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ESCROW AGREEMENT (PUBLIC OFFERING)
AGREEMENT made this 24 day of December, 1999 by and among the Issuer whose
name and address appears on the Information Sheet (as defined herein) attached
to this Agreement, and XX XXXX, 000 X Xxxxxx, Xxxxxx, XX 00000 (the "Escrow
Agent").
W I T N E S S E T H :
WHEREAS, the Issuer has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") covering a
proposed public offering of its securities (collectively, the "Securities", and
individually, a "Share") as described on the Information Sheet; and
WHEREAS, the Issuer proposes to offer the Securities for sale to the public on a
"best efforts, all or none basis" at the price per Share all as set forth on the
Information Sheet; and
WHEREAS, the Issuer proposes to establish an escrow account with the Escrow
Agent in connection with such public offering and the Escrow Agent is willing to
establish such escrow account on the terms and subject to the conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. INFORMATION SHEET.
Each capitalized term not otherwise defined in this Agreement shall have the
meaning set forth for such term on the Information Sheet which is attached to
this Agreement and is incorporated by reference herein and made a part hereof
(the "Information Sheet").
2. ESTABLISHMENT OF ESCROW ACCOUNT.
2.1 The parties hereto shall establish a non-interest bearing escrow account at
the office of the Escrow Agent, and bearing the designation set forth on the
Information Sheet (the "Escrow Account").
2.2 On or before the date of the initial deposit in the Escrow Account pursuant
to this Agreement, the Issuer shall notify the Escrow Agent in writing of the
effective date of the Registration Statement (the "Effective Date") and the
Escrow Agent shall not be required to accept any amount for deposit in the
Escrow Account prior to its receipt of such notification.
2.3 The Offering Period, which shall be deemed to commence on the Effective
Date, shall consist of the number of calendar days or business days set forth on
the Information Sheet. The Offering Period shall be extended by an Extension
Period only if the Escrow Agent shall have received written notice thereof at
least five (5) business days prior to the expiration of the Offering Period. The
Extension Period, which shall be deemed to commence on the next calendar day
following the expiration of the Offering Period, shall consist of the number of
the calendar days or business days set forth on the Information Sheet. The last
day of the Offering Period, or the last day of the Extension Period (if the
Escrow Agent has received written notice thereof as hereinabove provided), is
referred to herein as the "Termination Date." After the Termination Date, the
Issuer shall not deposit, and the Escrow Agent shall not accept, any additional
amounts representing payments by prospective purchasers.
3. DEPOSITS IN THE ESCROW ACCOUNT.
3.1 Upon receipt, the Issuer shall promptly deposit all monies received from
investors to the Escrow Agent. All of these deposited proceeds (the "Deposited
Proceeds") shall be in the form of checks or money orders. All checks or money
orders deposited into the Escrow Account shall be made payable to "Alphatech,
Inc. and US Bank". Any check or money order payable other than to the Escrow
Agent as required hereby shall be returned to the prospective purchaser, or if
the Escrow Agent has insufficient information to do so, then to the Issuer
(together with any Subscription Information, as defined below, or other
documents delivered therewith) by noon of the next business day following
receipt of such check by the Escrow Agent, and such check shall be deemed not to
have been delivered to the Escrow Agent pursuant to the terms of this Agreement.
The Deposited Proceeds and interest or dividends thereon, if any, shall be held
for the sole benefit of the purchasers of the securities.
3.2 The Deposited Proceeds shall be invested in either:
(a) an obligation that constitutes a "deposit" as that term is defined in
Section (3)(1) of the Federal Deposit Insurance Act;
(b) securities of any open-end investment company registered under the
Investment Company Act of 1940 that holds itself out as a money market fund
meeting the conditions of paragraphs (c)(2), (c)(3), and (c)(4) of Rule 2a-7
under the Investment Company Act; or
(c) securities that are direct obligations of, or obligations guaranteed as to
principal or interest by, the United States.
3.3 Simultaneously with each deposit into the Escrow Account, the Issuer shall
inform the Escrow Agent by confirmation slip or other writing of the name and
address of the prospective purchaser, the number of Securities subscribed for by
such purchaser,
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and the aggregate dollar amount of such subscription (collectively, the
"Subscription Information").
