EXHIBIT 99.1
ESCROW AGREEMENT
Agreement entered into this 15th day of July, 2002, (this "Agreement")
between Caraco Pharmaceutical Laboratories Ltd. (herein called "Company"), and
Bank One Trust Company, N.A. whose address is 000 Xxxxxxxx, Xxxx Xxxxx XX
0-0000, Xxxxxxx, Xxxxxxxx 00000 (herein called "Agent"):
A. The Company shall be offering investors ("Investors") up to
4,365,000 of its shares of common stock pursuant to a registration statement
("Registration Statement") filed with the Securities and Exchange Commission
(the "SEC") and the securities divisions ("Securities Divisions") of certain
States. The prospectus provides a minimum of 100,000 shares (the "Minimum
Offering") must be sold within 90 days from the date of commencement of the
offering (which commencement date shall be communicated in writing by the
Company to the Agent). The 90-day offering period may be extended by the Company
for an additional 90 days) (the "Termination Date"). If the Minimum Offering is
not obtained on or before the Termination Date, the offering by the Company will
terminate.
B. The purchase price for the shares of common stock will be paid by
Investors at the time of subscription. The Company has represented to the
Investors that the Minimum Offering will be deposited into an escrow account.
C. The Company and Agent desire that the subscription proceeds with
respect to the Minimum Offering be held in escrow by the Agent pursuant to the
terms and conditions set forth below.
WITNESSETH:
1. The Company agrees to deliver, or cause to be delivered to Agent, the
checks representing payment from Investors for their shares of common
stock of the Company. The Company agrees to retain the original copies
of all of the Investors' subscription agreements and to deliver to
Agent duplicate copies of such subscription agreements fully executed
by both the Company and the Investors. Agent shall have no duty or
obligation to examine the subscription agreements for any purpose
whatsoever (including, but not limited to, genuineness of signatures or
authority to sign). The checks representing payment for the shares of
common stock with respect to the Minimum Offering shall be made payable
to "Bank One Trust Company, N.A., escrow agent." Agent agrees to hold
the subscription proceeds in a non-interest bearing account (the
"Escrow Account").
2. If subscriptions for 100,000 shares, in the aggregate, have not been
deposited with Agent into the Escrow Account by the Termination Date,
Agent will return to the Investors all of the Investors' subscription
proceeds held in the Escrow Account. If, however, subscription proceeds
for 100,000 or more shares have been deposited with Agent into the
Escrow Account on or before the Termination Date, upon written
notification and demand by the Company, Agent will release all of such
subscription proceeds to the Company by depositing the proceeds into an
account specified to the Agent in writing by the Company's Chief
Executive Officer. In no event will such subscription proceeds be
released to the Company until the Agent has received collected funds.
For purposes of this Agreement, the term
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"collected funds" shall mean all funds received by the Agent which have
cleared normal banking channels and are in the form of cash.
3. If, during the term of this Escrow Agreement, an Investor and the
Company deliver to Agent written instructions that an Investor has
rescinded his purchase of shares of common stock, then Agent shall
return to that Investor his or her subscription proceeds that Agent is
holding for such Investor.
4. The duties and obligations of Agent hereunder shall be determined
solely by the express provisions of this Agreement. Agent shall not be
liable or responsible for any act done or step taken or omitted by it
or any mistake of fact or law or for anything which it may do or
refrain from doing, except for its gross negligence, willful misconduct
or willful default or failure in the performance of any obligation
imposed upon it hereunder.
5. Agent is authorized to act in reliance upon the sufficiency,
correctness, genuineness or validity of any instrument or document or
other writing submitted to it hereunder and shall have no liability
with respect to said matters.
6. Agent's fee in the amount of $1,500.00 shall be paid in advance by the
Company at the time the Company's registration statement is declared
effective by the SEC and the Securities Division of at least one State.
