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EXHIBIT 10.1
FORM OF ESCROW AGREEMENT
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ESCROW AGREEMENT
THIS AGREEMENT made this ____ day of February, 1999 between XXXX.XXX,
INC., a Delaware corporation, having a principal place of business located at 0
Xxxxxxxx Xxxxx Xxxxxx , Xxxxx 000, Xxxxxxxx, XX 00000 ("Efox"), and U.S. Trust
Company of New York, a Trust company chartered by the New York State Banking
Commission, having a principal place of business located at NY, NY ("Escrow
Agent", and collectively with Efox referred to as the "Parties").
WHEREAS, Efox intends to file a registration statement on Form SB-1
with the Securities and Exchange Commission and with the various states to
offer not less than $1,000,000 nor more than $6,000,000 of securities (the
"Offering"); and
WHEREAS, the Offering provides, among other terms, that unless and
until one million dollars are received from the Offering, it shall not close
and all funds delivered by investors, plus interest, shall be returned to the
investors; and
WHEREAS, once the minimum Offering has been obtained and disbursed,
the additional Offering proceeds are to be disbursed to Efox on a monthly
basis; and
WHEREAS, Efox desires to have said Offering proceeds received,
invested, safeguarded and disbursed by an independent, trust company; and
WHEREAS, Escrow Agent is an independent trust company and is willing
to serve Efox under the terms of the Offering and this Agreement;
NOW THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, receipt of which is
hereby acknowledged, the Parties hereto agree as follows:
1. Definitions.
a. Business Day: Shall mean any day except Saturday, Sunday, a
legal holiday in the District of Columbia, or a day on which banking
institutions in the State of New York are authorized or required by Law or
Executive Order to be closed.
b. Escrow Account: Shall mean an interest bearing demand deposit
account established at a commercial banking institution or other financial
services institution located in the State of
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New York whose accounts are insured by the Federal Deposit Insurance
Corporation, the Securities Investors Protection Corporation, or any successor
agency thereto.
c. Escrow Agent: Shall mean U.S. Trust Company of New York.
d. Escrowed Funds: Shall mean the Offering proceeds, including
interest earned on said cash balances, if any, held in the Escrow Account
pursuant to this agreement. To the extent that the Offering does not raise one
million dollars by the time required in the Offering or any extensions thereof,
all Escrowed Funds and all interest earned thereon, shall be returned to the
investors. To the extent the Offering raises one million or more dollars, the
interest earned on all of the proceeds shall be disbursed to Efox for its use.
e. Maximum Offering Proceeds: Shall mean Six Million Dollars US
($6,000,000).
f. Minimum Offering Proceeds: Shall mean One Million Dollars
US($1,000,000).
g. Offering: Shall mean Efox's registration statement on Form
SB-1 filed with the Securities and Exchange Commission and the various states
which provides for the offer and sale of securities to raise a minimum of one
million dollars and a maximum of six million dollars. Said Offering may
conducted for a period of 24 months from its effective date.
All terms not otherwise defined herein shall have the meanings set
forth in the Offering.
2. Creation of New Escrow Accounts. Upon receipt of the Escrowed Funds
Escrow Agent shall deposit said funds into the Escrow Account.
3. Terms of Escrow.
a. Delivery of Offering Proceeds. Investors shall be directed to
deliver their investment proceeds directly to Escrow Agent during the term of
the Offering. Escrow Agent shall collect and account for all Offering proceeds
on a daily basis, and shall provide Efox with daily reports of the incoming
proceeds.
b. Release of Escrowed Funds to Efox. Within one (1) Business
Day after receipt by Escrow Agent of the Minimum Offering Proceeds, Escrow
Agent shall disburse the Escrowed Funds being held in the Escrow Account to
Efox. Thereafter, Escrow Agent shall disburse the Escrowed Funds to Efox on a
monthly basis. Once the Maximum Offering Proceeds have been received and
disbursed by Escrow Agent to Efox, this Agreement shall be an terminated.
c. Failure to achieve the Minimum Offering Proceeds. In the
event that The Minimum Offering Proceeds have not been delivered to Escrow
Agent by the end of the Offering term, the
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Escrowed Funds then on deposit with Escrow Agent shall be returned along with
all interest accrued thereon to the investors.
d. Manner of Distribution. Escrowed Funds shall be disbursed in
the form of a wire transfer to Efox's bank account set forth below its
signature.