3.4 The Escrow Agent shall not be required to accept for deposit into the Escrow
Account checks which are not accompanied by the appropriate Subscription
Information. Checks and money orders representing payments by prospective
purchasers shall not be deemed deposited in the Escrow Account until the Escrow
Agent has received in writing the Subscription Information required with respect
to such payments.
3.5 The Escrow Agent shall not be required to accept any amounts representing
payments by prospective purchasers, whether by check or money order, except
during the Escrow Agent's regular banking hours. Any check, money order or cash
not received prior to 1:00 P.M. shall be deposited the following business day.
3.6 Interest or dividends earned on the Deposited Proceeds, if any, shall be
held in the Escrow Account until the Deposited Proceeds are released in
accordance with the provisions of Section 4 of the Escrow Agreement. If the
Deposited Proceeds are released to a purchaser of the securities, the purchaser
shall receive interest or dividends earned, if any, on such Deposited Proceeds
up to the date of release. If the Deposited Proceeds held in the Escrow Account
are released to the Company, any interest or dividends earned on such funds up
to the date of release may be released to the Company.
3.7 The Issuer shall deposit the Securities directly into the Escrow Account
promptly upon issuance (the "Deposited Securities"). The identity of the
purchaser of the Securities shall be included on the Common Stock and Warrant
certificates.
3.8 The Deposited Securities shall be held for the sole benefit of the
purchasers. No transfer or other disposition of Securities held in the Escrow
Account or any interest related to such Securities shall be permitted other than
by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.
3.9 The Escrow Agent shall refund any portion of the Deposited Proceeds prior to
disbursement of the Deposited Proceeds in accordance with Section 4 hereof upon
instructions in writing signed by the Issuer.
4. DISBURSEMENT FROM THE ESCROW ACCOUNT.
4.1 The Deposited Proceeds may be released to the Company and the Securities
delivered to the purchaser or other registered holder only at the same time as
or after:
(a) the Escrow Agent has received a signed representation from the Company,
together with an opinion of counsel, that the following events have already
occurred and the following requirements have already been met:
(1) An agreement(s) has been executed for the acquisition(s) of a
business(es) or assets that will constitute the business (or a line of
business) of the Company and for which the fair value of the business(es)
or net assets to be acquired represents at least 80 percent of the maximum
offering proceeds, including proceeds received or to be received upon the
exercise or conversion of the Securities offered, but excluding amounts
payable to non-affiliates for underwriting commissions, underwriting
expenses, and dealer allowances, if any,
(2) The Company has filed a post-effective amendment that:
(i) Discloses the information specified by the SB-2 registration
statement form and Industry Guides, including financial statements of
the Company and of the company or business with which it plans to
merge or acquire (the "Target Company"), and pro forma financial
information required by the SB-2 and applicable rules and regulations;
(ii) Discloses the results of the initial offering, including but not
limited to:
(A) The gross offering proceeds received to date, specifying the
amounts paid for underwriter commissions, underwriting expenses
and dealer allowances, if any, amounts disbursed to the Company,
and amounts remaining in the Escrow Account; and
(B) The specific amount, use and application of funds disbursed
to the Company to date, including, but not limited to, the
amounts paid to officers, directors, promoters, controlling
shareholders or affiliates, either directly or indirectly,
specifying the amounts and purposes of such payments; and
(iii) Discloses the terms of the offering as described pursuant to
Section 4 of this Escrow Agreement;
(3) The terms of the offering provided, and the Company satisfied, the
following conditions:
(i) Within five business days after the effective date of the
post-effective amendment(s), the Company shall send by first class
mail or other equally prompt means, to each purchaser of securities
held in escrow, a copy of the prospectus contained in the
post-effective amendment and any amendment or supplement thereto;
(ii) Each purchaser shall have no fewer than 20 business days and no
more than 45 business days from the
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effective date of the post-effective amendment to notify the Company
in writing that the purchaser elects to remain an investor. If the
Company has not received such written notification by the 45th
business day following the effective date of the post-effective
amendment, funds and interest or dividends, if any, held in the Escrow
Account shall be sent by first class mail or other equally prompt
means to the purchaser within five business days;
(iii) The acquisition(s) meeting the criteria set forth in paragraph
(a) (1) of this Section 4 will be consummated if a sufficient number
of purchasers confirm their investments; and
(iv) If a consummated acquisition(s) meeting the requirements of this
section has not occurred by a date 18 months after the Effective Date,
the Deposited Proceeds shall be returned by first class mail or
equally prompt means to the purchaser within five business days
following that date; and
(b) An acquisition(s) has been consummated meeting the requirements set
forth in Section 4.1(a)(2)(iii) of this Escrow Agreement.
