Exhibit 1.2
Form SB-2
Skypath Networks, Inc.
ESCROW AGREEMENT
This ESCROW AGREEMENT ("Agreement"), made and entered into as of
__________, 2003, by and among ACAP FINANCIAL, INC., a Utah corporation (the
"Underwriter"), Skypath Networks, Inc., a Delaware corporation ("Skypath"), and
Xxxxx Union Bank, a Utah banking corporation (the "Escrow Agent").
R E C I T A L S:
Skypath intends to engage in a registered offering of certain of its
securities (the "Offering"), which Offering contemplates total aggregate
offering proceeds of up to $2,000,000, (2,000,000 shares at $1.00 per share (the
"Shares") pursuant to a registration statement on Form SB-2 ("Registration
Statement") filed with the Securities and Exchange Commission.
SKYPATH has retained the Underwriter, as selling agent for SKYPATH on a
best efforts basis, to sell the Shares in the Offering, and the Underwriter has
agreed to sell the Shares as SKYPATH's selling agent on a best efforts basis in
the Offering, the terms of which relationship are set forth in an Underwriting
Agreement between SKYPATH and the Underwriter (the "Underwriting Agreement").
The Underwriter may enter into agreements with other brokers/dealers (the
"Selected Dealers" or individually, the "Selected Dealer") to assist in the sale
of the Shares.
Following the effective date of the Registration Statement ("Effective
Date") there will be deposited into an escrow account with Escrow Agent from
time to time funds from prospective investors who wish to subscribe for
securities offered in connection with the Offering ("Subscribers"), which funds
will be held in escrow and distributed in accordance with the terms hereof.
The Escrow Agent is willing to act as an escrow agent in respect of the
Escrow Funds (as hereinafter defined) upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, it is hereby agreed as follows:
1. Establishment of the Escrow Account. The Underwriter and SKYPATH hereby
appoint Escrow Agent to serve as escrow agent for purposes of the Underwriting
Agreement, and Escrow Agent hereby accepts the appointment as escrow agent
hereunder and agrees to act on the terms and conditions set forth in this
Agreement. On or prior to the date of commencement of the Offering, the parties
shall establish an account with the Escrow Agent, which escrow account shall be
entitled "Skypath Co. Corporation Escrow Account" (the "Escrow Account"). This
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Agreement is being executed and the Escrow Account is being established to, and
the parties hereto will, comply with SEC Rule 15c2-4.
2. Escrow Period. The escrow period (the "Escrow Period") shall begin with
the commencement of the Offering and shall terminate upon the Closing Date (as
defined in Section 5 of this Agreement), or ___________, 2003, whichever first
occurs. During the Escrow Period, SKYPATH is aware and understands that it is
not entitled to any funds received into escrow and no amounts deposited by the
Escrow Agent shall become property of SKYPATH or any other entity, or be subject
to the debts of SKYPATH or any other entity.
4. Deposits into the Escrow Account. Funds received from purchasers by the
Underwriter, or Selected Dealers shall be deposited in the Escrow Account in
compliance with SEC Rule 15c2-4. All money so deposited in the Escrow Account is
hereinafter referred to as the "Escrow Funds". Until termination of this Escrow
Agreement, all funds collected by the Underwriter from subscription for the
purchase of Shares in the subject offering shall be payable to the Escrow Agent,
and deposited promptly with the Escrow Agent, but in any event by 12:00 noon of
the next business day after receipt by the Underwriter of such funds. The
Underwriter may allow certain selected dealers to assist it in the offering of
the Shares, which selected dealers shall similarly deposit with or transmit to
the Escrow Agent all funds received on subscription for the Units by noon of the
next business day following receipt. The amount transmitted shall include all
cash payments received, together with all funds collected on checks honored by
the paying bank.
Concurrently with transmitting funds to the Escrow Agent, the Underwriter
shall also deliver to the Escrow Agent a schedule setting forth the name and
address of each subscriber whose funds are included in such transmittal, the
number of Units subscribed to, and the dollar amount paid. All funds so
deposited shall remain the property of the subscriber and shall not be subject
to any lien or charges by the Escrow Agent, or judgment or creditors' claims
against the Corporation until released to it in the manner hereinafter provided.
