IPO ESCROW AGREEMENT
THIS AGREEMENT is entered into between RODI POWER SYSTEMS, INC.
("RODI"), a Washington Corporation, 0000 Xxxxx 000xx Xxxxxx, Xxxx, Xxxxxxxxxx
00000 and First Trust National Association, a Division of U.S. Bank ("Escrow
Agent"), 000 Xxxxx Xx., Xxxxx 0000, Xxxxxxx, XX 00000.
RECITALS
X. XXXX has filed an SB-2 registration with the Securities and
Exchange Commission and intends to offer Units of securities consisting of
one share of RODI Common Stock and one Warrant to purchase an additional
share of RODI Common Stock in an Initial Public Offering (the "Offering")
scheduled to take place in a ninety (90) day period (the "Offering Period")
beginning in September, 1997 with an option to extend the Offering Period by
an additional ninety (90) days. The Offering is a minimum/maximum best
efforts offer with a minimum of 800,000 Units at $4.25 per Unit and a maximum
of 5,000,000 Units at $4.25 per Unit. The minimum purchase allowed is 100
units for $425.00.
B. If the minimum offer of $3,400,000 is not achieved during the
original or extended Offering Period and the Offering is not amended to
reduce the minimum offer amount, all funds obtained from potential investors
will be returned, interest free, to the potential investors and the Offering
will be canceled. Escrow Agent shall promptly return the funds which have
been deposited in an Escrow Account, ("Escrow"), to the potential investors
in the amount and to the addresses as shown on its records. To accumulate
investor funds in determination of achieving the minimum Offering, an escrow
account must be established to receive direct deposit and control of these
funds. All funds received from the Offering will be deposited in Escrow until
the Offering is completed and closed or the Offering is canceled due to
failure to achieve the minimum amount.
AGREEMENT
In consideration of the premises and other good and valuable
consideration, the parties hereto agree as follows:
1. DEPOSIT OF FUNDS. Escrow Agent shall be authorized to receive and
hold in escrow any and all funds remitted by Securities Broker/Dealers who
are depositing funds pursuant to securities sales under the Offering. Such
funds shall at all times be held for the purposes, and be subject to the
terms and conditions, set forth in this Agreement.
2. ESTABLISHING ACCOUNT. Escrow Agent shall receive and hold all funds
received from the Offering in a special, non-interest bearing escrow account
entitled "RODI IPO Escrow" ("Escrow"). The Securities Broker/Dealers shall
cause all checks received by them for deposit in Escrow to be made payable to
"RODI IPO Escrow" account #00000000 and sent directly to: Escrow Agent, First
National Trust Association, 000 Xxxxx Xx., Xxxxx 0000, Xxxxxxx, XX 00000 no
later than noon of the next business day after receipt. As deposits are made
in Escrow, Securities Broker/Dealers shall cause to be delivered to Escrow
Agent with each such deposit a list showing the name, address, and tax
identification number of each potential investor. Escrow Agent shall keep a
current list of the persons who have subscribed for the offering and
deposited money, showing name, date, address and amount of each deposit and
remit this list and a copy of each check deposited to RODI upon receipt of
written notice of closure or cancellation of the Offering. All funds so
deposited shall be held in escrow by Escrow Agent solely for the purposes
hereof until notified that the Offering has been closed or canceled and shall
in no event be deemed an asset of RODI or be subject to any judgment,
attachment, seizure, garnishment, lien or claim of liability asserted by any
third party until the minimum Offering amount of $3,400,000 has been
deposited in Escrow.
3. INVESTMENT OF FUNDS. Funds deposited in Escrow may not be invested
by Escrow Agent until the minimum Offering amount of $3,400,000 has been
deposited in Escrow. After the minimum has been deposited, Escrow funds will
be invested in a First Bank Money Market Fund. Funds deposited in Escrow may
only be invested according to SEC RULE 15c:2-4. Interest earned on Escrow
funds will be re-invested with the Escrow funds. RODI will provide Escrow
Agent with proper tax reporting forms prior to the disbursement of interest.
4. DISTRIBUTION OF FUNDS. Upon closing or cancellation of the Offering,
RODI shall provide written directions to Escrow Agent with respect to any and
all distributions of funds from Escrow. Escrow Agent shall comply with, and
be authorized to rely solely upon, any and all such written directions
verified by any two (2) signatures of the following members of RODI's
management: Xxxxx X. Spain, Xxxxxxx X. Xxxxxx or Xxxxxxx X. Xxxxxxx. Such
verification shall include the statement that the action being directed has
been duly approved by a majority vote of the Board of Directors of RODI.