4. Dispute Resolution Methods.
a. Binding Arbitration. The Parties hereto shall give all other
Parties written notice of any controversy or claim arising out of or relating
to this Escrow Agreement or the breach thereof. All Parties shall then have 10
calendar days from receipt of such notice to resolve the claim or dispute. In
the event such claim or dispute is not resolved within this 10 day time frame,
such claim or dispute shall immediately be referred to, and settled by, binding
arbitration before one (1) neutral arbitrator selected by the American
Arbitration Association ("AAA") or other similar organization acceptable to the
Parties in accordance with the rules of the AAA. The arbitration is to be held
in Washington DC, at a mutually agreed upon site. The parties agree that the
laws of the State of Maryland shall apply. That decision shall be enforceable
and judgement upon the award rendered by the arbitrator will be binding upon
the parties and may be entered in any court of record having jurisdiction and
may be relied upon by the Escrow Agent.
b. Costs. The costs associated with any arbitration or court
proceeding shall be apportioned by the arbitrator or court.
5. Interest on Escrowed Funds. the Parties agree and understand that
Escrowed Funds shall be held in an interest bearing escrow account. Interest
paid to Efox shall be reported under the tax ID number set forth below its
signature affixed hereto. Other recipients of the interest shall be responsible
for the payment of all taxes on such interest.
6. Notices. Any and all notices to be given by any Parties shall be in
writing and shall be given in person, or by facsimile with transmission
confirmed, or by overnight courier service with confirmation of delivery
requested, prepaid, and addressed as follows unless a change of such address
has been given and acknowledged:
To Efox:
Xxxx.xxx, Inc.
0 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
ATTENTION: Xxxxxx X. Xxxxxxx, Pres. & CEO
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
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With a Copy to:
Xxxxx & Xxxxxx, Attorney At Law, L.L.C.
0000 00xx Xxxxxx, XX (Xxxxxxxxx-0)
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
To Escrow Agent:
U.S. Trust Company of New York
ATTENTION: Xxxx Xxxxxxxx
Tel. No. (000) 000-0000
Fax No.(000) 000-0000
Any such notice so delivered shall be deemed for all purposes of this Escrow
Agreement to have been given when written confirmation of receipt has been
obtained, or, in the case of facsimile, when confirmation of transmission
received.
7. Concerning the Escrow Agent. To induce the Escrow Agent to act
hereunder, it is agreed by the Parties hereto that:
a. Duty of Care. The Escrow Agent shall not be under any duty to
give the Escrowed Funds held by it hereunder any greater degree of care than it
gives its own similar property and shall only invest Escrowed Funds held
hereunder in the following types of investments: U.S. Treasury or U.S.
Treasury-backed securities; Overnight Repurchase Agreements; Mutual Funds
Primarily investing in such securities; and such other investments as Efox
shall direct in writing to Escrow Agent.
b. Entire Agreement. This Escrow Agreement and the Offering sets
forth all the duties of the Escrow Agent with respect to any and all matters
pertinent hereto. No implied duties or obligations shall be read into this
Escrow Agreement against the Escrow Agent.
c. Indemnification; Hold Harmless. The Escrow Agent shall not be
liable, except for its own negligence or misconduct, and, except with respect
to claims based upon such negligence
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or misconduct that are successfully asserted against the Escrow Agent, the
other Parties hereto shall jointly and severally indemnify and hold harmless
the Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Escrow Agreement.
d. Reliance. The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity or
the service thereof. The Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume that any person
purporting to give notice or receipt or advice or make any statement or execute
any document in connection with the provisions hereof has been duly authorized
to do so.
e. Action upon Advice of Counsel. The Escrow Agent may act
pursuant to the advice of counsel with respect to any matter relating to this
Escrow Agreement and shall not be liable for any action taken or omitted in
accordance with such advice.
f. Escrow Agent as Stakeholder. The Escrow Agent does not have
any interest in the Escrowed Funds deposited hereunder but is serving as escrow
holder only and having only possession thereof. Efox shall pay or reimburse
the Escrow Agent upon request, for any transfer taxes relating to the Escrowed
Funds incurred in connection herewith and shall indemnify and hold harmless the
Escrow Agent from any amounts that it is obligated to pay in the way of
transfer taxes. Any payments of income from an Escrow Account shall be subject
to withholding regulations then in force with respect to United States taxes.
