EXHIBIT 10.7
FORM OF ESCROW AGREEMENT
THE UNDERSIGNED, in order to designate UNITED NATIONAL BANK, A COMMERCIAL BANK,
whose address is 0000 Xxxxx Xxxxx Xxxxx, Xxxxx Xxxxx, XX 00000 ("Escrow Agent"),
as the Escrow Agent of the undersigned for the purposes and upon the terms and
conditions herein set forth ("Escrow Agreement"), does hereby enter into this
Escrow Agreement with United National Bank on the effective date of the
Registration Statement on Form SB-2 (the "Registration Statement") for Gay
Entertainment Television, Inc., a New York corporation (the "Company").
1. United National Bank hereby is appointed depository for the undersigned with
respect to the subject matter of this agreement. Escrow Agent is not required to
post bond for any activity of Escrow Agent described in this Escrow Agreement.
2. This Escrow Agreement is being executed in connection with that certain offer
for sale to subscribers ("Subscribers") of a minimum of 1,882,350 units (the
"Minimum Offering") and a maximum of 2,350,000 units (the "Maximum Offering")
offered by the Company, pursuant to and as described in the Registration
Statement. Pursuant to the offer, and concurrently with the execution and
delivery hereof, undersigned have agreed to deposit with Escrow Agent, as
custodian and depository all moneys until the Minimum Offering amount is
satisfied collected pursuant to this offer from Subscribers, and direct that
same be held and disposed of by Escrow Agent as herein provided.
3. Escrow Agent is directed and authorized to hold the deposited funds in a
demand deposit account at United National Bank, designated GAY ENTERTAINMENT
TELEVISION, INC. ESCROW ACCOUNT.
The undersigned hereby directs the Escrow Agent to immediately
distribute the deposited funds thereon to the Company pursuant to the following
escrow requirements:
a. All funds received from Subscribers will be deposited into Escrow
Account at United National Bank and shall be invested in funds permissible by
the Securities and Exchange Commission.
b. Escrow Agent will promptly return to a Subscriber their portion of
the escrowed funds, without interest, if a Subscriber is subsequently rejected
by the Company or The Agean Group, as representative (the "Representative") of
the Company's underwriters, in whole or in part, as set forth in the Prospectus
or if a Subscriber rescinds that Subscriber's subscription agreement; provided
that such rescission shall be of any force and effect if rescission is permitted
under the laws of the State to which such Subscriber is domiciled. The Company
or the Representative will immediately notify Escrow Agent in writing of any
rejected Subscriber or a rescission by a Subscriber. Escrow Agent will then,
upon collection of that Subscriber's moneys, refund the rejected amount to that
Subscriber.
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c. Escrow Agent shall promptly return to each investor their portion of
the escrow funds, without interest in the event the Escrow Agent fails to
receive aggregate escrowed funds in the amount of Seven Million, Nine Hundred
Ninety Nine Thousand, Nine Hundred Eighty Seven and 50/100 ($7,999,987.50)
Dollars on or before ninety (90) days from the effective date of the Prospectus
("Termination Date"), unless the offering is extended by the Company and the
Representative, at their sole option, for an additional ninety (90) days (for a
total of 180 days from the effective date of the Prospectus and the Company will
promptly notify Escrow Agent in writing of any extension of the offering.
d. Escrow Agent will promptly deliver the escrowed funds to the Company
with accrued interest if:
(1) the escrowed funds are in the aggregate amount of not less
than Seven Million, Nine Hundred Ninety Nine Thousand, Nine Hundred Eighty Seven
and 50/100 ($7,999,987.50) Dollars ("Minimum Subscription") on or before
Termination Date or any extension thereof.
(2) In the case of a distribution under the proceeding
subparagraph 3c(1) above, the Company may continue to deposit checks made
payable to Gay Entertainment Television, Inc. Escrow Account into the Escrow
Account and Escrow Agent will cause the Escrow Account to remain open for a
period not to exceed the Termination Date, unless the offering is extended
pursuant to subparagraph 3b(2). During said period, all such deposits shall be
considered funds of the Company received by Escrow Agent for collection and upon
receipt of collected funds on each such deposit. Upon written notice from the
Company and the Representative, after release of the Minimum Subscription, the
Escrow Agent shall release such amount of additional funds as directed in such
additional written notice(s).
