may
be released to the Company.
The Company may receive up to 10% of the proceeds remaining after
payment of underwriting commissions, underwriting expenses and dealer
allowances permitted by paragraph (b)(2)(i) of Rule 419, exclusive of
interest or dividends, as those proceeds are deposited into the Escrow
Account.
5.6 The Escrow Agent shall be entitled to reasonable
compensation from the Company for all services rendered by it hereunder
5.7 From time to time on and after the date hereof, the Company
shall deliver or cause to be delivered to the Escrow Agent such further
documents and instruments and shall do or cause to be done such further acts
as the Escrow Agent shall reasonably request (it being understood that the
Escrow Agent shall have no obligation to make such request) to carry out more
effectively the provisions and purposes of this Agreement, to evidence
compliance herewith or to assure itself that it is protected in acting
hereunder.
5.8 The Escrow Agent may resign at any time and be discharged
from its duties as Escrow Agent hereunder by its giving the Company at least
thirty (30) days' prior written notice thereof. As soon as practicable after
its resignation, the Escrow Agent shall turn over to a successor escrow agent
appointed by the Company, all monies and property held hereunder upon
presentation of the document appointing the new escrow agent and its
acceptance thereof. If no new escrow agent is so appointed within the sixty
(60) day period following the giving of such notice of resignation, the
Escrow Agent may deposit the Escrow Account with any court it deems
appropriate.
5.9 The Escrow Agent shall resign and be discharged form its
duties as Escrow Agent hereunder if so requested in writing at anytime by the
Company, provided, however, that such resignation shall become effective only
upon acceptance of appointment by a successor escrow agent as provided in
Paragraph 5.8.
5.10 Notwithstanding anything herein to the contrary, the
Escrow Agent shall not be relieved from liability thereunder for its own
gross negligence or its own willful misconduct.
6. Miscellaneous.
6.1 This Agreement shall for all purposes be deemed to be made
under and shall be construed in accordance with the laws of the State of
Colorado.
6.2 This Agreement contains the entire agreement of the parties
hereto with respect to the subject matter hereof and, except as expressly
provided herein, may not be changed or modified except by an instrument in
writing signed by the party to be charged.
6.3 The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
thereof.
6.4 This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representatives,
successors and assigns.
6.5 Any notice or other communication required or which may be
given hereunder shall be in writing and either be delivered personally or be
mailed, certified or registered mail, return receipt requested, postage
prepaid, and shall be deemed given when so delivered personally or, if
mailed, two (2) days after the date of mailing, as follows:
If to the Company, to:
SPECIAL ACQUISITIONS, INC.
Attn: Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000
copy to: Xxxxxx X. Xxxxxx, Xx.
Attorney at Law
000 Xxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
(000) 000-0000
and if to the Escrow Agent, to:
COLORADO BUSINESS BANK
Attn: Xxxxx Xxxxx
000 00xx Xxxxxx
Xxxxxx, XX 00000-0000
(000) 000-0000
7. Additional Terms. The attached Exhibit "A1" (CUSTOMARY RULES and
REGULATIONS) is incorporated herein by this reference.
The parties may change the persons and addresses to which the notices
or other communications are to be sent by giving written notice to any such
change in the manner provided herein for giving notice.
WITNESS the execution of this Agreement as of the date first above
written.
SPECIAL ACQUISITIONS, INC.
By: ______________________________________
President
This Escrow Agreement is accepted as of the ______ day of
_____________, 1996.
COLORADO BUSINESS BANK
By: _______________________________________
Authorized Representative
Exhibit "A1"
CUSTOMARY RULES and REGULATIONS
COLORADO BUSINESS BANK
COMMUNITY TRUST DIVISION
Escrow Agreement
Account Number:
Account Name: SPECIAL ACQUISITIONS, INC. ESCROW
This Escrow Agreement ("Agreement") is dated _____________.
This Agreement exists among SPECIAL ACQUISITIONS, INC. and
______________________
_____________________________________________________________________________
_
_____________________________________________________________________________
_
("Depositors") and Colorado Business Bank, Community Trust Division ("Escrow
Agent").
