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EXHIBIT 10 (k)
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is entered into as of __________
____, 1998, by and among SEL-DRUM INTERNATIONAL, INC. (the "Company"), having
its principal office at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000, the FIRST
NATIONAL BANK OF ROCHESTER, as escrow agent (the "Bank" or "Escrow Agent"),
having its principal office at 00 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, and
PITTSFORD CAPITAL MARKETS, INC. (the "Underwriter") having its principal office
at 00 Xxxxx Xxxxxxx Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, the Company proposes to offer for sale through the Underwriter
pursuant to a "best efforts minimum/maximum" public offering (the "Offering"),
which has commenced, up to 845,000 shares of the common stock, par value $.01
per share (the "Common Stock") of the Company; and
WHEREAS, the term of this Agreement shall commence as of the date hereof
and continue until terminated as provided herein. In any event, this Agreement
shall terminate on December 31, 1998 (hereinafter referred to as the
"Termination Date"); and
WHEREAS, if subscriptions for at least 250,000 shares of Common Stock
(the "Minimum") offered by the Company have not been tendered by the Termination
Date, all subscription funds theretofore received will thereupon be returned to
the subscribers thereof with interest, less escrow costs.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties agree as follows:
1. The Company hereby designates and appoints the Bank as escrow agent
(the "Escrow Agent") to serve in accordance with the terms and conditions of
this Agreement, and the Escrow Agent hereby agrees to serve in said capacity
upon the terms and conditions hereof. The Bank agrees to establish an
appropriate segregated interest bearing account (the "Escrow Account") entitled:
"FIRST NATIONAL BANK OF ROCHESTER, ESCROW AGENT FOR SEL-DRUM INTERNATIONAL,
INC." and to receive for deposit therein all of the subscription payments. The
Escrow Agent shall invest the escrowed funds only in investments permissible
under Rule 15c2-4 as promulgated under the Securities Act of 1934, as amended.
2. The Underwriter and other broker/dealers participating in the
offering shall deliver to the Escrow Agent all subscription cash and checks from
subscriptions for Common Stock by noon of the next day following receipt
together with the name and address of each subscriber, the subscription amount
and the number of shares of Common Stock subscribed for. The
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Escrow Agent shall accept such proceeds subject to terms hereof. Subscription
checks shall be payable to "FIRST NATIONAL BANK OF ROCHESTER, ESCROW AGENT FOR
SEL-DRUM INTERNATIONAL, INC." The Escrow Agent is authorized to deposit such
proceeds in the Escrow Account, which shall be an interest bearing bank account.
The Escrow Agent will, upon final collection of the proceeds of such items,
credit the proceeds to the Escrow Account to be held by it under the terms of
this Escrow Agreement. Any item returned unpaid to the Escrow Agent on its first
presentation for payment shall be presented again for payment and if not then
paid, shall be returned to the Company.
3. In the event the Offering is extended beyond the Termination Date by
supplement, this Agreement shall continue in effect through such extended
period. The Company and the Underwriter shall jointly provide written notice to
the Bank of any such extension.
4. The Escrow Agent shall distribute the proceeds as follows:
(a) If the Company rejects any subscription for which the Escrow
Agent has already collected funds, upon written notice from
the Company, the Escrow Agent shall promptly remit to the
subscriber a refund of the full amount of the subscriber's
original payment with interest but less escrow costs.
(b) The Company and Underwriter may determine by joint written
notice to the Escrow Agent to effect a closing only after
the receipt of subscriptions acceptable to the Company for
the Minimum number of shares of Common Stock offered
pursuant to the Offering have been subscribed for (the
"Closing"); provided, that all subscription checks shall
have cleared normal banking channels and all such
subscriptions shall have been accepted in writing by the
Company. The Common Stock must be paid for by cash. Upon
being notified by the Company of the Initial Closing, the
Escrow Agent shall distribute the escrowed funds with
respect to the subscriptions accepted pursuant to the
Initial Closing, together with interest earned thereon, to
the Company or as directed in writing by the Company.
(c) As specified by the Company, in the event the Offering of
the Common Stock is withdrawn or terminated, or in the event
the Escrow Agent has not received proceeds with respect to
the Minimum number of shares of Common Stock offered
pursuant to the Offering before the Termination Date, the
entire proceeds previously deposited with the Escrow Agent
hereunder shall be refunded to the subscribers. In no event
shall any refund be less than the amount of the subscriber's
original payment sent to the mailing address provided by the
Company. Interest will also be paid to the subscribers.
(d) This Agreement shall terminate on the earlier of: (i) the
Termination Date; (ii) upon a Closing; or (iii) as otherwise
provided herein.
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5. The acceptance by the Escrow Agent of its duties under this Agreement
is subject to the following terms and conditions, which will govern and control
with respect to the Escrow Agent's rights, duties, liabilities and immunities:
(a) The duties and obligations of the Escrow Agent will be
determined solely by the provisions of this Agreement, and
the Escrow Agent shall not be bound by the terms of any
other agreement nor shall the Escrow Agent be liable to any
persons except for the performance of such duties and
obligations as are specifically set forth in this Agreement.