The Efox will instruct the investors to provide Escrow Agent with appropriate
W-9 forms for tax i.d., number certification, or non-resident alien
certifications.
g. No Representations. The Escrow Agent makes no representation
as to the validity, value, genuineness or the collectibility of any document or
instrument held by or delivered to it.
h. No Advice. The Escrow Agent shall not be called upon to
advise any Party as to the wisdom in taking or refraining from taking any
action with respect to any Escrowed Funds deposited hereunder.
i. Resignation. The Escrow Agent (and any successor Escrow
Agent) may at any time and in its sole discretion resign as such by delivering
the Escrowed Funds to any successor Escrow Agent jointly designated by the
Parties hereto in writing, or to any court of competent jurisdiction, whereupon
the Escrow Agent shall be discharged of and from any and all further
obligations arising in connection with this Escrow Agreement. The resignation
of the Escrow Agent will take effect on the earlier of (a) the appointment of a
successor (including a court of competent
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jurisdiction) or (b) the day which is 30 days after the date of delivery of its
written notice of resignation to the Parties hereto. If at that time the
Escrow Agent has not received a designation of a successor Escrow Agent, the
Escrow Agent's sole responsibility shall be to safekeep the Escrowed Funds
until receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the Parties hereto or a final order of a Court of
competent jurisdiction.
j. Arbitrators; Third Parties. The Escrow Agent shall have no
responsibility for the contents of any writing of the arbitrators or any third
party contemplated herein as a means to resolve disputes and may rely without
any liability upon the contents thereof.
k. Fees. The Escrow Agent's fees, disbursements, advancements,
and costs incurred or made up to the final disbursement date shall be capped at
a total of Three Thousand Two hundred Fifty Dollars US($3,250) and shall
deducted from the Escrowed Funds disbursed unless otherwise provided for by the
Parties.
8. Miscellaneous.
a. Headings. The headings in this Escrow Agreement are for the
convenience of reference only and shall not limit or otherwise affect the terms
and provisions hereof.
b. Counterparts. This Escrow Agreement may be executed in any
number of counterparts and by different Parties hereto on separate
counterparts, but all such counterparts shall together constitute one and the
same instrument.
c. Term. This Escrow Agreement shall commence on the date signed
by all of the Parties hereto and will continue for a maximum period of two (2)
years unless earlier terminated in accordance with its terms.
d. Binding Nature; Assignment; Choice of Law. This Escrow
Agreement shall be binding upon and inure solely to the benefit of the Parties
hereto and their respective successors and assigns, heirs, administrators and
representatives and shall not be enforceable by or inure to the benefit of any
third party except as provided in paragraph 7(i) with respect to a resignation
by the Escrow Agent. No Party may assign any of its rights or obligations
under this Escrow Agreement without the written consent of the other Parties.
This Escrow Agreement shall be construed in accordance with and governed by the
internal law of the State of Maryland (without reference to its rule as to
conflicts of law).
e. Amendments. This Escrow Agreement may only be modified by a
writing signed by all of the Parties hereto, and no waiver hereunder shall be
effective unless in a writing signed by the Party to be charged.
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f. Survival of Agreement. The provisions set forth in paragraph
7 shall survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
IN WITNESS WHEREOF, each party, intending hereto to be bound
has caused this Agreement to be executed as of the day and year first written
above.
ESCROW AGENT XXXX.XXX, INC.
U.S. Trust Company of New York a Delaware Corporation
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By: By: Xxxxxx X. Xxxxxxx
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Its: Its: President and CEO
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Tax ID: Tax ID:
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