5. Release of Escrow Funds. The Escrow Agent shall pay the Escrow Funds in
accordance with the following:
(a) Provided that the Escrow Agent has received deposits to the Escrow
Account totaling at least $500,000 at or before 4:00 p.m., mountain time,
on _______, 2004, (within six months from the Effective Date) or on any
date prior thereto, that are subsequently collected through normal banking
procedures so that the total of the Escrow Funds is $500,000 after
collection, the Escrow Funds shall be paid to the Company or as otherwise
instructed by the Company, within one (1) business day after the Escrow
Agent receives a written release notice (a "Release Notice") signed by an
authorized person of the Company; and
(b) if the Escrow Agent has not received deposits to the Escrow
Account totaling at least $500,000 at or before 4:00 p.m., mountain time,
on ___________, 2004, (within six months from the Effective Date) that for
whatever reason are not subsequently collected through normal banking
procedures so that the total of the Escrow Funds is not $500,000, then the
Escrow Funds shall be promptly returned to Subscribers.
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(c) As an additional consideration for and as an inducement for the
Escrow Agent to act hereunder, it is understood and agreed that, in the
event of any disagreement between the parties to this Agreement or among
them or any other person(s) resulting in adverse claims and demands being
made in connection with or for any money or other property involved in or
affected by this Agreement, the Escrow Agent shall be entitled, at the
option of the Escrow Agent, to refuse to comply with the demands of such
parties, or any of such parties, so long as such disagreement shall
continue. In such event, the Escrow Agent shall make no delivery or other
disposition of the Escrow Funds or any part of such Escrow Funds. Anything
herein to the contrary notwithstanding, the Escrow Agent shall not be or
become liable to such parties or any of them for the failure of the Escrow
Agent to comply with the conflicting or adverse demands of such parties or
any of such parties.
(d) The Escrow Agent shall be entitled to continue to refrain and
refuse to deliver or otherwise dispose of the Escrow Account or any part
thereof or to otherwise act hereunder, as stated above, unless and until:
(i) the rights of such parties have been finally sealed by
binding arbitration or duly adjudicated in a court having jurisdiction
of the parties and the Escrow Account; or
(ii) the parties have reached an agreement resolving their
differences and have notified the Escrow Agent in writing of such
agreement and have provided the Escrow Agent with indemnity
satisfactory to the Escrow Agent against any liability, claims or
damages resulting from compliance by the Escrow Agent with such
agreement.
In the event of a disagreement between such parties as described above, the
Escrow Agent shall have the right, in addition to the rights described above and
at the option of the Escrow Agent, to tender into the registry or custody of any
court having jurisdiction, all money and property comprising the Escrow Account
and may take such other legal action as may be appropriate or necessary, in the
opinion of the Escrow Agent. Upon such tender, the parties hereto agree that the
Escrow Agent shall be discharged from all further duties under this Agreement;
provided, however, that the filing of any such legal proceedings shall not
deprive the Escrow Agent of its compensation hereunder earned prior to such
filing and discharge of the Escrow Agent of its duties hereunder.
6. Closing Date. The "Closing Date" shall be that date specified in the
Underwriting Agreement. The Underwriter will notify the Escrow Agent of the
Closing Date.
7. Investment of Escrow Account. The Escrow Agent shall deposit all
subscription funds it receives in the Escrow Account, which shall be a
non-interest-bearing bank account at Escrow Agent. The Escrow Funds in the
Escrow Account shall not be invested.
The Underwriter and SKYPATH each warrant to and agree with the Escrow Agent
that, unless otherwise expressly set forth in this Agreement, there is no
security interest in the Escrow Account; no financing statement under the
Uniform Commercial Code of any jurisdiction is on file in any jurisdiction
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claiming a security interest in or describing, whether specifically or
generally, the Escrow Account; and the Escrow Agent shall have no responsibility
at any time to ascertain whether or not any security interest exists in the
Escrow Account or to file any financing statement under the Uniform Commercial
Code of any jurisdiction with respect to the Escrow Account.
8. Compensation of Escrow Agent. The Underwriter shall pay the Escrow Agent
a fee for its services hereunder in an amount equal to $___________, which
amount shall be paid on the Closing Date. In the event that the Offering is
canceled for any reason, the Underwriter shall pay the Escrow Agent its fee
within 10 days after all of the Escrow Funds have been refunded to the parties
that made payment to the Escrow Account. In addition, the Underwriter agrees to
pay to the Escrow Agent its further expenses incurred in connection with this
Agreement, including but not limited to the actual cost of legal services in the
event the Escrow Agent deems it necessary to retain counsel. Such expenses shall
be paid to the Escrow Agent within 30 days following receipt by the Underwriter
of a written statement setting forth such expenses. The Underwriter agrees that,
in the event any controversy arises under or in connection with this Agreement
or the Escrow Account or the Escrow Agent is made a party to or intervenes in
any litigation pertaining to this Agreement or the Escrow Account, to pay to the
Escrow Agent reasonable compensation for its extraordinary services and to
reimburse the Escrow Agent for all costs and expenses associated with such
controversy or litigation. No such fee, expenses or any other monies whatsoever
shall be paid out of or chargeable to the funds on deposit in the Escrow
Account.