ESCROW AGENT SHALL BE PROTECTED IN RELYING ON THE SOLE WRITTEN ASSERTIONS OF THE
COMPANY FOR EACH OF THE ITEMS IN THIS PARAGRAPH 3.
4. Escrow Agent is not a party to, nor is it bound by nor need it give
consideration to the terms or provisions of any other agreement or undertaking
between the undersigned or between any of the undersigned and other persons, or
any agreement or undertaking which may be evidenced by or disclosed by any items
included among the deposited funds, and Escrow Agent assents to and is to give
consideration only to the terms and provisions of this Escrow Agreement. Unless
it is specifically provided otherwise herein, Escrow Agent has no duty to
determine or inquire into the happening or occurrence of any event or
contingency or the performance or failure of performance of any of the
undersigned with respect to arrangements or contracts with each other or with
others, and the Escrow Agent's sole duty hereunder is to hold the deposited
funds and to dispose of and deliver the same in accordance with instructions
given to it in the form and tenor provided in this Escrow Agreement. The Company
represents and warrants that each Subscriber has been advised of this Escrow
Agreement and its availability.
5. Escrow Agent shall not be responsible or liable to any person in any manner
whatever for
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the sufficiency, correctness, genuiness, effectiveness or validity of any of the
deposited funds or for the form or execution thereof, or for the identity or
authority of any person executing or depositing it. If any of the undersigned
are acting as agent for others, all of the undersigned represent and warrant
that such agent is authorized to make and enter into this Escrow Agreement. This
Escrow Agreement is a personal one between the undersigned and the Escrow Agent
only, and in connection therewith Escrow Agent is authorized by each of the
undersigned to rely upon the representations, both actual and implied, of the
undersigned and all other persons connected with this Escrow Agreement and the
deposited funds, as to marital status, authority to execute and deliver this
Escrow Agreement, notifications, receipts, or instructions hereunder, and
relationships among persons,including persons authorized to receive delivery
hereunder, and Escrow Agent shall not be liable to any person in any manner for
such reliance. The duty of Escrow Agent hereunder shall only be to the
undersigned, their successors, and assigns and to no other person or persons
whomsoever.
6. Escrow Agent may act upon any written notice, request, waiver, consent,
certificate, receipt, authorization, power of attorney or other instrument or
document, from the Company and Escrow Agent may consider such to be genuine and
to be what it purports to be. Escrow Agent shall be liable as a depository only
and shall not be responsible for the sufficiency or accuracy of the form,
execution or validity of documents deposited hereunder, or any description of
funds or other thing therein, nor shall it be liable in any respect on account
of the identity, authority, or rights of the persons executing or delivering or
purporting to execute or deliver any such document or paper. The undersigned
parties, jointly and severally, agree to indemnify and hold harmless Escrow
Agent from and against any and all liabilities, including attorney's fees,
incurred in connection with this Escrow Agreement.
7. Whenever under the terms of this Escrow Agreement the performance date of any
provision hereof shall fall on a holiday of the Escrow Agent, the performance
thereof on the next succeeding business day of Escrow Agent shall be deemed to
be in full compliance. Whenever Escrow Agent is required by the terms hereof to
take action upon the occurrence of any event or contingency, the time prescribed
for such actions shall in all cases be a reasonable time after written notice to
the Escrow Agent of the happenings of such event or contingency provided,
however, that this provision shall not be deemed to limit or reduce the time
allowed Escrow Agent for action as provided in Paragraph 12 of this Agreement.
8. Anything in this Escrow Agreement to the contrary notwithstanding, Escrow
Agent shall not be liable to any person for anything which it may do or refrain
from doing in connection with this Escrow Agreement, unless Escrow Agent is
guilty of gross negligence or willful misconduct.
9. In case of any notice of dispute or disagreement between the parties, or
among them or any other person resulting in adverse claims and demands being
made in connection with, or for, any Escrow Account funds or other funds held
pursuant to the terms of this Escrow Agreement:
a. The Escrow Agent may refuse to comply with the claims or demands as
long as such disagreement continues and in so refusing the Escrow Agent will
make no
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delivery or disposition of the Escrow Account funds and the Escrow Agent shall
not be liable or become liable in any way to any person for its failure or
refusal to comply with such conflicting or adverse demands; and it shall be
entitled to continue to refrain from acting and refuse to act until it receives
authorization executed by all parties to the disagreement; or a certified or
file-stamped copy of a court order resolving the disagreement; or a certified or
file-stamped copy of a court order resolving the disagreement or directing a
distribution of all or any portion of the Escrow Account funds. Upon receipt of
any such document the Escrow Agent shall promptly act according to the terms
thereby being relieved of any duty, responsibility or liability arising from the
adverse claims and demands or from the terms of this Escrow Agreement.
b. The Escrow Agent shall have at its option, at any time, the rights
to file an action or xxxx in interpleader, or similar action for such purpose,
in a court of competent jurisdiction and pay the Escrow Account funds and any
income earned or accrued thereon into said court. In such event, the Escrow
Agent's duties, responsibilities and liabilities with respect to the Escrow
Account fund, proceeds therefrom and this Escrow Agreement shall terminate,
provided however, that all costs and expenses, including attorney's fees, which
the Escrow Agent incurs in any such action shall be the responsibility of and
paid by the Company.
10. The death, disability, bankruptcy, insolvency or absence of any of the
undersigned shall not affect or prevent performance or exercise by Escrow Agent
of its obligations and rights hereunder.
11. Escrow Agent may from time to time advise with legal counsel of its own
choosing in the event of any disagreement, controversy, question or doubt as to
the construction of any of the provisions hereof or its duties and Escrow Agent
will be protected in acting in good faith in accordance with the opinion of such
counsel.
12. Escrow Agent will receive from the Company prior to distribution of the
deposited funds and prior to termination of this Escrow Agreement, fees and
charges for services of Escrow Agent hereunder which are agreed to be $3,000 and
additional amounts sufficient to reasonably compensate Escrow Agent for any
additional services, fees or charges imposed upon Escrow Agent as a result of
additional responsibilities in connection with or arising on account of the
deposits into the Escrow Account, the holding and disposition thereof pursuant
to this Escrow Agreement, or as a result of litigation or threat of litigation.
The Company agrees to reimburse Escrow Agent for reasonable attorney's fees,
disbursement expenses,costs, charges and damages, if any, suffered or incurred
by Escrow Agent in the performance of the duties and responsibilities of Escrow
Agent pursuant to this Escrow Agreement.
13. The full amount of the deposited funds, less any fees and costs as herein
described, shall be paid to the Company by the Escrow Agent pursuant to this
Escrow Agreement. If additional moneys are added to the Escrow Account after the
escrow is broken, Escrow Agent shall not be required to disburse such funds
except pursuant to the provisions of this Escrow Agreement.
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Notwithstanding anything to the contrary contained herein, Escrow Agent is under
no duty or responsibility to enforce collection of any checks delivered to
Escrow Agent hereunder.
14. During the term of the escrow, the deposited Escrow Account funds hereunder
shall, by order of the Company, be deposited in an interest bearing account with
United National Bank pursuant to paragraph 3 above.
15. Escrow Agent reserves the right to resign hereunder, upon ten (10) days
prior written notice to the Company. On and after the date of the written notice
of resignation, Escrow Agent is not required to accept any additional deposits
from Subscribers or anyone else for the Escrow Account. In the event of said
resignation, and prior to the effective date thereof, the Company, by written
notice to Escrow Agent, shall designate a successor escrow agent. If the Company
fails to designate such a successor escrow agent within such time period, the
Escrow Agent may deliver any undisbursed funds into the registry of any court
having jurisdiction at the expense of the Company.
16. This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Florida and the laws of the United States applicable to
transactions in Florida.
17. UNITED NATIONAL BANK HAS NOT PARTICIPATED IN THE PLANNING OR STRUCTURING OF
THIS TRANSACTION AND ASSUMES NO RESPONSIBILITY FOR ADVERSE TAX OR OTHER LEGAL
CONSEQUENCES AFFECTING THE UNDERSIGNED, AN SUBSCRIBER OR ANY OTHER PERSON
WHATSOEVER, EACH OR WHOM IS URGED TO DIRECT ALL SUCH QUESTIONS TO COMPETENT
LEGAL COUNSEL OF ANY SUCH PERSON'S CHOICE.
18. This Agreement may be executed in several counterparts, each of which shall
be deemed an original, and such counterparts shall constitute and be one and the
same instrument.
United National Bank, a chartered bank Gay Entertainment Television, Inc.
By: __________________________ By: ________________________________________
Name: ________________________ Xxxxxx X. Xxxxxx, Chief Executive Officer
Its: _________________________
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