EXHIBIT 99.1
------------
ESCROW AGREEMENT
This Escrow Agreement is entered into as of June 20, 2002, by and
between, a American Pacific Bank (the "Escrow Agent"), Transfer Online, Inc.
("Transfer Online"), Oftring & Co., Inc. (the "Underwriter") and LocatePLUS
Holdings Corporation ("LocatePLUS"), for the benefit of investors in
LocatePLUS's initial public offering of securities (the "Investors").
LocatePLUS, the Underwriter and the Investors are herein referred to as the
"Interested Parties".
WHEREAS, LocatePLUS intends to complete an initial public offering of
at least 6,000,000 Units and not more than 12,000,000 Units, each Unit
consisting of one share of LocatePLUS Class B Non-voting Common Stock, par value
$0.01, and a warrant to purchase one share of LocatePLUS Class A Voting Common
Stock, par value $0.01, for $0.50 per share) (the "Offering");
WHEREAS, Underwriter intends to conduct the Offering on a
minimum/maximum, best efforts basis;
WHEREAS, as a condition to approval by certain state securities
authorities, proceeds from the Offering must be held in escrow with a bank until
such time as $1,800,000 in gross proceeds from the offering (the "Minimum
Threshold") have been received by the Escrow Agent; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent subject
to the terms and conditions of this Escrow Agreement.
NOW THEREFORE, IN CONSIDERATION OF THE PROMISES AND THE MUTUAL
COVENANTS CONTAINED HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE ACKNOWLEDGED BY EACH OF THE PARTIES, THE
PARTIES AGREE AS FOLLOWS:
SECTION 1. APPOINTMENT OF ESCROW AGENT. The Escrow Agent is hereby constituted
and appointed the escrow agent hereunder.
SECTION 2. ESTABLISHMENT OF ESCROW ACCOUNT; ASSISTANCE OF TRANSFER ONLINE.
LocatePLUS agrees to give notice to Transfer Online and the Escrow Agent of the
effective date of LocatePLUS's Registration Statement with respect to the
Offering (the "Offering Commencement Date"). Transfer Online agrees to deposit
all subscriptions received by it ("Offering Proceeds") into a non-interest
bearing account (the "Escrow Account") to be established by the Escrow Agent
(the "Escrow Account").
SECTION 3. RELEASE OF ESCROW FUNDS; INFORMATION RIGHTS.
(a) At such time as the Escrow Agent has received Offering Proceeds
equal to at least the Minimum Threshold, then the Escrow Agent shall promptly
notify Transfer Online and LocatePLUS, and, at the written election of
LocatePLUS (signed by both its Chief Executive Officer and its Chief Financial
Officer), the Escrow Agent will release such Offering Proceeds promptly to
LocatePLUS.
(b) In the event that the Escrow Agent has not received Offering
Proceeds equal to at least the Minimum Threshold by close of business on the
60th day after Commencement Date, then the Escrow Agent, through Transfer Online
as its agent, will release and return the
proceeds directly to the Investors without deduction for expenses (including any
fees charged by the Escrow Agent).
(c) Whether funds are released to LocatePLUS pursuant to Section 3(a)
or returned to the Investors pursuant to Section 3(b), the Escrow Agent, through
its agent, Transfer Online, shall promptly notify the securities authorities of
each of the Applicable Jurisdictions of such release or return.
(d) The Interested Parties, Transfer Online and the Escrow Agent hereby
authorize the securities administrator of each of the states in which the
Offering is being conducted (the "Applicable Jurisdictions") the right to
inspect and make copies of the books and records of the Escrow Agent relating to
the Escrow Account at any reasonable time and wherever such records are
maintained.
SECTION 4. OBLIGATIONS OF THE ESCROW AGENT.
(a) Each Interested Party acknowledges that the Escrow Agent: (i) SHALL
BE OBLIGATED ONLY FOR THE PERFORMANCE OF SUCH DUTIES AS ARE EXPRESSLY AND
SPECIFICALLY SET FORTH IN THIS ESCROW AGREEMENT ON ITS PART TO BE PERFORMED,
EACH OF WHICH IS MINISTERIAL (AND SHALL NOT BE CONSTRUED TO BE FIDUCIARY) IN
NATURE, AND NO IMPLIED DUTIES OR OBLIGATIONS OF ANY KIND SHALL BE READ INTO THIS
ESCROW AGREEMENT AGAINST OR ON THE PART OF THE ESCROW AGENT; (ii) shall not be
obligated to take any legal or other action hereunder that might in its judgment
involve or cause it to incur any expense or liability unless it shall have been
furnished with acceptable indemnification; (iii) may rely on and shall be
protected in acting or refraining from acting upon any written notice,
instruction (including, without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), instrument,
statement, certificate, request or other document furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility for making inquiry as to or determining
the genuineness, accuracy or validity thereof, or of the authority of the person
signing or presenting the same; (iv) may consult counsel satisfactory to it,
including in-house counsel, and the opinion or advice of such counsel in any
instance shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or advice of such counsel; and (v) may engage
accountants or other professionals if the Escrow Agent deems the services of
such professionals necessary in the discharge of the Escrow Agent's duties
hereunder. Documents and written materials referred to in this paragraph
include, without limitation, e-mail and other electronic transmissions capable
of being printed, whether or not they are in fact printed; and any such e-mail
or other electronic transmission may be deemed and treated by the Escrow Agent
as having been signed or presented by a person if it bears, as sender, the
person's e-mail address; and (vi) is authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrow Account, the Offering Proceeds or this Agreement, without determination
by the Escrow Agent of such court's jurisdiction in the matter. If any Offering
Proceeds then held in the Escrow Account are at any time attached, garnished, or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgement or decree shall be made or entered
by any court affecting such property or any part thereof, then in any such
events the Escrow Agent is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgement or decree which it is advised by
legal counsel of its own choosing is binding upon it, and if the Escrow Agent
complies with any such order, writ, judgement, or decree, it shall not be liable
to depositor, or to any other person, firm or corporation by reason of such
compliance even
-2-
though such order, writ, judgement or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
(b) The Escrow Agent shall not be liable to the other parties hereto
for any of its own acts or omissions of any kind, except for its own gross
negligence. In no event shall the Escrow Agent be liable for indirect, punitive,
special or consequential damage or loss, even if the Escrow Agent has been
informed of the likelihood of such loss or damage and regardless of the form of
action.