9. Duties and Rights of the Escrow Agent. The foregoing agreements and
obligations of the Escrow Agent are subject to the following provisions:
(a) The Escrow Agent's duties hereunder are limited solely to the
safekeeping of the Escrow Account and the delivery of the Escrow Account in
accordance with the terms of this Agreement and no additional duties or
obligations shall be implied hereunder. It is agreed that the duties of the
Escrow Agent are only such as herein specifically provided, being purely of
a ministerial nature, and the Escrow Agent shall incur no liability
whatsoever except for gross negligence or willful misconduct. The Escrow
Agent shall have no duty with respect to the Shares.
(b) The Escrow Agent is authorized to rely on any document believed by
the Escrow Agent to be authentic in making any delivery of the Escrow
Account or otherwise acting under this Agreement. It shall have no
responsibility for the genuineness or the validity of any document or any
other item deposited with it, and it shall be fully protected in acting in
accordance with this Agreement or instructions received. The Escrow Agent
shall in no event incur any liability with respect to any action taken or
omitted to be taken in good faith upon advice of legal counsel, which may
be counsel to any party hereto, given with respect to any question relating
to the duties and responsibilities of the Escrow Agent hereunder. Escrow
Agent shall not be bound in any way by any agreement or contract between
the Underwriter and SKYPATH, including the Underwriting Agreement, whether
or not the Escrow Agent has knowledge of any such agreement or contract.
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(c) SKYPATH and the Underwriter hereby waive any suit, claim, demand
or cause of action of any kind that they may have or may assert against the
Escrow Agent arising out of or relating to the execution or performance by
the Escrow Agent of this Agreement, unless such suit, claim, demand or
cause of action is based upon the gross negligence or willful misconduct of
the Escrow Agent.
(d) The Escrow Agent shall have no obligation to take any legal action
in connection with this Agreement or towards its enforcement, or to appear
in, prosecute or defend any action or legal proceeding which would or might
involve it in any cost, expense, loss or liability unless security and
indemnity, as provided in this subsection, shall be furnished.
The Underwriter and SKYPATH jointly and severally agree to indemnify
the Escrow Agent and its officers, directors, employees and agents and save
the Escrow Agent and its officers, directors, employees and agents harmless
from and against any and all Claims (as hereinafter defined) and Losses (as
hereinafter defined) which may be incurred by the Escrow Agent or any of
such officers, directors, employees or agents as a result of Claims
asserted against the Escrow Agent or any of such officers, directors,
employees or agents as a result of or in connection with the Escrow Agent's
capacity as such under this Agreement by any person or entity. For the
purposes hereof, the term "Claims" shall mean all claims, lawsuits, causes
of action or other legal actions and proceedings of whatever nature brought
against (whether by way of direct action, counterclaim, cross action or
impleader) the Escrow Agent or any such officer, director, employee or
agent, even if groundless, false or fraudulent, so long as the claim,
lawsuit, cause of action or other legal action or proceeding is alleged or
determined, directly or indirectly, to arise out of, result from, relate to
or be based upon, in whole or in part: (a) the acts or omissions of the
Underwriter and SKYPATH, (b) the appointment of the Escrow Agent as escrow
agent under this Agreement, or (c) the performance by the Escrow Agent of
its powers and duties under this Agreement; and the term "Losses" shall
mean losses, costs, damages, expenses, judgments and liabilities of
whatever nature (including but not limited to attorneys', accountants' and
other professionals' fees, litigation and court costs and expenses and
amounts paid in settlement), directly or indirectly resulting from, arising
out of or relating to one or more Claims. Upon the written request of the
Escrow Agent or any such officer, director, employee or agent (each
referred to hereinafter as an "Indemnified Party"), the Underwriter and
SKYPATH jointly and severally agree to assume the investigation and defense
of any Claim, including the employment of counsel acceptable to the
applicable Indemnified Party and the payment of all expenses related
thereto and, notwithstanding any such assumption, the Indemnified Party
shall have the right, and the Underwriter and SKYPATH jointly and severally
agree to pay the cost and expense thereof, to employ separate counsel with
respect to any such Claim and participate in the investigation and defense
thereof in the event that such Indemnified Party shall have been advised by
counsel that there may be one or more legal defenses available to such
Indemnified Party which are different from or additional to those available
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to either the Underwriter or SKYPATH. The Underwriter and SKYPATH hereby
agree that the indemnifications and protections afforded Escrow Agent in
this subsection shall survive the termination of this Agreement.
