PROCEEDS ESCROW AGREEMENT
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THIS PROCEEDS ESCROW AGREEMENT (the "Agreement") is made and entered into
this ____ day of _______________ 1997 by and between SUMMA METALS CORP., a
Nevada corporation (the "Company/Issuer") and Xxxxxx X. Xxxxxxx, 000 Xxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxx, XX 00000 (the "Escrow Agent").
Premises
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The Company proposes to offer for sale to the general public, up to
510,000 Units of Company Stock (the "Offering"), at an offering price of $6.00
per unit (the "Units'), in accordance with the registration provision of the
Small Business Investment Incentive Act of 1980, now contained in Section 19 of
the Securities Act of 1993, as amended; Rule 504 of Regulation D; and pursuant
to a Registration Statement on Form SB-2 (the "Registration Statement" filed
with the Securities and Exchange Commission.
Agreement
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NOW THEREFORE, the parties hereto agree as follows:
1. Until termination of this Agreement, all funds collected by the Company
and/or an Underwriter from subscriptions for the purchase of Units in the
subject offering shall be deposited promptly with the Escrow Agent, but in any
event no later than noon of the next business date following receipt.
2. Collections. All subscription payments (which payments shall be made
payable to Xxxxxx X. Xxxxxxx, Attorney Escrow Account for the benefit of Summa
Metals Corp.) received for Units by the Company and/or Underwriter, will be
transmitted to the Escrow Agent by the Company and/or Underwriter by noon of the
next business day following receipt by the Company and/or Underwriter. The
Company and/or Underwriter shall include a written account of sale, which shall
include the Investor's name and address, the number of Units purchased, the
amount paid therefor, social security number, taxpayer identification number,
and whether the consideration received was in the form of a check, draft or
money order ("Payment").
3. The Escrow Agent shall establish the Escrow Account, forward for
collection all Payments received by it and deposit all funds collected by it
into the Escrow Account. Any Payment received that is payable to a party other
then Xxxxxx X. Xxxxxxx, Attorney Escrow Account for the benefit of Summa Metals
Corp., and any payment returned unpaid to the Escrow Agent, shall be returned to
the Company and/or Underwriter. In the event Issuer rejects an Investor after
the Investor's Payment has been deposited into the Escrow Account, Issuer shall
certify in writing to the Escrow Agent the fact of such rejection, the name of
the investor so rejected, and the amount of Payment for Units made by such
Investor, and shall direct the Escrow Agent to return to such Investor a check
in the amount of such Payment, without deduction, including such investor's pro
rata share of any interest earned while such Investor's funds were on deposit;
provided, however, that if Payment by such Investor has been forwarded for
collection but funds on which have not been collected, the Escrow Agent shall
have no duty to make payment pursuant to this paragraph until receipt of such
Collected Funds by Escrow Agent. In the event Issuer rejects an Investor before
the Investor's Payment has been deposited in the Escrow Account, Issuer shall
direct Escrow Agent to return promptly the Investor's Payment, without interest,
directly to Investor.
4. Interest, Except to the extent that interest is payable to Investors
pursuant to Section 3 of this Agreement, Escrow Agent shall deliver to Issuer in
a single, lump-sum payment all interest earned on funds deposited in the Escrow
Account.
Except as provided in Section 3 of this Agreement, no interest shall be
earned by or payable to Investors. If interest is payable to Investors pursuant
to Section 3 of this Agreement, the amount of interest payable to each Investor
shall be calculated by Escrow Agent and provided to the Company and/or
Underwriter. Company and/or Underwriter shall file Form 1099's and any other
required reports in connection with the interest earned on the Escrow Account
and distributed to Investors.
5. Investments. Collected funds deposited into the Escrow Account shall be
invested only in a money market account at First National Bank of Long Island,
000 Xxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx. Issuer represents such fund is an
investment permitted under rule 15c2-4 of the Securities Exchange Act of 1934,
as amended.
6. Concurrently with transmitting funds to the Escrow Agent, the Company
and/or Underwriter shall also deliver to the Escrow Agent a schedule setting
forth the name and address of each subscriber whose funds are included in such
transmittal, the number of Units subscribed for, and the dollar amount paid, All
funds so deposited shall remain the property of the subscriber until the dollar
threshold is met. Until the threshold is reached, the subscribers funds held by
the Escrow Agent shall not be subject to any lien or charges by the Escrow
Agent, or judgments or creditors' claims against the Company and/or the
Underwriter.
7. If at any time prior to the expiration of the minimum offering period,
as specified in Paragraph 8, $780,000 has been deposited pursuant to this
Agreement, the Escrow Agent shall confirm the receipt of such funds to the
Company and/or Underwriter, and on written request of the Company, the Escrow
Agent shall promptly transmit the balance to the Company (such event is
hereinafter referred to as the "Closing"). Thereafter, the Escrow Agent shall
continue to accept deposits from the Company and/or Underwriter and transmit,
upon written request of the Company the balance to the Company until the
offering is terminated. The Company shall notify the Escrow Agent in writing of
the completion of the Offering and shall schedule a final closing for the final
disbursement and settlement of the balance of funds in the Offering.