(b) The Underwriter and/or the Company shall: (i) not make any
claim, or bring an action, suit or proceeding, against the
Escrow Agent by reason of any alleged loss, liability, claim
or charge arising out of, or in connection with, the Escrow
Agent's acceptance or performance (including acts and
omissions), in good faith, of its duties and obligations
under this Agreement, and (ii) reimburse and indemnify the
Escrow Agent for, and hold it harmless against any loss,
liability, cost or expense (including, without limitation,
reasonable attorney's fees and disbursements), other than
such caused by willful misconduct or gross negligence on the
part of the Escrow Agent, and arising out of, or in
connection with, the Escrow Agent's acceptance or
performance of its duties hereunder, as well as the costs
and expenses of instituting, prosecuting or defending any
claim, action, suit or proceeding arising out of, or
relating to, this Agreement, including, without limitation,
an action for a declaratory judgment in such regard
instituted by the Escrow Agent.
(c) The Escrow Agent will be fully protected in acting and
relying upon any written advice, certificate, notice,
direction, instruction, request, order, judgment, decree or
other document given to it which the Escrow Agent in good
faith believed to be genuine and to have been signed or
presented by the proper party or parties, and may assume
that any person purporting to give such advice, certificate,
notice, direction, instruction, request or other document
has been duly authorized to do so. The Escrow Agent assumes
no responsibility for the accuracy of the recitals in any
such document.
(d) The Escrow Agent shall not be liable for any action taken by
it in good faith and believed by it to be authorized or
within the rights or powers conferred upon it by this
Agreement. The Escrow Agent may seek the advice of legal
counsel in the event of any dispute or question as to the
construction of any of the provisions of this Agreement or
its duties hereunder, and may rely on an opinion of such
counsel. In rendering such opinion, such counsel may rely on
statements of fact furnished to them by persons reasonably
believed by such counsel to be credible, and such counsel
will have no liability for the accuracy of the facts so
relied upon, nor will such counsel have any liability for
matters of their own judgment forming a part of the process
of providing such opinion.
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(e) The Escrow Agent, and any successor escrow agent, as the
case may be, may resign as escrow agent and be discharged
from all further duties and obligations hereunder at any
time upon giving 30 days notice to the Company. Thereupon,
the Company shall designate a successor escrow agent
hereunder within such 30 day period to whom the Escrow Agent
shall deliver the funds held by the Escrow Agent. Further,
either the Company or the Underwriter may, at any time,
terminate Escrow Agent as escrow agent under this Agreement
by giving 30 days written notice to Escrow Agent and, in
such event, must designate a successor escrow agent to whom
Escrow Agent will deliver the funds held by the Escrow
Agent.
6. If any disagreement should arise between the subscribers and the
Company, between the subscribers and the Underwriter or between the Company and
the Underwriter with respect to the funds held by the Escrow Agent or this
Escrow Agreement, or if the Escrow Agent in good faith is in doubt as to what
action should be taken hereunder, the Escrow Agent shall have the absolute right
at its election upon written notice to the Company and Underwriter to do either
or both of the following: (i) withhold or stop all further performances under
this Escrow Agreement and all instructions received in connection herewith until
the Escrow Agent is satisfied that such disagreement has been resolved, or (ii)
file a suit in interpleader and obtain an order from a court of appropriate
jurisdiction requiring all persons involved to litigate in such court their
respective claims arising out of or in connection with the fund held by the
Escrow Agent.
7. All communications, notices, requests, instructions, consents or
demands given under this Escrow Agreement shall be in writing and will be deemed
to have been duly given when delivered to, or mailed by prepaid registered or
certified mail addressed to, the party for whom intended, as follows, or to such
other address as may be furnished by such party in the matter provided herein:
If to the Placement Agent:
Pittsford Capital Markets, Inc.
00 Xxxxx Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
ATTN: President
If to the Escrow Agent:
First National Bank of Rochester
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
ATTN: Xxxxxxx Xxxxxx, Vice President
Business and Professional Banking
With a copy to:
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First National Bank of Rochester
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
ATTN: Xxxxxxx X. Xxxxxxx, Esq. (Vice President and Counsel)
If to the Company:
Sel-Drum International, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
ATTN: Chief Executive Officer
In all cases, with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
8. This Agreement will in all respects be governed by and construed
under the laws of the State of New York, without giving effect to provisions
thereof concerning the conflict of laws.
9. This Agreement sets forth the entire understanding of the parties
hereto with respect to its subject matter, merges and supersedes all prior and
contemporaneous understandings and may not be waived or modified, in whole or in
part, except by a writing signed by each of the parties hereto. Escrow Agent
shall not be bound by any other agreement between the parties hereto even if it
has knowledge thereof. No waiver of any provision of this Agreement in any
instance may be deemed to be a waiver of the same or any other provisions in any
other instance.
10. This Agreement will be binding upon, enforceable against, and inure
to the benefit of, the parties hereto and their respective successors and
assigns, and nothing herein is intended to confer any right, remedy or benefit
upon any other person.
11. If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, this Agreement will be
interpreted and enforceable as if such provision were not contained herein, the
provisions of this Agreement being severable in any such instance.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Escrow
Agreement as of the date first set forth above.
SEL-DRUM INTERNATIONAL, INC. PITTSFORD CAPITAL MARKETS, INC.
By: By:
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Name: Name:
Title: Title:
FIRST NATIONAL BANK OF ROCHESTER
By:
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Name:
Title: