EXHIBIT 10.5
ESCROW AGREEMENT
AGREEMENT made this day of ________, ________ 2000 by and among the Issuer
whose name and address appears on the Information Sheet (as defined herein)
attached to this Agreement and Continental Stock Transfer & Trust Company (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 (the "Securities") as
described on the Information Sheet;
WHEREAS, the Issuer, through its officers and directors, and/or
participating selected dealers proposes to offer the Securities for sale to the
public on a "best efforts, all or none" basis with respect to the Minimum
Securities Amount and Minimum Dollar Amount and at the price per share all as
set forth on the Information Sheet;
WHEREAS, the Issuer proposes to establish an escrow account (the "Escrow
Account"), to which subscription monies which are received by the Escrow Agent
from the Issuer and participating selected dealers, if any, in connection with
such public offering are to be credited, and the Escrow Agent is willing to
establish the Escrow Account on the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Escrow Agent has an agreement with Chemical Bank to establish
a special bank account (the "Bank Account") into which the subscription monies,
which are received by the Escrow Agent for the Issuer and/or participating
selected dealers, if any, and credited to the Escrow Account, are to be
deposited;
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").
163
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing bank account
at the branch of Chemical Bank selected by the Escrow Agent, and bearing the
designation set forth on the Information Sheet (heretofore defined as the "Bank
Account"). The purpose of the Bank Account is for (a) the deposit of all
subscription monies (checks, cash or wire transfers) which are received by the
Issuer and participating selected dealers, if any, from prospective purchasers
of the Securities and are delivered by the Issuer and participating selected
dealers, if any, to the Escrow Agent, (b) the holding of amounts of subscription
monies which are collected through the banking system, and (c) the disbursement
of collected funds, all as described herein.
2.2 On or before the date of the initial deposit in the Bank 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 amounts for credit to the
Escrow Account or for deposit in the Bank 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, 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". Except
as provided in Section 4.3 hereof, after the Termination Date the Underwriter
shall not deposit, and the Escrow Agent shall not accept, any additional amounts
representing payments by prospective purchasers.
3. Deposits to the Bank Account.
3.1 The Issuer and participating selected dealers, if any, shall promptly
deliver to the Escrow Agent all monies which they receive from prospective
purchasers of the Securities, which monies shall be in the form of checks, cash,
or wire transfers. Upon the Escrow Agent's receipt of such monies, they shall be
credited to the Escrow Account. All checks delivered to the Escrow Agent shall
be made payable to "Continental Stock Transfer & Trust Company, as Escrow Agent
for Xxxxxxx International Inc.". Any check 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.
164
3.2 Promptly after receiving subscription monies as described in Section
3.1, the Escrow Agent shall deposit the same into the Bank Account. Amounts of
monies so deposited are hereinafter referred to as "Escrow Amounts". The Escrow
Agent shall cause Chemical Bank to process all Escrow Amounts for collection
through the banking system. Simultaneously with each deposit to the Escrow
Account, the Issuer (or the participating selected dealer, if such deposit is
made by the selected dealer) shall inform the Escrow Agent in writing of the
name and address of the prospective purchaser, the amount of Securities
subscribed for by such purchaser, and the aggregate dollar amount of such
subscription (collectively, the "Subscription Information").
3.3 The Escrow Agent shall not be required to accept for credit to the
Escrow Account or for deposit into the Bank Account checks which are not
accompanied by the appropriate Subscription Information. Wire transfers and cash
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.
3.4 The Escrow Agent shall not be required to accept in the Escrow Account
any amounts representing payments by prospective purchasers, whether by check,
cash, or wire, except during the Escrow Agent's regular business hours.
3.5 Only those Escrow Amounts, which have been deposited in the Bank
Account and which have cleared the banking system and have been collected by the
Escrow Agent, are herein referred to as the "Fund".
3.6 If the proposed offering is terminated before the Termination Date,
the Escrow Agent shall refund any portion of the Fund prior to disbursement of
the Fund in accordance with Article 4 hereof upon instructions in writing signed
by the Issuer.
4. Disbursement from the Bank Account.
4.1 Subject to Section 4.3 below, if by the close of regular banking hours
on the Termination Date the Escrow Agent determines that the amount in the Fund
is less than the Minimum Dollar Amount or the Minimum Securities Amount, as
indicated by the Subscription Information submitted to the Escrow Agent, then in
either such case, the Escrow Agent shall promptly refund to each prospective
purchaser the amount of payment received from such purchaser which is then held
in the Fund or which thereafter clears the banking system, without interest
thereon or deduction therefrom, by drawing checks on the Bank Account for the
amount of such payments and transmitting them to the purchasers. In such event,
the Escrow Agent shall promptly notify the Issuer of its distribution of the
Fund.
165
4.2 Subject to Section 4.3 below, if at any time up to the close of
regular banking hours on the Termination Date, the Escrow Agent determines that
the amount in the Fund is at least equal to the Minimum Dollar Amount and
represents the sale of not less than the Minimum Securities Amount, the Escrow
Agent shall promptly notify the Issuer of such fact in writing. The Escrow Agent
shall promptly disburse the Fund, by drawing checks on the Bank Account in
accordance with instructions in writing signed by the Issuer as to the
disbursement of the Fund, promptly after it receives such instructions.
4.3 If the Escrow Agent or the Issuer has on hand at the close of business
on the Termination Date any uncollected amounts which when added to the Fund
would raise the amount in the Fund to the Minimum Dollar Amount, and result in
the Fund representing the sale of the Minimum Securities Amount, the Collection
Period (consisting of the number of business days set forth on the Information
Sheet) shall be utilized to allow such uncollected amounts to clear the banking
system. During the Collection Period, the Issuer and participating selected
dealers, if any, shall not deposit, and the Escrow Agent shall not accept, any
additional amounts; provided, however, that such amount as were received by the
Issuer (or the participating selected dealer) by the close of business on the
Termination Date may be deposited with the Escrow Agent by noon of the next
business day following the Termination Date. If at the close of business on the
last day of the Collection Period an amount sufficient to raise the amount in
the Fund to the Minimum Dollar Amount and which would result in the Fund
representing the sale of the Minimum Dollar Amount and which would result in the
Fund representing the sale of the Minimum Securities Amount shall not have
cleared the banking system, the Escrow Agent shall promptly notify the Issuer in
writing of such fact and shall promptly return all amounts then in the Fund, and
any amounts which thereafter clear the banking system, to the prospective
purchasers as provided in Section 4.2 hereof.
4.4 Upon disbursement of the Fund pursuant to the terms of this Article 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 Fund.
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 notify the Issuer, on a daily basis, of the
Escrow Amounts which have been deposited in the Bank account and of the amounts,
constituting the Fund, which have cleared the banking system and have been
collected by the Escrow Agent.
166
5.2 The Escrow Agent shall not be responsible for or be required to
enforce any of the terms or conditions of any agreement between the Issuer and
participating selected dealers, if any, nor shall the Escrow Agent be
responsible for the performance by the Issuer of its obligations under this
Agreement.
5.3 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, cash, or wire transfers
meeting the requirements of Section 3.1, nor shall the Escrow Agent be required
to keep records of any information with respect to the amount of such payments;
however, the Escrow Agent shall notify the Issuer within a reasonable time of
any discrepancy between the amount set forth in any Subscription Information and
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.
5.4 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.
5.5 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.
5.6 If the Escrow Agent is uncertain as to its duties or rights hereunder
or shall receive instructions with respect to the Bank Account, the Escrow
Amounts or the Fund which, in it sole determination, are in conflict either with
other instructions received by it or with any provision of this Agreement, it
shall be entitled to hold the Escrow Amounts, the Fund, or a portion thereof, in
the Bank Account pending the resolution of such uncertainty to the Escrow
Agent's sole satisfaction, by final judgment of a court or courts of competent
jurisdiction or otherwise; or the Escrow Agent, at its sole option, may deposit
the Fund (and any other Escrow Amounts that thereafter become part of the Fund)
with the Clerk 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 Fund
with the Clerk of any court, the Escrow Agent shall be relieved of all further
obligations and released from all liability hereunder.
167
5.7 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 wilful misconduct or gross negligence. 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.
5.8 The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Escrow Amounts, the Fund or
ant part thereof or to file any financing statement under the Uniform Commercial
Code with respect to the Fund or any part thereof.
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 three (3) 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 Escrow Amounts until they clear the banking system and the Fund for a period
of not more than five (5) business days following the effective date of such
resignation, at which tine (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, then the resigning Escrow Agent
shall pay over to the successor escrow agent the Fund, 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 Fund to each prospective purchaser, without interest thereon
or deduction therefrom, and the resigning Escrow Agent shall promptly notify the
Issuer in writing of its liquidation and distribution of the Fund; 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 Fund to a successor escrow agent or distribution of
the Fund 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 Escrow Amounts
or the Fund or any part thereof.
7.1 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 Escrow Amount or the Fund or any part thereof.
168
7.3 The Subscription Information submitted with each deposit shall, at the
tine of submission and at the time of the disbursement of the Fund, be deemed a
representation and warranty that such deposit represents a bona fide payment by
the purchaser described therein for 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 Fund, true
and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow
Agent Fees set forth on the Information Sheet, payable as and when stated
therein. 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. Upon receipt of the Minimum Dollar
Amount, the Escrow Agent shall have a lien upon the Fund to the extent of its
fees for services as Escrow Agent.
9. Indemnification and Contribution.
9.1 The Issuer (herein referred to as the "Indemnitor") agrees to
indemnify the Escrow Agent and its officers, directors, employees, agents and
shareholders (collectively referred to as 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 or gross
negligence of the Indemnitees.
9.2 If the indemnification provided for in Section 9.1 is applicable, but
for any reason is 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 The provisions of this Article 9 shall survive any termination of this
Agreement, whether by disbursement of the Fund, 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 New York 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
169
Escrow Amounts or the Fund 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, Federal Express or comparable overnight courier, or by hand delivery
with receipt acknowledged, or by the Express Mail service offered by the United
States Post Office, and addressed, if to the Issuer, at its address set forth on
the Information Sheet, and if to the Escrow Agent, at its address set forth
above, to the attention of the Trust Department.
12. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid 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. 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
hereto.
14. 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 therewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
THE ISSUER CONTINENTAL STOCK
TRANSFER & TRUST COMPANY
By: __________________________ By: __________________________
170
ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer
Name: Xxxxxxx International Inc.
Address: 00 Xxxxx xx Xxxxxxxx, Xxxxx 000, Nuns' Island,
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
State of incorporation of organization: Delaware
2. The Securities
Description of the Securities to be offered (e.g., shares of
or warrants for common stock, debentures, units consisting
shares and warrants, etc.) common stock
Par value, if any $.001 par value
Offering price per share $1.00
3. Minimum Amounts Required for Disbursement of the Escrow Account
Aggregate dollar amount which must be collected before the
Escrow Account may be disbursed to the Issuer
("Minimum Dollar Amount") $250,000
Total amount of securities which must be subscribed for before
the Escrow Account may be disbursed to the Issuer ("Minimum
Securities Amount") 250,000 shares
4. Plan of Distribution of the Securities
Offering Period: 30 calendar days
Extension Period, if any: 15 calendar days
Collection Period, if any: 5 business days
5. Title of Escrow Account: Continental Stock Transfer & Trust Company,
Escrow Agent for the offering by Xxxxxxx International Inc.
6. Escrow Agent Fees
Amount due on execution of the Escrow Agreement: $1,000 and $1,000 upon
completion of the escrow
Fee for each check disbursed pursuant to the terms of the
Escrow Agreement: $10
Fee for each check returned pursuant to the terms of the
Escrow Agreement: $10
171
