Exhibit 10.5
ESCROW AGREEMENT
ESCROW AGREEMENT, dated April 20, 1999 between Saf-T-Lok, Incorporated, a
Florida corporation (the "Company"), Alexander, Wescott & Co., Inc. (the
"Placement Agent") and Chase Manhattan Bank, as escrow agent ("the Escrow
Agent").
WHEREAS, the Company is offering Convertible Debentures to prospective investors
pursuant to the Company's Subscription Agreement dated April 20, 1999 (the
"Memorandum"), in connection with the consummation of the Company's private
placement (the "Private Placement");
WHEREAS, unless subscriptions are received from subscribers and accepted by the
Company by April 30, 1999 and, unless the offering is terminated at an earlier
date by the Placement Agent and the Company, or unless the offering is extended
by the Company and the Placement Agent to June 29, 1999 (the "Termination
Date"), then all funds received by the Escrow Agent will he returned without
interest to the subscribers;
WHEREAS, the Subscription Agreement provides that all funds received for
subscriptions prior to the consummation of the Private Placement will be placed
into an escrow account with the Escrow Agent until such time as release or
return of the funds is required pursuant to Section 5 hereof; and
WHEREAS, Chase Manhattan Bank has consented to act as escrow agent, subject to
the terms and conditions hereinafter set forth.
NOW THEREFORE, the parties hereby agree as follows:
1. The Company hereby appoints Chase Manhattan Bank as escrow agent and Chase
Manhattan Bank hereby accepts such appointment, in accordance with the terms and
conditions herein set forth.
2. The Company shall notify the Escrow Agent of its acceptance and rejection of
subscriptions respecting subscribers.
3. The Placement Agent shall deliver to the Escrow Agent all funds received by
it from subscribers as the Placement Agent shall determine, drawn on a U.S. bank
or Fedwire, in payment of accepted subscriptions for the Convertible Debenture
offering
from time to time as the Placement Agent receives such subscriptions. The Escrow
Agent shall accept all funds received from subscribers, provided that, the
Escrow Agent shall not deposit funds received respecting any subscription for
the Convertible Debenture which the Company has given notice of its rejection,
and the Escrow Agent shall promptly return to the subscriber. The Escrow Agent
shall promptly deposit all funds for subscriptions for Convertible Debentures
which may have been accepted into the Escrow Account for collection (such funds
when collected are hereinafter referred to as the "Proceeds").
The Escrow Agent shall have no duty to solicit any funds with respect to any
subscriber or to determine the propriety of any Proceeds received by it. The
Escrow Agent shall hold the funds uninvested.
The Escrow Agent shall have no duty to solicit any funds with respect to any
subscriber or to determine the propriety of any funds received by it. All funds
received by the Escrow Agent on or after the Termination Date shall be returned
to the source.
4. If the company rejects or has rejected the subscription of any subscriber for
which the Escrow Agent has collected Proceeds and such Proceeds remain in the
Escrow Account, the Escrow Agent shall promptly remit the amount of such
subscriber's funds as are held in the Escrow Account without interest to such
subscriber at the address supplied by the Company.
5. The Proceeds to be held in the Escrow Account shall be subject to, and
distributed in accordance with the following provisions:
(A) If (1) the Escrow Agent has not been provided with a letter, officially
signed on behalf of the Company and the Placement Agent by close of
business prior the Termination Date, or (2) the Escrow Agent has received
from the Company and Placement Agent a notice that the offering otherwise
has been terminated prior to such date, then the Escrow Agent shall
promptly terminate the Escrow Account and return all Proceeds without
interest earned on such Proceeds to the subscribers in the amounts
received by the Escrow Agent from such persons, upon receipt by the Escrow
Agent from the Company of the proper mailing addresses.
(B) If, on or prior to the Termination Date, the Escrow Agent has been
provided with the Letter, attached hereto as Exhibit A, then, on the date
(the "Closing Date"), and at the time and place as shall be stated in the
Letter, the Escrow Agent shall deliver to the Company by wire transfer or
other immediately available funds the principal amount of the Proceeds
held in the Escrow Account except for such
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amounts, representing underwriting commissions and expenses due the
Placement Agent and other expenses, as shall be set forth in the Letter,
which amounts the Escrow Agent shall deliver by wire transfer or other
immediately available funds to the Placement Agent or as otherwise
directed as set forth in the Letter. The "Letter" shall be signed by the
Company and the Placement Agent, and shall specifically set forth dollar
amounts to be released. The Escrow Agent shall be entitled to rely upon
any notice, instrument or other writing delivered to it under cover letter
of an Officer of the Company and Xxxxxxxxx Xxxxxxx & Co., without being
required to determine the authenticity or 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 execute any document in connection with the provisions hereof
has been duly authorized to do so.
6. The Company and the Placement Agent agree to hold the Escrow Agent
harmless and to indemnify the Escrow Agent against any loss, liability
expense (including reasonable attorney's fees and expenses), claim or
demand arising out of or in connection with, the performance of its
obligations in accordance with the provisions of this Agreement, except
for the gross negligence or willful misconduct of the Escrow Agent.
Further, the Company shall indemnify the Escrow Agent for any loss the
Escrow Agency may incur as a result of releasing Proceeds to the Company
or to the subscribers, which Proceeds were credited to the Escrow Account
as a result of a dishonest check.