Depositors and Escrow Agent agree:
1. Escrow Deposits.
Depositors deposit with Escrow Agent the items (i.e. cash, securities
and/or instruments, etc.) as specifically listed on the attached
Schedule A, which is hereby incorporated by reference. Schedule A
items are referred to in this Agreement as Escrow Property.
2. Escrow Instructions.
Escrow Agent will hold and distribute Escrow Property in accordance
with the instructions on the attached Schedule B, which is hereby
incorporated by reference.
3. Investment of Funds.
Escrow Agent has no duty to invest any Escrow Property, except as
provided on Schedule B.
4. Amendments.
This Agreement may be amended, modified, supplemented or revoked only
in writing signed by each Depositor with the written approval of Escrow
Agent and upon payment to Escrow Agent of its additional fees and
expenses.
5. Assignments of Interest.
Assignments, transfers, hypothecations or conveyances of any right,
title or interest in Escrow Property are only binding upon Escrow Agent
if written notice is served by Depositors and received by Escrow Agent,
all of Escrow Agent's additional fees and expenses are paid, and
Escrow Agent has given its assent.
6. Authority of Depositors.
Escrow Agent is under no duty or obligation to ascertain the identity,
authority, and/or rights of Depositors or its agents who are executing,
delivering or purporting to execute or deliver instructions and/or
performance hereunder.
7. Compensation of Escrow Agent.
Depositors, both jointly and severally, agree to pay Escrow Agent its
fees and expenses for services, including any extraordinary fees and
expenses that may arise, such as fees of counsel, consultants and court
costs. Escrow Agent has a first and prior lien on Escrow Property to
secure any such fees and expenses. Escrow Agent is authorized to
deduct any such fees and expenses from Escrow Property. Any fees and
expenses owed but unpaid shall accrue interest at the rate of 12% per
annum.
8. Complete Agreement and Execution in Counterparts.
This Agreement and its Schedules A and B constitute the complete and
entire Agreement of Depositors with Escrow Agent. This Agreement may
be executed in counterparts. Each executed counterpart shall be given
effect as an original.
9. Disagreements.
In the event of any disagreement or dispute between Depositors to this
Agreement concerning the meaning or validity of any provision under
this Agreement, including Schedules A and B, or concerning any other
matter relating to this Agreement, Escrow Agent:
a. Shall be under no obligation to act, except under process or
order of court, or until it has been adequately indemnified to
its full satisfaction, and shall sustain no liability for its
failure to act pending such process or court order or
indemnification; and
b. May deposit, in its sole and absolute discretion, Escrow Property
or that portion of Escrow Property it then holds with the then
Clerk of the District Court of the City and County of Denver,
State of Colorado, to interplead Depositors. Upon such deposit
and filing of interpleader, Escrow Agent shall be relieved of all
liability as to Escrow Property and shall be entitled to recover
from Depositors its attorneys' fees and other costs incurred in
commencing and maintaining such action. Depositors by signing
this Agreement submit themselves to the jurisdiction of such
Court and do appoint the then Clerk of such court as their agent
for the service of all process in connection with such
proceedings. In no event shall the institution of such
interpleader action impair the rights of Escrow Agent described
in paragraph 14.
10. Extension of Benefits.
This Agreement and its Schedules A and B extends to and binds the
heirs, legal representatives and successors and assigns all of the
parties to this Agreement.
11. Governing Law.
The laws of the State of Colorado shall apply to the interpretation,
construction and enforcement of this Agreement.
12. Headings of Paragraphs.
The titles of these numbered paragraphs to this Agreement exist for
convenience only and in no way shall they restrict or modify any
Agreement or provision.
13. Indemnification and Hold Harmless.
Depositors agree, jointly and severally, to indemnify and hold harmless
Escrow Agent from any liability, cost or expense whatsoever, including
attorney's fees that it has or will incur by reason of accepting Escrow
Property and Escrow Agency.
14. Non-Liability.
Escrow Agent shall not be liable for any act it may do or omit to do as
Escrow Agent while acting in good faith and in the exercise of its own
best judgment. Any act done or omitted by Escrow Agent pursuant to the
advice of its attorneys shall be conclusive evidence of such good
faith. Escrow Agent shall have the right to consult with counsel
whenever any question arises concerning Agreement and shall incur no
liability whatsoever, for any delay reasonably required to obtain such
advice of counsel.