Escrow Agent shall have no obligation to make any further inquiry or
verification of its authority to act and proceed. If the minimum amount of
the Offering is not obtained, RODI will direct the Escrow Agent to terminate
the Escrow and refund the amounts deposited to the potential investors
according to Escrow Agents records of deposits. RODI may elect to request
transfer of Escrow funds by Fedwire, subject to the conditions stated herein.
Parties
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hereto agree that the wire transfer security procedures identified on the
attached Exhibit A to this agreement are commercially reasonable. Parties
hereto further agree that Escrow Agent should use these procedures to detect
unauthorized wire transfer payment requests prior to executing such requests
and further agree that any request acted upon by Escrow Agent in compliance
with these security procedures, whether or not authorized, shall be treated
as an authorized request. Parties hereto agree that Escrow Agent has the
right to change the wire transfer security procedures from time to time and
that use of any changed procedures evidences the acceptance of the commercial
reasonability of such change by the parties hereto.
5. ESCROW FEES AND EXPENSES. Escrow Agent shall be paid for services
hereunder in accordance with the attached schedule (Exhibit B). Payments of
all fees shall be the responsibility of RODI to pay within ten (10) days of
receipt of invoice from Escrow Agent. In the event the Escrow Agent is made a
party to litigation with respect to the property held hereunder, or brings
action in interpleader or in the event that the conditions of this escrow are
not promptly fulfilled, or Escrow Agent is required to render any service not
provided for in this agreement, or there is assignment of interest of the
Escrow or any modification thereof, Escrow Agent shall be entitled to
reasonable compensation for such extraordinary services and reimbursement for
all fees, costs, liability and expenses, including attorney fees.
6. CONFLICTING DEMANDS OR INSTRUCTIONS. If Escrow Agent at any time
receives or becomes aware of any conflicting demands or instructions from any
party, or shall be uncertain concerning how to proceed, Escrow Agent shall
have the right to refrain from or discontinue any disbursement of funds or
other acts on its part until such conflict or uncertainty is resolved to its
satisfaction, and Escrow Agent shall not be or become liable to RODI, or to
any shareholder or other person, either for its failure or refusal to act or
for its proceeding to act notwithstanding such conflict or uncertainty.
Escrow Agent shall have the further right to commence or defend, at the
expense of RODI and the funds deposited in Escrow, any action or proceedings
for the determination of the conflict or uncertainty, including (without
limitation) any suit in interpleader brought by Escrow Agent for the purpose
of having the respective rights of the parties and other claimants
adjudicated. Except for Escrow Agent's negligence or willful misconduct,
Escrow Agent shall not be liable for any action taken or omitted in good
faith and believed to be authorized by this Agreement or by RODI.
7. RELIANCE. Escrow Agent may rely upon and shall be protected in acting
upon or complying with the written directions of RODI provided for herein.
Escrow Agent shall have no duties or obligations other than those set forth
herein or otherwise provided by law. It is understood that Escrow Agent has
not passed upon or approved in any way the merits of the Offering or any
investment in RODI, and Escrow Agent shall not be called upon to advise any
shareholder or investor as to the wisdom of investing in the Offering or of
investing in RODI. The name of the Escrow Agent will not be used in any way
that may infer its association with the Offering other than that of a legal
depository of funds pursuant to this Agreement.
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8. RESIGNATION AND TERMINATION. Escrow Agent may, upon providing fifteen
(15) days' written notice, resign its position and terminate its liabilities
and obligations hereunder. In the event Escrow Agent is not notified within
fifteen (15) days of the Successor Escrow Agent, Escrow Agent shall be
entitled to transfer all funds and assets to a court of competent
jurisdiction with a request to have a successor appointed. Upon filing such
action and delivering such assets, Escrow Agent obligations and
responsibilities shall cease. Similarly, RODI may also terminate Escrow Agent
and appoint a Successor Escrow Agent by providing fifteen (15) days' written
notice to Escrow Agent.
9. INDEMNIFICATION. RODI shall indemnify and hold harmless Escrow Agent,
its directors, officers, employees and agents, from and against any and all
liability, demands, claims, actions, losses, interest, costs of defense and
expense (including reasonable attorney's fees) which arise out of or in any
way relate to Escrow Agent's performance of this Agreement. Except for Escrow
Agent's negligence or willful misconduct, this indemnification and hold
harmless shall continue after termination of this Agreement.
10. NOTICES. All notices, requests, demands, written instructions and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received only
when (a) delivered to Escrow Agent,(b) when deposited in the United States
mails, registered or certified mail postage pre-paid , return receipt
requested addressed as set forth herein, or(c) sent by facsimile transmission
to the other party and confirmed as received by the other party. If to First
Trust National Association: 000 Xxxxx Xx, Xxxxx 0000, Xxxxxxx, XX 00000,
(000) 000-0000. If to RODI Power Systems, Inc. : X.X. Xxx 000, Xxxxx
Xxxxxx, XX 00000, (000) 000-0000.
11. MISCELLANEOUS.
11.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between RODI and Escrow Agent pertaining to the subject matter
hereof and may not be modified except in writing signed by both parties
hereto.
11.2 BINDING AGREEMENT. The foregoing provisions shall be binding
upon the assigns, successors, personal representatives and heirs of the
parties hereto, and shall be effective as of the day accepted by Escrow
Agent. Any corporation into which Escrow Agent may merge, sell or transfer
its escrow business and assets shall automatically be and become Successor
Escrow Agent hereunder and vested with all powers as was its predecessor,
without the execution or filing of any instruments, or any further act, deed
or conveyance on the part of the parties hereto.
11.3 NON-ASSIGNMENT. Neither party hereto may assign this Agreement
without the prior written consent of the other party.
11.4 GOVERNING LAW AND VENUE. This Agreement shall be construed and
enforced in accordance with the laws of the State of Washington. Proper
jurisdiction and venue for any action arising hereunder shall be in the
Superior Court, King County, State of Washington.
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11.5 COUNTERPARTS. This Agreement may be executed in counterpart with
each counterpart, when taken together, constituting one and the same
agreement.
11.6 BROKERAGE CONFIRMATIONS. The parties acknowledge that to the
extent regulations of the Comptroller of Currency or other applicable
regulatory entities grant a right to receive brokerage confirmations of
security transactions of the Escrow, the parties waive receipt of such
confirmations to the extent permitted by law. The Escrow Agent shall furnish
a statement of security transactions on its regular monthly reports.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of this____ day of ___________,1997.
FIRST TRUST NATIONAL ASSOCIATION RODI POWER SYSTEMS., INC.
By: Xxxxx Xxxxxxx BY: /s/ Xxxxx X. Spain
----------------------------- ------------------------------
Xxxxx X. Spain,CEO
ITS: Escrow Officer
----------------------------
BY: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx,President
BY: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx,CFO
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EXHIBIT A
Wire Transfer Security Procedures
Requester is defined as RODI in the Escrow Agreement
1. REQUEST IS MADE IN WRITING
a. Escrow Agent verifies signature vs. authorized list of representatives
for Requester.
2. REQUEST IS MADE IN PERSON
a. Requester prepares a written, signed request.
b. Escrow Agent verifies signature vs. authorized list of representatives
for Requester.
3. REQUEST IS MADE BY PHONE
a. Requester provides Escrow Agent with their name, the account number and
the detailed request.
b. Escrow Agent confirms that the person making the request is an authorized
representative for the Requester.
c. Escrow Agent uses call back verification to reconfirm the request.*
d. Requester sends original follow-up request by mail.*
* If request changes the amount and/or message only, on an instruction by
Requester's authorized representative which Requester has previously
communicated to Escrow Agent in writing and Escrow Agent has such written
instruction on file, Escrow Agent is not required to perform the call back
verification and Requester need not follow up the request by mail.
Escrow Agent has the right to change the Wire Transfer Security Procedures
from time to time and the Requester's use of any changed procedures evidences
the acceptance of the commercial reasonability of such changes.
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EXHIBIT B
FIRST TRUST NATIONAL ASSOCIATION
Schedule of Fees and Escrow Services
RODI POWER SYSTEMS, INC. ESCROW
MINIMUM ACCEPTANCE FEE: $1,500.00
ACCOUNT MAINTENANCE FEE: $5,500.00
EXTRAORDINARY SERVICES:
If the Escrow is required to assume duties or responsibilities of
an unusual nature not provided for in the Indenture or otherwise
set forth in this schedule, to amend existing documents or
restructure the financing, to incur legal fees and expenses or to
perform services during a default, a reasonable charge will be made
based upon the nature of the service and the responsibility
involved. Such charges, (other than attorney's fees and expenses
which will be billed at cost), will be billed at the Escrow's
hourly rate then in effect or assessed at a flat fee, at the
Escrow's option.
