EXHIBIT 10.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of ___________, 2004 (this "Escrow
Agreement"), is by and between Del Mar Income Partners, Ltd., a Maryland
corporation ("Issuer"), and American National Bank, as Escrow Agent ("Escrow
Agent"). For purposes of this Escrow Agreement, each of Issuer and Escrow Agent
is individually referred to as a "Party", and Issuer and Escrow Agent are
referred to collectively as the "Parties".
BACKGROUND
A. Certain persons will purchase shares (the "Shares") of the common stock
of Issuer pursuant to a subscription agreement, the form of which is attached as
Exhibit A to this Escrow Agreement (the "Subscription Agreement").
B. In accordance with the Subscription Agreement, the Subscribers will be
required to submit full payment for their investment at the time they return the
executed Subscription Agreement to Issuer.
C. All payments for subscriptions for Shares and Subscription Agreements
received and approved by Issuer ("Subscription Funds") shall be promptly
forwarded to Escrow Agent and Escrow Agent has agreed to accept, hold and
disburse such Subscription Funds deposited with it thereon in accordance with
the terms of this Escrow Agreement.
D. In order to establish the escrow of funds and to effect the consummation
of the transactions contemplated by the Subscription Agreement, the parties
hereto have entered into this Escrow Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, for themselves, their
successors and assigns, hereby agree as follows:
1. Definitions: The following terms shall have the following meanings when
used herein:
"Cash Investment" shall mean the number of Shares subscribed for by a
Subscriber multiplied by US $7.25 per Share, as set forth in the Subscription
Agreement.
"Escrow Funds" shall mean the Subscription Funds deposited with Escrow
Agent pursuant to this Escrow Agreement.
"Minimum Offering" shall mean the sale of at least 740,000 Shares for
$1,522,500.
"Offering Notice" shall mean a written notification, signed by Issuer,
which shall specify that: (a) subscriptions for the Minimum Offering have been
received; and (b) such subscriptions have not been withdrawn, rejected or
otherwise terminated.
"Offering Period" shall mean a period of 90 days, which may be extended at
the discretion of Issuer for an additional 90 days.
"Subscribers" shall be those persons who purchase the Shares pursuant to
the Subscription Agreement.
"Subscription Accounting" shall mean an accounting of all subscriptions for
Shares received and accepted by Issuer as of the date of such accounting,
indicating for each subscription the Subscriber's name, address and taxpayer
identification number, the number and total purchase price of subscribed Shares,
any withdrawal of such subscription by the Subscribers, any rejections of such
subscription by the Issuer, or other termination, for whatever reason, of such
subscription.
2. Appointment of and Acceptance by Escrow Agent. Issuer hereby appoints
Escrow Agent to serve as escrow agent hereunder, and Escrow Agent hereby accepts
such appointment in accordance with the terms of this Escrow Agreement.
3. Deposits into Escrow. Issuer shall forward to Escrow Agent the
Subscription Funds received by Issuer for deposit into the following escrow
account:
Del Mar Income Partners, Ltd.
x/x Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxx, XX
Attn: ___________
ALL FUNDS SO DEPOSITED SHALL REMAIN THE PROPERTY OF THE SUBSCRIBERS
ACCORDING TO THEIR RESPECTIVE INTEREST AND SHALL NOT BE SUBJECT TO ANY
LIEN OR CHARGE BY ESCROW AGENT OR BY JUDGMENT OR CREDITORS' CLAIMS
AGAINST ISSUER UNTIL RELEASED TO ISSUER IN ACCORDANCE WITH SECTION 4(a)
HEREOF.
Upon receipt of any Subscription Funds which are not equal to the proper
Cash Investment for such subscription or if a notice of insufficient funds has
been received by Escrow Agent for such Subscription Funds, Escrow Agent shall
promptly notify Issuer of such fact. If such fact has not been remedied on or
before expiration of the Offering Period or if Issuer notifies Escrow Agent that
such fact will not be remedied prior to expiration of the Offering Period,
Escrow Agent shall within three (3) business days after such date and without
any further instruction or direction from Issuer, return to the Subscriber, by
bank check and first class mail, that portion of the Escrow Funds equal to the
amount of the Subscription Funds paid by the Subscriber, without any interest.