4.2 In the event that at the close of regular banking hours on the Termination
Date less than the minimum offering of 1,000,000 Shares have been sold (the
"Minimum Offering"), the Escrow Agent shall promptly refund to each prospective
purchaser the amount of payment received from such purchaser held in Escrow
without interest thereon or deduction therefrom, and the Escrow Agent shall
notify the Issuer of its distribution of the Deposited Proceeds.
4.3 In the event that at any time up to the close of banking hours on the
Termination Date the Minimum Offering or more Shares have been sold, the Escrow
Agent shall notify the Issuer of such fact in writing within a reasonable time
thereafter. The Escrow Agent shall hold the Deposited Proceeds until the events
described in Section 4.1 of this Escrow Agreement take place.
4.4 Upon disbursement of the Deposited Proceeds pursuant to the terms of this
Section 4, the Escrow Agent shall be relieved of all further obligations and
released from all liability under this Agreement. It is expressly agreed and
understood that in no event shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the Deposited Proceeds.
5. RIGHTS, DUTIES AND RESPONSIBILITIES OF ESCROW AGENT.
It is understood and agreed that the duties of the Escrow Agent are purely
ministerial in nature, and that:
5.1 The Escrow Agent shall not be responsible for the performance by the Issuer
of its obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the Issuer any
Subscription Information pertaining to prospective purchasers unless such
Subscription Information is accompanied by checks or money orders representing
the payment of money, nor shall the Escrow Agent be required to keep records of
any information with respect to payments deposited by the Issuer except as to
the amount of such payments; however, the Escrow Agent shall notify the Issuer
within a reasonable time of any discrepancy between the amount delivered to the
Escrow Agent therewith. Such amount need not be accepted for deposit in the
Escrow Account until such discrepancy has been resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent, within a
reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy, act in
reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document. The Escrow Agent
must, however, determine for itself whether the conditions permitting the
release of the funds in the Escrow Account have been met.
5.5 In the event that the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions with respect to the Escrow
Account or the Deposited Proceeds which, in its sole determination, are in
conflict either with other instructions received by it or with any provision of
this Agreement, the Escrow Agent, at its sole option, may deposit the Deposited
Proceeds (and any other amounts that thereafter become part of the Deposited
Proceeds) with the registry of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined. Upon the deposit by the Escrow
Agent of the Deposited Proceeds with the registry of any court, the Escrow Agent
shall be relieved of all further obligations and released from all liability
hereunder.
5.6 The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct. The Escrow Agent shall be entitled
to consult with counsel of its own choosing and shall not be liable for any
action taken, suffered or omitted by it in accordance with the advice of such
counsel.
5.7 The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Deposited Proceeds or any
part thereof or to file any financing statement under the Uniform Commercial
Code with respect to the
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Deposited Proceeds or any part thereof.
5.8 The Escrow Agent shall determine whether or not the Offering has been
successful, and if it determines that less than the Minimum Offering has been
sold, thus rendering the Offering unsuccessful, the Escrow Agent shall return
the proceeds of the Offering to the investors on a pro-rata basis.
6. AMENDMENT; RESIGNATION.
This Agreement may be altered or amended only with the written consent of the
Issuer and the Escrow Agent. The Escrow Agent may resign for any reason upon
seven (7) business days written notice to the Issuer. Should the Escrow Agent
resign as herein provided, it shall not be required to accept any deposit, make
any disbursement or otherwise dispose of the Deposited Proceeds, but its only
duty shall be to hold the Deposited Proceeds for a period of not more than ten
(10) business days following the effective date of such resignation, at which
time
(a) if a successor escrow agent shall have been appointed and written
notice thereof (including the name and address of such successor
escrow agent) shall have been given to the resigning Escrow Agent by
the Issuer and such successor escrow agent, the resigning Escrow Agent
shall pay over to the successor escrow agent the Deposited Proceeds,
less any portion thereof previously paid out in accordance with this
Agreement, or
(b) if the resigning Escrow Agent shall not have received written notice
signed by the Issuer and a successor escrow agent, then the resigning
Escrow Agent shall promptly refund the amount in the Deposited
Proceeds to each prospective purchaser without interest thereon or
deduction therefrom, and the resigning Escrow Agent shall notify the
Issuer in writing of its liquidation and distribution of the Deposited
Proceeds;
whereupon, in either case, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. Without
limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall be
entitled to be reimbursed by the Issuer for any expenses incurred in connection
with its resignation, transfer of the Deposited Proceeds to a successor Escrow
Agent or distribution of the Deposited Proceeds pursuant to this Section 6.
7. REPRESENTATIONS AND WARRANTIES.
The Issuer hereby represents and warrants to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective purchasers have,
or shall have any lien, claim or security interest in the Deposited Proceeds or
any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Deposited Proceeds or any part thereof.
7.3 The Subscription Information submitted with each deposit shall, at the time
of submission and at the time of the disbursement of the Deposited Proceeds, be
deemed a representation and warranty that such deposit represents a bona fide
sale to the purchaser described therein of the amount of Securities set forth in
such Subscription Information.
7.4 All of the information contained in the Information Sheet is, as of the date
hereof and will be, at the time of any disbursement of the Deposited Proceeds,
true and correct.
8. FEES AND EXPENSES.
The Escrow Agent shall be entitled to the Escrow Agent Fee set forth in the
Information Sheet, payable upon execution of this Agreement. In addition, the
Issuer agrees to reimburse the Escrow Agent for any reasonable expenses incurred
in connection with this Agreement, including, but not limited to, reasonable
counsel fees, but not including the review of this Agreement.
9. INDEMNIFICATION AND CONTRIBUTION.
9.1 The Issuer (referred to as the "Indemnitor") agrees to indemnify the Escrow
Agent and its officers, directors, employees, agents and shareholders (jointly
and severally the "Indemnitees") against, and hold them harmless of and from,
any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Indemnitees may suffer or incur
by reason of any action, claim or proceeding brought against the Indemnitees
arising out of or relating in any way to this Agreement or any transaction to
which this Agreement relates, unless such action, claim or proceeding is the
result of the willful misconduct of the Indemnitees.
9.2 If the indemnification provided for in this Section 9 is applicable, but for
any reasons held to be unavailable, the Indemnitor shall contribute such amounts
as are just and equitable to pay, or to reimburse the Indemnitees for the
aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of any action, claim or
proceeding arising out of or relating in any way to, any actions or omissions of
the Indemnitor.
9.3 Any Indemnitee which proposes to assert the right to be indemnified under
this Section 9, promptly after receipt of notice of
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commencement of any action, suit or proceeding against such Indemnitee in
respect of which a claim is to be made against the Indemnitor under this Section
9, will notify the Indemnitor of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
the Indemnitor of any such action, suit or proceeding shall not relieve the
Indemnitor from any liability which they may have to any Indemnitee otherwise
than under this Section 9. In case any such action, suit or proceeding shall be
brought against any Indemnitee and it shall notify the Indemnitor of the
commencement thereof, the Indemnitor shall be entitled to participate in and, to
the extent that they shall wish, to assume the defense thereof, with counsel
satisfactory to such Indemnitee. The Indemnitee shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such Indemnitee unless:
(i) the employment of counsel by such Indemnitee has been authorized by
the Indemnitor,
(ii) the Indemnitee shall have concluded reasonably that there may be a
conflict of interest among the Indemnitor and the Indemnitee in the
conduct of the defense of such action (in which case the Indemnitor
shall not have the right to direct the defense of such action on
behalf of the Indemnitee) or
(iii) the Indemnitor in fact shall not have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses
of counsel shall be borne by the Indemnitor.