(c) Notwithstanding any term in this Escrow Agreement to the contrary,
in no instance shall the Escrow Agent be required or obligated to distribute any
of the Offering Proceeds (or take other action that may be called for hereunder
to be taken by the Escrow Agent) sooner than two business days after it has
received the applicable documents required under this Escrow Agreement.
(d) LocatePLUS agrees to compensate the Escrow Agent in accordance with
the fee schedule attached as EXHIBIT A to this Agreement, and to reimburse the
Escrow Agent and Transfer Online on demand for all costs and expenses incurred
in connection with the administration of this Escrow Agreement or the escrow
created hereby or the performance or observance of its duties hereunder.
(e) LocatePLUS and the Underwriter shall jointly and severally
indemnify and hold harmless the Escrow Agent, its agents and employees against
any cost or expenses (including attorneys' fees and fees and costs associated
with any complaint in interpleader), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation arising out of or pertaining to this Escrow
Agreement or the administration of its duties hereunder (collectively, the
"Damages"), except to the extent such Damages are caused by the Escrow Agent's
gross negligence, bad faith or willful misconduct. The foregoing indemnification
and agreement to hold harmless shall survive the termination of this Escrow
Agreement.
(f) The Escrow Agent shall not have any ownership interest in the
Offering Proceeds deposited hereunder.
(g) The Escrow Agent may resign and be discharged from its obligations
hereunder by mailing written notice to LocatePLUS and the Underwriter of such
resignation specifying a date when such resignation shall take effect; PROVIDED,
HOWEVER, that no such resignation shall take effect until a successor escrow
agent, which shall be a bank, shall have been appointed and qualified and shall
have executed an escrow agreement substantially in the form hereof.
(h) In the event the Escrow Agent is notified of any dispute,
disagreement or legal action between the parties hereto (other than the Escrow
Agreement), or any third parties, relating to or arising in connection with the
Escrow Account, Assets or the performance of the Escrow Agent's duties under
this Agreement. Agent shall be authorized and entitled to suspend further
performance hereunder and to retain and hold the Offering Proceeds then in the
Escrow Account. The Escrow Agent may take no further action with respect thereto
until the matter has been fully resolved, as evidenced by written notification
signed by the parties and any other parties to such dispute, disagreement or
legal action.
-3-
(i) With regard to any litigation among the parties hereto, or if the
Escrow Agent reasonably believes, in its sole discretion that it may become
involved in litigation, Agent is authorized to deposit the Offering Proceeds
then held in the Escrow Account with the Clerk of [_____________] Court
("Court") and interplead the parties to this Agreement. Upon so depositing the
Offering Proceeds and filing its complaint in interpleader, the Escrow Agent
shall be completely discharged and released from all further liability or
responsibility under the terms hereof. If the Escrow Agent deposits said
Offering Proceeds as provided in this paragraph, the parties hereto, for
themselves, their heirs, successors and assigns, do hereby submit themselves to
the jurisdiction of the Court and do hereby appoint the Clerk of the Court as
their agent of service of all proceeds in connection with the proceeding
mentioned in this paragraph.
SECTION 5. MISCELLANEOUS.
(a) This Escrow Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns.
(b) This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
(c) The section headings contained in this Escrow Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Escrow Agreement.
(d) Any notice or other communication hereunder shall be in writing and
shall be deemed duly given two business days after it is sent by (i) registered
or certified mail, return receipt requested, postage prepaid, or (ii) a
nationally recognized overnight courier to the applicable address set forth
below (unless later updated) to the last known address of such party.
(e) This Escrow Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Massachusetts. Each of the Parties submits to the jurisdiction of any state or
federal court sitting in Boston, Massachusetts in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
MATTER WHATSOEVER ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(f) No amendment of any provision of this Escrow Agreement shall be
valid unless the same shall be in writing and signed by each of the parties
hereto. No waiver by any party of any default or misrepresentation hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default or misrepresentation hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
-4-
(g) Any term or provision of this Escrow Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
(h) The Escrow Agent shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include but
not limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.
(i) This Escrow Agreement shall terminate on the date on which the
Offering Proceeds have been distributed (or refunded) in their entirety in
accordance with the terms hereof.
[SIGNATURE PAGE FOLLOWS.]
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be effective as of the Closing Date.
LOCATEPLUS HOLDINGS CORPORATION
By: /s/ Xxx X. Xxxxxxxxx
-------------------------------------
Xxx X. Xxxxxxxxx
President and Chief Executive Officer
OFTRING & CO., INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx,
President
AMERICAN PACIFIC BANK, as ESCROW
AGENT
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior VP & Chief Financial Officer
TRANSFER ONLINE, INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------------
Xxxx Xxxxxxxxxx, President
-6-
EXHIBIT A
---------
Initial One-time Setup fee $500
On-going monthly fees $100
Wire Fees
- $15 per each incoming or outgoing wire
Deposited Item Returned $5 per item
Issuing of Cashier's Checks $5 per check
-7-