(e) In order to induce and as partial consideration for the Escrow
Agent's acceptance of this Agreement, the Underwriter and SKYPATH
acknowledge that the Escrow Agent is serving as escrow agent for the
limited purposes set forth herein and each represent, covenant and warrant
to the Escrow Agent that no statement or representation, whether oral or in
writing, has been or will be made to any prospective subscribers for any of
the Shares to the effect that Escrow Agent has investigated the
desirability or advisability of investment in the Shares or approved,
endorsed or passed upon the merits of such investment or is otherwise
involved in any manner with the transactions or events contemplated in the
offering documents for the Shares being used by the Underwriter or SKYPATH
other than as the Escrow Agent under this Agreement. It is further agreed
that no party shall in any way use the name "Xxxxx Union Bank" in any sales
presentation or literature except in the context of the duties of the
Escrow Agent as escrow agent of the offering of the Shares in the strictest
sense. Any breach or violation of this subsection shall be grounds for
immediate termination of the Agreement by the Escrow Agent.
Without limitation to any release, indemnification or hold harmless
provision in favor of the Escrow Agent as elsewhere provided in this
Agreement, the Underwriter and SKYPATH jointly and severally covenant and
agree to indemnify the Escrow Agent and its officers, directors, employees
and agents and to hold the Escrow Agent and such officers, directors,
employees and agents harmless from and against all liability, cost, losses
and expenses, including but not limited to attorneys' fees and expenses
which are suffered or incurred by the Escrow Agent or any such officer,
director, employee or agent as a direct or indirect result of the threat or
the commencement of any claim or proceeding against the Escrow Agent or any
such officer, director, employee or agent based in whole or in part upon
the allegation of a misrepresentation or an omission of a material or
significant fact in connection with the sale or subscription of any one or
more of the Shares. The Escrow Agent shall have no responsibility for
approving or accepting on behalf of the Underwriter or SKYPATH any proceeds
delivered to it hereunder, nor shall Escrow Agent be responsible for
authorizing issuance of the Shares or for determining the qualification of
any purchaser or the accuracy of the information contained in any offering
documents for the Shares being used by the Underwriter or SKYPATH.
(f) The Escrow Agent may resign at any time from its obligations under
this Agreement by providing written notice to the parties hereto. Such
resignation shall be effective on the date set forth in such written notice
which shall be no earlier than 30 days after such written notice has been
given. In the event no successor escrow agent has been appointed on or
prior to the date such resignation is to become effective, the Escrow Agent
shall be entitled to tender into the custody of a court of competent
jurisdiction all assets then held by it hereunder and shall thereupon be
relieved of all further duties and obligations under this Agreement. The
Escrow Agent shall have no responsibility for the appointment of a
successor escrow agent hereunder.
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(g) The Escrow Agent will not be responsible for tax reporting of any
income on the Escrow Account.
10. Notices. All notices given hereunder will be in writing, served by
registered or certified mail, return receipt requested, postage prepaid, or by
hand-delivery, to the parties at the following addresses:
To SKYPATH:
Skypath Networks, Inc.
000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000X
Xxxxxxx, XX 00000
Attention: Xxxxx X. Paolo
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Underwriter:
ACAP Financial, Inc.
00 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Escrow Agent:
Xxxxx Union Bank
000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Attention:____________________
Telephone: (000) 000-0000
10. Miscellaneous.
(a) This Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
assigns.
(b) If any provision of this Agreement shall be held invalid by any
court of competent jurisdiction, such holding shall not invalidate any
other provision hereof.
(c) This Agreement shall be governed by the applicable laws of the
State of Utah.
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(d) This Agreement may not be modified except in writing signed by the
parties hereto.
(e) All demands, notices, approvals, consents, requests and other
communications hereunder shall be given in the manner provided in this
Agreement.
(f) This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original, but all such counterparts
together shall constitute one and the same instrument.
(g) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous writings, understandings, agreements, solicitation
documents and representations, express or implied. By execution of this
Agreement, the Escrow Agent shall not be deemed or considered to be a party
to any other document, including the Underwriting Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their respective names, all as of the date first above written.
ACAP FINANCIAL, INC.
By:__________________________________________
Xxxx Xxxxxxxx
President
SKYPATH NETWORKS, INC.
By:__________________________________________
Xxxxx X. Paolo
Chief Executive Officer
XXXXX UNION BANK
By:__________________________________________
_________________________________
Trust Officer
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