First Trust National Association reserves the right to refer any or all
escrow documents for legal review prior to execution. Legal fees (billed on
an hourly basis) and expenses for this service will be to, and paid by, the
customer. Where appropriate and when requested by the customer, First Trust
National Association will provide advance estimates of these legal fees.
Acceptance fees, annual maintenance fees and Final Release of Proceeds Review
are based on appraisal of work and time spent.
For investments made through First American Funds-managed mutual funds, there
is no investment fee. First Bank N.A.'s fees and charges as investment
advisor, shareholder servicing agent, transfer agent and custodian are
disclosed in the applicable prospectus.
Initial Acceptance Fees and first year Annual Account Maintenance Fees are
due and payable upon execution of the escrow documentation. Thereafter,
annual account maintenance fees are payable in advance. Annual account
maintenance fees will not be prorated.
Fees are to be paid before escrowed funds are released.
First Trust National Association shall have a first and paramount lien
against all property placed in escrow for payment of its costs, charges, fees
and expenses (including, without limit, reasonable attorney's fees), in the
event of a dispute or misunderstanding.
All fees are subject to Washington State sales tax of 8.6%.
Additional fees may be charged in a reasonable amount for any unusual or
extraordinary services, including investment management services rendered and
not covered by this fee schedule.
Fees are subject to change from time to time, consistent with changes made by
First Trust National Association to its standard escrow fee schedule.
Note: Final account acceptance is subject to review of documents and
compliance with First Trust National Association's account acceptance
procedures.
Dated: August 28, 1997
/s/ Xxxxxxx X. Xxxxxxx Chief Financial Officer
-------------------------------- ------------------------------------
Accepted by Title
XXXXXXX X. XXXXXXX 8/29/97
-------------------------------- ------------------------------------
Print Name Date
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RODI POWER SYSTEMS, INC.
LOCKUP AGREEMENT
EXHIBIT A
RODI power Systems, Inc. ("RODI"), and Intrepid Securities, Inc.
("Underwriter"), being in full agreement with the terms and conditions of the
Underwriting Agreement for the Registered SB-2 Offering, (the "Offering"), of
RODI Common Stock, (the "Stock") and related Warrants, do hereby enter into
the following Lockup Agreement, (the "Agreement"):
1. The Officers and Directors of RODI, with regard to all RODI stock
beneficially owned by them prior to the closing date of the Offering, agree
not to directly or indirectly agree or offer to sell, transfer, assign,
distribute, grant an option for purchase or sale of, pledge, hypothecate or
otherwise encumber or dispose of these shares according to the terms of this
Agreement.
2. The total period of the Agreement will be two (2) years, all of which is
subject to release at any time by written consent at the discretion of the
Underwriter.
3. Absolute lockup will be twelve (12) months from the Effective Date of the
Offering.
4. After twelve (12) months:
a. Thirty Percent (30%) of the total stock subject to this Agreement
will be released subject only to applicable SEC trading restrictions.
Allocation of the released stock among the Officers and Directors will
be per mutual agreement. All trading of the released stock must be
placed through the Underwriter or their designated participating dealer.
b. After the released stock has been allocated among the
Officers and Directors, Fifty Percent (50%) of each Officer's and
Director's stock remaining in lockup may be used as collateral in a
margin account. Fifty Percent (50%) must be reserved to cover call
requirements. The margin account and its related reserve must be
placed with the Underwriter during the remaining lockup period. If
the Underwriter is unable to fully fund the margin account; the
Officers and Directors are free to place their margin account with a
Broker/Dealer of their choice.
5. After twenty four (24) months all lockup restrictions will automatically
be removed and this Agreement will end.
Signed: Dated Sept 8, 1997
RODI Power Systems, Inc. Intrepid Securities, Inc.
/s/ Xxxxx Spain
---------------------------------- ------------------------------------
Xxxxx Spain/CEO Xxxxxxx Xxxxx/President
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx/President
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx/CFO
----------------------------------
Xxxxxx X. Xxxxxx/VP
/s/ Xxxxxxxxx X. Spain
----------------------------------
Xxxxxxxxx X. Spain/VP
/s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx/Director
----------------------------------
Xxxxx Xxx/Director
