ESCROW AGREEMENT
EXHIBIT 10.11
ESCROW AGREEMENT, effective as of the day of August, 2004, by and among the shareholders listed on Exhibit A to this Escrow Agreement (the “Shareholders” or “Shareholder”) of INTEGRATED FINANCIAL SERVICES, INC., a Colorado corporation (the ‘Company”), X.X. XXXXXX & COMPANY, L.L.C. (the “Representative”) and CORPORATE STOCK TRANSFER, INC. (the “Escrow Agent”).
WHEREAS, the Shareholders are the record and beneficial owners of certain shares of the Company’s common stock (“Common Stock”) all as more fully reflected on Exhibit A to this Escrow Agreement; and
WHEREAS, the Company and the Representative of the several underwriters (the “Underwriters’) intend to enter into an underwriting agreement (the “Underwriting Agreement”) pursuant to which the Company will sell Common Stock in a public offering pursuant to the registration provisions of the Securities Act of 1933, as amended (the “1933 Act”); and
WHEREAS, as a condition to closing the proposed public offering of the Company (the “Offering”), the Representative has required the Shareholders to deposit an aggregate of 250,000 shares of Common Stock owned by such Shareholders in Escrow with the Escrow Agent as reflected on Exhibit A (the “Escrow Shares”); and
WHEREAS, the Shareholders wish to deposit the Escrow Shares in Escrow in order to fulfill the requirements of the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants, terms and conditions hereinafter set forth, the parties to this Escrow Agreement agree as follows:
SECTION 1. DESIGNATION AND DEPOSIT OF ESCROW SHARES.
(a) The Escrow Shares to be deposited pursuant to this Escrow Agreement consist of 250,000 shares of Common Stock of the Company and are owned of record as of the date of this Escrow Agreement by the Shareholders identified on Exhibit A.
(b) On the date on which the Securities and Exchange Commission declares the Company’s Registration Statement on Form SB-2 (Reg. No. 333- ) effective under the 1933 Act (the “Effective Date”) , the Shareholders shall deliver to the Escrow Agent any and all certificates representing the Escrow Shares and a stock power endorsed in blank with a medallion guarantee. Promptly after the Effective Date, the Escrow Agent shall deliver a receipt therefor and, if requested by a Shareholder, a new certificate representing each Shareholder’s share of Common Stock represented by the certificates delivered but which are not subject to this Escrow Agreement.
SECTION 2. TITLE OF ACCOUNT. All certificates representing the Escrow Shares delivered to the Escrow Agent pursuant to this Agreement shall be deposited on the Effective Date by the Escrow Agent in an account designated substantially as follows: “Integrated Financial Services, Inc. Escrow Share Account” (the “Escrow Account”).
SECTION 3. TRANSFER OF ESCROW SHARES DURING ESCROW PERIOD. During the Escrow Period (as defined below) none of the Escrow Shares deposited in the Escrow Account shall be sold, pledged, hypothecated or otherwise transferred or delivered out of the Escrow Account except transfers by operation of law.
SECTION 4. DURATION OF ESCROW PERIOD.
(a) The Escrow Period shall commence on the Effective Date and shall terminate on the earlier of the date on which all Escrow Shares have been returned to the Shareholders pursuant to Sections 6(a), 6(b), 6(c) or 6(d) below.
(b) This Agreement shall be of no force or effect in the event the Underwriting Agreement is not executed on the Effective Date in accordance with its terms.
SECTION 5. RECEIPT OF DISTRIBUTIONS AND DIVIDENDS. During the term of the Escrow Period, if the Company issues any distributions, dividends, rights or other property with respect to the Common Stock, then, in such event, the Company shall be authorized to send evidence of such distributions, dividends, rights or other property directly to the Escrow Agent, which is hereby authorized to hold and retain possession of all such evidences of distributions, dividends, rights or other property until termination of the Escrow Period in accordance with Section 6 below. At such time as the Escrow Shares are distributed to the Shareholders pursuant to Sections 6(a), 6(b), 6(c) or 6(d) below, then the Escrow Agent will distribute evidences of such distributions, dividends, rights, or other property in the form the Escrow Agent received such distributions, dividends, rights, or other property from the Company. If the Company recapitalizes, splits or combines its shares, such shares shall be substituted on a pro rata basis for the Escrow Shares. The Company will notify the Escrow Agent of the occurrence of the events listed in this section.