(A) The Escrow Agent's duties are only such as are specifically provided
herein, and the Escrow Agent shall incur no liability whatsoever to
the Company, except for gross negligence or willful misconduct. The
Escrow Agent shall have no responsibility hereunder other than to
follow faithfully the instructions herein contained. The Escrow
Agent may consult with counsel and shall be fully protected in any
actions taken in good faith in accordance with such advice. The
Escrow Agent shall be fully protected in acting in accordance with
any written instructions given to it hereunder believed by it to
have been executed by the proper parties.
(B) The Company agrees to pay the Escrow Agent a fee of $5,000.00 per
year, without proration for partial years, payable upon execution of
this agreement or deducted from Proceeds collected, as compensation
for the ordinary administrative services to be rendered hereunder;
and agrees to pay all reasonable expenses of the Escrow Agent,
including fee for refund checks respecting the Proceeds not in
excess of $5 per check or $25 per wire and its reasonable attorney's
fees and expenses, and other expenses which it may incur in
connection with the performance of its duties under this Agreement.
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(C) It is agreed that, should any dispute arise with respect to the
payment and/or ownership or right of possession of the Escrow
Account, the Escrow Agent is authorized and directed to retain in
its possession, without liability to anyone, all or part of the
Escrow Account until such dispute shall have been settled either by
mutual agreement by the parties concerned or by the final order,
decree or judgment of a court or other tribunal of competent
jurisdiction in the United States of America and time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such
proceedings.
(D) The Escrow Agent may resign at any time giving written notice
thereof to the Company, but such resignation shall not become
effective until a successor Escrow Agent shall have been appointed
and shall have accepted such appointment in writing. If any
instrument of acceptance by a successor Escrow Agent shall have not
been delivered to the Escrow Agent within thirty days after giving
of such notice of resignation, the resigning Escrow Agent may, at
the expense of the Company, petition any court of competent
jurisdiction for the appointment of a successor agent.
(E) The Escrow Agent's duties and obligations hereunder shall be
determined solely by the express provisions of this Agreement. The
Escrow Agent's duties and obligations are purely ministerial in
nature, and nothing in this Agreement shall be construed to give
rise to any fiduciary obligations of the Escrow Agent with respect
to the Subscribers or the other parties of this Agreement.
(F) The Placement Agent and the Company represent to the Escrow Agent
that they have and shall continue to solicit the advise of their
respective counsel regarding compliance and all applicable state and
federal securities laws in connection with the offer and sale of the
Convertible Debentures and that they will act in accordance with
such advice. The Escrow Agent shall have no responsibility to ensure
compliance with any such securities laws and such responsibility
rests solely with the Placement Agent and the Company. The Escrow
Agent makes no representations and has no responsibility as to the
validity, value or genuineness of the offering of the Convertible
Debenture.
(G) In no event shall the Escrow Agent be required to notify or obtain
consent, approval, authorization or order of any court of
governmental body pursuant to the transactions contemplated by the
provision of this Agreement.
(H) The provisions of this paragraph shall survive the resignation of
the Escrow Agent or the termination of this Agreement.
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7. This Agreement shall be construed in accordance with the laws of the State
of New York. It may be executed in several counterparts, each one of which
shall constitute an original, and all collectively shall constitute but
one instrument.
8. Any notice, consent or request to be given in connection with any of the
terms or provisions of this Agreement shall be in writing and shall be
sent by registered mail, postage prepaid, or delivered:
If to the Company, to: If to the Placement Agent, to:
Saf-T-Lok, Incorporated Alexander, Wescott & Co., Inc.
0000 Xxxxxxxxxx Xxxxxxx 000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxx Xxxx Xxxxx, XX. 33408 Xxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx Attn: Xxxxx Xxxxxx
If to the Escrow Agent, to:
Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
9. This Agreement shall terminate on the Termination Date, unless previously
terminated by fully disbursing the Escrow Account, or the date of the
distribution of funds after the Termination Date.
10. If any one or more of the covenants or agreements provided in this
Agreement on the part of the parties hereto to be performed should be
determined by a court of competent jurisdiction to be contrary to law,
such covenant or agreement shall be deemed and construed to be severable
from the remaining covenants and agreements herein contained and shall in
no way affect the validity of the remaining provisions of this Agreement.
11. Any corporation or association into which the Escrow Agent may be
converted or merged, or to which it may sell or transfer its assets as a
whole or substantially as a whole, or any corporation or association
resulting from any conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor Escrow
Agent hereunder and shall be vested with all the power, discretion,
immunities, privileges and all other matters as with its predecessor,
without the execution or filing of any instrument or any further act or
deed of conveyance on the part of any of the parties hereto.
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12. The duties and responsibilities of the Escrow Agent hereunder shall be
determined solely by the express provisions of this Escrow Agreement and
no other or further duties or responsibilities shall be implied. The
Escrow Agent shall not have any liability under, nor duty to inquire into
the terms and provisions of any agreement or instructions, other than
outlined in the Agreement.
13. Anything in this agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Escrow Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement
as of the date first above written.
Saf-T-Lok, Incorporated (the "Company")
By: /s/ Xxxxxxxx Xxxxxx
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Dated: 4-22-99
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Alexander, Wescott & Co., Inc. (the "Placement Agent")
By: /s/ Xxxxx Xxxxxx
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Dated: 4-22-99
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Chase Manhattan Bank (the "Escrow Agent")
By: /s/ A. Caldas
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Dated: 4/28/99
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