Subject to Paragraph 4, the Company agrees, to indemnify and hold
harmless the Agent from any costs, damages, expenses or claims,
including attorney's fees, which Agent may incur or sustain as a result
of or arising out of this Escrow Agreement or Agent's duties relating
thereto. The above indemnification shall survive the resignation or
removal of Agent or the termination of this Agreement.
IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY,
FOR ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED
HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT'S
FAILURE TO ACT IN ACCORDANCE WITH THE STANDARDS SET FORTH IN THIS
AGREEMENT, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW
AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
7. The Agent shall have the right, but not the obligation, to consult with
counsel of choice of a reputable law firm which has more than 50
lawyers and shall not be liable for action taken or omitted to be taken
by Escrow Agent in good faith in accordance with the advice of such
counsel.
8. In the event of any disagreement or the presentation of adverse claims
or demands in connection with the Escrow Account, Agent shall, at its
option, be entitled to refuse to comply with any such claims or demands
during the continuance of such disagreement and may refrain from
delivering any item affected thereby, and in so doing, Agent shall not
become liable to the Company or any Investor, or to any other person,
due to its failure to comply with any such adverse claim or demand.
Agent shall be entitled to continue, without liability, to refrain and
refuse to act:
a. Until all the rights of the adverse claimants have been finally
adjudicated by a court having jurisdiction of the parties and the items
affected thereby, after which time the Agent shall be entitled to act
in conformity with such adjudication; or
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b. Until all differences shall have been adjusted by agreement and
Agent shall have been notified thereof and shall have been directed in
writing signed jointly or in counterpart by the Company and by all
persons making adverse claims or demands, at which time Agent shall be
protected in acting in compliance therewith.
The parties agree that they may seek adjudication of any adverse claim
or demands only in either the Circuit Court for the County of Wayne,
Michigan, or the United States Federal District Court for the Eastern
District of Michigan, Southern Division. The parties agree to the
jurisdiction of either of said Courts over their persons as well as the
subscription proceeds, waive personal service of any process, and agree
that service of process by certified or registered mail, return receipt
requested, to the address set forth below each party's signature to
this Agreement shall constitute adequate service.
9. Agent may resign as such following the giving of thirty days prior
written notice to the Company hereto. Similarly, Agent may be removed
and replaced following the giving of thirty days prior written notice
to Agent by the Company. In either event, the duties of Agent shall
terminate thirty days after the date of such notice (or as of such
earlier date as may be mutually agreeable); and Agent shall then
deliver the balance of the escrow deposit then in its possession to a
successor escrow agent as shall be appointed by the Company as
evidenced by a written notice filed with Agent.
10. 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 be
given in person, by facsimile transmission, courier delivery service or
by mail, and shall become effective (a) on delivery if given in person,
(b) on the date of delivery if sent by facsimile or by courier delivery
service, or (c) four business days after being deposited in the mail,
with proper postage for first-class registered or certified mail,
prepaid.
Notices shall be addressed as follows:
(i) if to the Company:
Caraco Pharmaceutical Laboratories Ltd.
0000 Xxxxxx XxXxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Fax Number: (000) 000-0000
(ii) if to the Agent:
Bank One Trust Company, N.A.
000 Xxxxxxxx
Xxxx Xxxxx XX 0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx Xxxxxxxxx
Fax Number: (000) 000-0000
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11. The entire agreement of the parties is contained herein; any change in
terms or conditions herein may only be made in writing signed by all
parties hereto. Agent shall not be charged with knowledge of any fact,
unless it has actually received written notice thereof from one of the
parties by certified or registered mail, return receipt requested,
addressed to Agent's address shown at the top of this Agreement, such
notice clearly referring to this Agreement.
12. This Escrow Agreement shall be deemed to have been made under and shall
be governed by the laws of the State of Michigan in all respects,
including matters of construction, validity and performance.
CARACO PHARMACEUTICAL LABORATORIES LTD
By /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxxx X. Xxxxxx
Its Chief Executive Officer
BANK ONE TRUST COMPANY, N.A.
By /s/ Xxxxxxxxxxx Xxxxxxxxx
-------------------------------
Its Authorized Officer
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