SECTION 6. RELEASE AND DELIVERY OF ESCROW SHARES.
(a) In the event the Escrow Agent receives written notice from the Representative and the Company confirming that the Company had gross revenues of $15,000,000 and after tax net income of $3,000,000 in fiscal 2005, the Escrow Agent shall return to each Shareholder a certificate for his portion of the Escrow Shares as are listed on Exhibit A. The Escrow Agent shall return the Escrow Shares only to the person or entity named as the holder of record in Exhibit A to this Escrow Agreement, as modified by any transfers made pursuant to Section 3 above.
(b) In the event the Escrow Agent receives written notice from the Representative and the Company confirming the Company had gross revenues of $40,000,000 after tax net income of $12,000,000 in fiscal year 2006, the Escrow Agent shall return to each Shareholder a certificate for his portion of the Escrow Shares as are listed on Exhibit A. The Escrow Agent shall return each certificate only to the person or entity named as the holder of record in Exhibit A hereto, as modified by any transfers made pursuant to Section 3 above.
(c) In the event the Escrow Agent receives written notice from the Representative and the Company confirming that the Company has been merged or consolidated, or has executed a share exchange, with another company which is the survivor to the transaction
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or in which the stockholders of the Company own less that 50% of the outstanding capital stock of the surviving entity, or that the Company has sold all or substantially all of its assets and the relevant transaction was approved by the holders of a majority of the Company’s outstanding voting securities exclusive of the Escrow Shares held hereunder, the Escrow Agent shall contemporaneously with the closing of any such transaction return to each Shareholder a certificate for his share of the Escrow Shares as are listed on Exhibit A. The Escrow Agent shall return each certificate only to the person or entity named as the holder of record in Exhibit A hereto, as modified by any transfers made pursuant to Section 3 above.
(d) In the event none of the criteria for release specified in subparagraphs (a) , (b) or (c) above is reached by the Company, the Escrow Shares shall remain in the Escrow Account until a date that is three years from the Effective Date. Upon termination of the Escrow Period pursuant to the provisions of this Section 6(d), the Escrow Agent shall, as promptly as possible, return to each Shareholder a certificate for its share of the Escrow Shares as are listed on Exhibit A. The Escrow Agent shall return each certificate only to the person named as the holder of record in Exhibit A hereto, as modified by any transfers made pursuant to Section 3 above.
(e) At such time as the Escrow Agent shall have returned all Escrow Shares as provided in this Section, the Escrow Agent shall be discharged completely and released from any and all further liabilities and responsibilities under this Escrow Agreement.
(f) The determination of the criteria described above shall be solely the responsibility of the Company and the Representative, and the Escrow Agent shall have no liability or responsibility therefor.
SECTION 7. VOTING RIGHTS. During the Escrow Period, each Shareholder, or any transferee receiving all or a portion of the Escrow Shares of such Shareholder pursuant to Section 3 of this Escrow Agreement, shall have the right to vote such Escrow Shares (to the extent the Escrow Shares have voting rights) at any and all shareholder meetings without restriction.
SECTION 8. LIMITATION OF LIABILITY OF ESCROW AGENT. In acting pursuant to this Escrow Agreement, the Escrow Agent shall be protected fully in every reasonable exercise of its discretion and shall have no obligation hereunder to either the Shareholders or to any other party except as expressly set forth herein. In performing any of its duties hereunder, the Escrow Agent shall not incur any liability to any person for any damages, losses or expenses, except for willful default or negligence and it shall, accordingly, not incur any such liability with respect to (1) any action taken or omitted in good faith upon advice of its counsel, counsel for the Company or counsel for the Representative given with respect to any questions relating to the duties and responsibilities of the Escrow Agent under this Agreement, and (2) any action taken or omitted in reliance upon any instrument, including written notices provided for herein, not only to its due execution and validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which the Escrow Agent shall in good faith believe to be genuine, to have been signed and presented by a proper person or persons and to be in compliance with the provisions of this Agreement.