8. If the Company and/or Underwriter have not deposited a minimum of
$780,00 in collected funds with the Escrow Agent on or before _________, the
Escrow Agent shall so notify the Company. Upon receipt by Escrow Agent of its
fee, Escrow Agent shall within ten days of such receipt promptly transmit to
those investor who subscribed for the purchase of Shares from the Company the
amount of money each such investor so paid with out interest. The Escrow Agent
shall furnish to the Company verification of refunds to all subscribers.
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9. If at any time prior to the termination of this escrow the Escrow Agent
is advised by the Securities and Exchange Commission, or any state securities
division, that a stop order has been issued with respect to the Registration
Statement, the Escrow Agent shall, upon receipt of its fee, thereon return all
funds without interest to the respective subscribers.
10. It is understood and agreed that the duties if the Escrow Agent are
entirely ministerial, being limited to receiving monies from the Company and/or
Underwriter and holding and disbursing such monies in accordance with this
Agreement.
11. The Escrow Agent is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, geniuses, or validity of any instrument
deposited with it, or with respect to the form or execution of the same, or the
identity, authority, or rights of any person executing or depositing the same.
12. The Escrow Agent shall not be required to take or be bound by notice of
any default of any person or to take any action with respect to such default
involving any expense or liability, unless notice in writing is given to any
officer of the Escrow Agent of such default by the undesigned, or any of them,
unless it is indemnified in manner satisfactory to it against any expense or
liability arising therefrom.
13. The Escrow Agent shall not be liable for acting on any notice, request,
waiver, consent, receipt, or other paper or document believe by the Escrow Agent
to be genuine and to have been signed by the proper party or parties.
14. The Escrow Agent shall not be liable for any error of judgment or for
any act done or step taken or omitted by it in good faith, or for any mistake of
fact or law, or for having anything which it may do or refrain from doing in
connection herewith, except its own willful misconduct.
15. The Escrow Agent shall not be answerable for the default or misconduct
of any agent, attorney or employee appointed by it if such agent, attorney or
employee shall have been selected with reasonable care.
16. The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the consideration of the foregoing instructions or the
Escrow Agent's duties hereunder and the Escrow Agent shall incur no liability
and shall be fully protected in acting in accordance with the opinion and
instructions of such counsel.
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17. In the event of any disagreement between the undersigned, or any of
them, the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and/or demands being made in
connection with or for any papers, money or property involved herein or affected
hereby, the Escrow Agent shall be entitled at its option to refuse to comply
with any such claim or demand so long as such disagreement shall continue and,
in so refusing, the Escrow Agent shall not be or become liable to the
undersigned or any of them or to any person named in the foregoing instructions
for the failure or refusal to comply with such conflicting or adverse demands,
and the Escrow Agent shall be entitled to continue to so refrain and refuse to
so act until:
(a) The rights of adverse claimants have been finally adjudicated in a
court assuming and having jurisdiction of the parties and the money, papers and
property involved herein or affected hereby; and/or
(b) All differences shall have been adjusted by agreement and the Escrow
Agent shall have been notified thereof on writing signed by all of the person
interested.
18. The fee of the Escrow Agent is $2,500. The fee agreed upon for services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by this Agreement; however, in the event that the
conditions of this agreement are not fulfilled, or the Escrow Agent renders any
material service not contemplated by this Agreement, or there is any assignment
of interest in the subject matter of this Agreement, or any material
modification thereof, or if any material controversy arises hereunder, or the
Escrow Agent is made a party to or justifiably intervenes in any litigation
pertaining to this Agreement, or the subject matter hereof, the Escrow Agent
shall be fully reimbursed for all such extraordinary expenses, including
reasonable attorney's fees, including the reasonable value of legal services
rendered by the Escrow Agent in his capacity as attorney in connection with such
services, and all extraordinary expenses shall be paid by the Company.
19. Resignation. Escrow Agent may resign at any time and be discharged from
its duties as Escrow Agent hereunder by giving the other parties hereto at least
fifteen (15) days notice hereof. As soon as practicable after the resignation,
Escrow Agent shall turn over to a successor escrow agent all monies and property
held hereunder (less such amount as Escrow Agent is entitled to retain) upon
presentation to Escrow Agent of the document appointing the new escrow agent and
its acceptance of such appointment. If no successor Escrow Agent is to appointed
within a thirty day period following such notice of resignation, Escrow Agent
shall deposit the monies and property with the Superior Court of the State of
Arizona in and for the County of Maricopa or United States District Court for
the District of Arizona, as it deems appropriate.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers, as of the date first
above written.
SUMMA METALS CORP.
0000 Xxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxx 00000
(000) 000-0000
By: /s/ Xxxxxxx X. Xxxxxxx, President
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Xxxxxxx X. Xxxxxxx, President
/s/ Xxxxxx X. Xxxxxxx, as Escrow Agent
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Xxxxxx X. Xxxxxxx, as Escrow Agent
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