9.4 The Indemnitor agrees to provide the Indemnitees with copies of all
registration statements pre- and post-effective amendments to such registration
statements including exhibits, whether filed with the SEC prior to or subsequent
to the disbursement of the Deposited Proceeds.
9.5 The provisions of this Section 9 shall survive any termination of this
Agreement, whether by disbursement of the Deposited Proceeds, resignation of the
Escrow Agent or otherwise.
10. GOVERNING LAW AND ASSIGNMENT.
This Agreement shall be construed in accordance with and governed by the laws of
the State of Washington and shall be binding upon the parties hereto and their
respective successors and assigns; provided, however, that any assignment or
transfer by any party of its rights under this Agreement or with respect to the
Deposited Proceeds shall be void as against the Escrow Agent unless:
(a) written notice thereof shall be given to the Escrow Agent; and
(b) the Escrow Agent shall have consented in writing to such assignment or
transfer.
11. NOTICES.
All notices required to be given in connection with this Agreement shall be sent
by registered or certified mail, return receipt requested, or by hand delivery
with receipt acknowledged, or by the Express Mail service offered by the United
States Post Office or by Canada Post, and addressed, if to the Issuer, at its
address set forth on the Information Sheet, and if to the Escrow Agent, to: US
Bank, Attention: Trust Department, 000 X Xxxxxx, Xxxxxx, XX 00000.
12. SEVERABILITY.
If any provision of this Agreement or the application thereof to any person or
circumstance shall be determined to be unpaid or unenforceable, the remaining
provisions of this Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby and shall be valid and enforceable to the fullest
extent permitted by law.
13. CLOSING.
The closing shall take place within 90 days of the Effective Date unless an
additional 90 days is approved by the Company, but in no instance later than 180
days after the Effective Date.
14. PRONOUNS.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular, or plural as the context may require.
15. CAPTIONS.
All captions are for convenience only and shall not limit or define the term
thereof.
16. EXECUTION IN SEVERAL COUNTERPARTS.
This Agreement may be executed in several counterparts or by separate
instruments and all of such counterparts and instruments shall constitute one
agreement, binding on all of the parties herein.
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17. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings (written or oral) of the parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
THE ISSUER: ALPHATECH, INC.
By:
/s/ Xxxxxxx xxx Xxxx
---------------------
Authorized Signatory
ESCROW AGENT: US BANK
By:
/s/ Xxxx XxXxxxx
---------------------
Authorized Signatory
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US BANK
ESCROW AGREEMENT INFORMATION SHEET
1. THE COMPANY
ALPHATECH, INC.
Address:
00000 Xxxxxxx Xxx, Xxxxx 00, Xxxxxxxx, XX 00000
State of incorporation or organization:
Delaware
2. THE UNDERWRITER
Self-Underwriting
State of incorporation or organization:
Delaware
3. THE SECURITIES
Description of the Securities to be offered (e.g., shares of common stock or
warrants for common stock, debentures, units consisting of shares and warrants,
etc.):
Shares of Common Stock.
4. TYPE OF OFFERING
Registration Statement filed on Form SB-2
Offering Statement filed pursuant to Regulation C of the General Rules
and Regulations under the Securities Act of 1933.
5. OFFERING AMOUNT:
$1,000 minimum; $6,000 maximum
6. PLAN OF DISTRIBUTION OF THE SECURITIES
Offering Period: 90 (calendar days)
Extension Period: 90 (calendar days)
Collection Period, if any: -0- (calendar days)
7. THE ESCROW ACCOUNT
Title of the Escrow Account: ALPHATECH, INC. ESCROW ACCOUNT.
8. ESCROW ACCOUNT FEE
Amount due on execution of the Escrow Agreement:
$ Fee for each check disbursed pursuant to the terms of the Escrow
Agreement (unsuccessful offering): Up to 35 checks at no charge per
month; thereafter $0.15 each. $ Fee for each subscriber in excess of
the first fifty subscribers: ______ $ Fee for each check returned
pursuant to the terms of the Escrow Agreement: $3.00.
All other fees will be negotiated on the basis of service requirements.
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