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SECTION 9. INDEMNIFICATION. The Company, the Representative and the Shareholders shall indemnify and hold harmless the Escrow Agent against any and all losses, claims, damages, liabilities and expenses, including reasonable costs of investigation and counsel fees and disbursements, which may be imposed upon the Escrow Agent or incurred by Escrow Agent in connection with its acceptance of appointment as Escrow Agent or the performance of its duties hereunder, including any litigation arising from this Escrow Agreement or involving the subject matter of this Escrow Agreement.
SECTION 10. PAYMENT OF FEES. The Company shall be responsible for all reasonable fees and expenses of the Escrow Agent incurred by it in the course of performing under this Escrow Agreement.
SECTION 11. CHANGE OF ESCROW AGENT. In the event the Escrow Agent notifies the Company and the Representative that it desires to terminate its duties as Escrow Agent, or in the event the Escrow Agent files for protection under the United States Bankruptcy Code or is liquidated or ceases operations for any reason, the Company and the Representative shall have the right to jointly designate a replacement Escrow Agent who shall succeed to the rights and duties of the Escrow Agent hereunder. Any such replacement Escrow Agent shall be a trust or stock transfer company experienced in stock transfer, escrow and related matters and shall have a minimum net worth of $5 million. Upon appointment of such successor Escrow Agent, the Escrow Agent shall be discharged from all duties and responsibilities hereunder.
SECTION 12. NOTICES. All notices, demands or requests required or authorized hereunder shall be deemed given sufficiently if in writing and sent by registered mail or certified mail, return receipt requested and postage prepaid and by facsimile or cable:
In the case of the Representative to: |
X.X. Xxxxxx & Company, L.L.C. |
0000 XXX Xxxxxxx, Xxxxx 000 |
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000 |
Attention: Xxxxx X. Xxxx, Director of Investment Banking, Denver |
With a copy to (which shall not constitute notice): |
Xxxx Xxxxx LLP |
0000 Xxxxxxxxxxx Xxxxxx, #0000 |
Xxxxxx, Xxxxxxxx 00000 |
Attention: Xxxxx X. Xxxx, Esq. |
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In the case of the Escrow Agent to: |
Corporate Stock Transfer, Inc. |
0000 Xxxxxx Xxxxx Xxxxx |
Xxxxxx, Xxxxxxxx 00000 |
Attention: Xxxxxxx X. Xxxx, President |
In the case of the Company to: |
Integrated Financial Systems, Inc. |
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000 |
Xxxxxxxxx Xxxxxxx, XX 00000 |
Attention: Xxxx X. Xxxxxxx, President |
With a copy to (which shall not constitute notice): |
Xxxxx & Xxxxxx, P.C. |
0000 Xxxxxxxx, 00xx Xxxxx |
Xxxxxx, Xxxxxxxx 00000 |
Attention: Xxxx X. Xxxxxxx, Esq. |
In the case of the Shareholders, to the addresses on the records of the Escrow Agent.
SECTION 13. COUNTERPARTS. This Escrow Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same Escrow Agreement. Facsimile signatures shall be accepted as original signatures for all purposes.
SECTION 14. GOVERNING LAW. The validity, interpretation and construction of this Escrow Agreement and of each part hereof shall be governed by the laws of the State of Colorado.
SECTION 15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between the parties hereto in reference to all the matters herein agreed upon.
IN WITNESS WHEREOF, the Shareholders, the Company, the Representative and the Escrow Agent have executed this Escrow Agreement to be effective as of the day and year first above written.
| CORPORATE STOCK TRANSFER, INC.: | ||||
| By: | ||||
| Title: | ||||
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| INTEGRATED FINANCIAL SERVICES, INC. | ||||
| By: | ||||
| Xxxx X. Xxxxxxx, President | ||||
| X.X. XXXXXX & COMPANY, L.L.C.: | ||||
| By: | ||||
| Xxxxx Xxxx, Director of | ||||
| Investment Banking, Denver | ||||
| THE SHAREHOLDERS: | ||||
| Xxxx X. Xxxxxxx | ||||
| Xxxxxx X. Xxxxxxx | ||||
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EXHIBIT A
TO ESCROW AGREEMENT
| NAME | TOTAL SHARES | ||||
Xxxx X. Xxxxxxx
|
|||||
Xxxxxx X. Xxxxxxx
|
|||||
TOTAL:
|
250,000 | ||||