15. Notices.
Any notices will be given by delivery, by mailing, via first class
mail, postage prepaid or by facsimile promptly followed by mailing such
notice via first class mail, postage prepaid, to the addresses and/or
facsimile numbers provided in Agreement. Notice shall be effective as
of the time of receipt, as of the time of deposit in the mail, or in
the event of initial facsimile transmission, upon the sending of such
facsimile, except that any notice given to Escrow Agent shall not be
deemed given until actually received by an employee of Escrow Agent
working in the Trust Division. All such notices to Escrow Agent must
contain Account Number.
16. Other Contracts or Agreements.
Escrow Agent is not a party to or bound by any agreement between
Depositors other than this Agreement, whether or not an original copy
of such agreement is held as Escrow Property or is in the files of
Escrow Agent.
17. Removal or Resignation of Escrow Agent.
Escrow Agent may resign at any time by furnishing written notice of its
resignation to Depositors. Depositors may remove Escrow Agent at any
time by furnishing to Escrow Agent a written notice of its removal.
Such resignation or removal, as the case may be, shall be effective
thirty days after delivery of such notice.
18. Statute of Limitations and Laches.
Escrow Agent is not liable for the outlawing, lapse or invalidation of
any rights under any Statute of Limitations or due to laches with
respect to Agreement or Escrow Property.
19. Validity and Sufficiency of Schedule A Deposits and Schedule B
Instructions.
Escrow Agent assumes no responsibility for the validity and/or
sufficiency of any funds, securities, instruments or instructions held
as Escrow Property.
20. Waivers.
The failure of any party to Agreement at any time or times to require
performance of any provision under this Agreement shall in no manner
affect the right at a later time to enforce the same performance. A
waiver by any party to Agreement of any such condition or breach of any
term, covenant, representation or warranty contained in this Agreement,
in any one or more instances, shall neither be construed as a further
or continuing waiver of any such condition or breach nor a waiver of
any other condition or breach of any other term, covenant,
representation or warranty contained in this Agreement.
IN WITNESS WHEREOF, the undersigned have affixed their signatures and hereby
adopt as part of this instrument Schedules A and B which are incorporated by
reference.
DEPOSITOR DEPOSITOR
SPECIAL ACQUISITIONS, INC.
By: ________________________________By: ________________________________
________________________________ ____________________________________
Name and Title Name and Title
________________________________ __________________________________
Address Address
________________________________ ___________________________________
City, State and Zip Code City, State and Zip Code
________________________________ ___________________________________
Telephone Telephone
________________________________ ____________________________________
Facsimile Number Facsimile Number
________________________________ ____________________________________
Tax ID Tax ID
ESCROW AGENT
Colorado Business Bank,
Community Trust Division
By: ________________________________
Authorized Officer
COLORADO BUSINESS BANK
COMMUNITY TRUST DIVISION
Escrow Agreement
SCHEDULE A
DEPOSITS
The deposits are described in California Applied Research Fund Escrow
Agreement dated 6-1-96 and California Applied Research Rule 419 Escrow
Agreement dated 6-1-96, which have been previously executed and are attached
hereto.
COLORADO BUSINESS BANK
COMMUNITY TRUST DIVISION
Escrow Agreement
SCHEDULE B
INSTRUCTIONS
1. The terms of Colorado Business Bank's Customary Rules and Regulations
(Escrow Agreement) control and supercede any conflicting or
insufficient instructions contained in Escrow Agreements referenced in
Schedule A.
2. Escrow Agent may invest the cleared funds in any interest bearing account
including deposits in Colorado Business Bank.
3. Depositor must provide timely notice to Escrow Agent of its
intent to make an acquisition so that Escrow Agent may liquidate any
investments.
4. Notice address for SPECIAL ACQUISITIONS, INC. is
SPECIAL ACQUISITIONS, INC.
Attn: Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000
copy to: Xxxxxx X. Xxxxxx, Xx.
Attorney at Law
000 Xxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
(000) 000-0000