4. Disbursements of Escrow Funds.
a. Completion of Offering. Escrow Agent shall pay to Issuer the value of
the Escrow Funds, by wire transfer and deliver to Issuer all documents and
instruments no later than three (3) business days following receipt of the
following documents:
(1) The Offering Notice;
(2) Subscription Accounting, substantiating the sale of the Minimum
Offering; and
(3) Subscription Agreements signed by all Subscribers.
Notwithstanding the foregoing, Escrow Agent shall not be obligated to
disburse the Escrow Funds to Issuer if Escrow Agent reasonably believes that (i)
Subscription Funds in full payment equal to the Cash Investment for that number
of Shares equal to or greater than the Minimum Offering have not been received,
deposited with and collected by Escrow Agent, subject to the right of Issuer to
consummate the sale of some, but not all, of the Shares, or (ii) the
Subscription Funds are not cleared.
b. Termination of the Offering. Notwithstanding anything to the contrary
contained herein, if Escrow Agent (i) has not received the Offering Notice on or
before expiration of the Offering Period, or (ii) receives written notice from
Issuer prior to expiration of the Offering Period that there will be no closing
of the sale of Shares to Subscribers, Escrow Agent shall, within three (3)
business days after such date and without any further instruction or direction
from Issuer, return to the Subscribers, by bank check and by first class mail,
that portion of the Escrow Funds equal to the amount of the Subscription Funds
paid by the Subscribers, without any interest and without any deduction for
expenses.
c. Rejection or Withdrawal of any Subscription. No later than three (3)
business days after receipt by Escrow Agent of written notice from Issuer that
Issuer has rejected or permitted a withdrawal of a Subscription for which
Subscription Funds have already been placed in escrow by Escrow Agent, Escrow
Agent shall pay to the Subscribers, by bank check and by first class mail, that
portion of the Escrow Funds equal to the amount of the Subscription Funds paid
by the Subscribers, without any interest.
5. Suspension of Performance or Disbursement into Court. If, at any time,
there shall exist any dispute between Issuer, Subscribers or any other third
party with respect to the holding or disposition of any portion of the Escrow
Funds or any other obligations of Escrow Agent hereunder, or if at any time
Escrow Agent is unable to determine, to Escrow Agent's reasonable satisfaction,
the proper disposition of any portion of the Escrow Funds or Escrow Agent's
proper actions with respect to its obligations hereunder, or if Subscribers and
Issuer have not within thirty (30) days of the furnishing by Escrow Agent of a
notice of resignation pursuant to Section 6 hereof appointed a successor Escrow
Agent to act hereunder, then Escrow Agent may, in its reasonable discretion,
take either or both of the following actions:
a. Suspend the performance of any of its obligations under this Escrow
Agreement until such dispute or uncertainty shall be resolved to the reasonable
satisfaction of Escrow Agent or until a successor Escrow Agent shall have been
appointed (as the case may be); and/or
b. Petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in Denver, Colorado for instructions
with respect to such dispute or uncertainty, and pay to such court all funds
held by it for holding and disposition in accordance with the instructions of
such court.
Escrow Agent shall have no liability to Issuer, Subscribers or any other
person with respect to any such suspension of performance or disbursement into
court, specifically including any liability or claimed liability that may arise,
or be alleged to have arisen, out of or as a result of any delay in the
disbursement of funds held in the escrow or any delay in or with respect to any
action required or requested of Escrow Agent.
6. Resignation and Removal of Escrow Agent. Escrow Agent may resign from
the performance of its duties hereunder at any time by giving ten (10) days'
prior written notice to Issuer or may be removed, with or without cause by
Issuer, in writing, at any time by giving prior written notice to Escrow Agent.
Such resignation or removal shall take effect upon the appointment of a
successor Escrow Agent as provided herein below. Upon any such notice of
resignation or removal, Issuer shall appoint a successor Escrow Agent hereunder.
Upon the acceptance in writing of any appointment as Escrow Agent hereunder by a
successor Escrow Agent, such successor Escrow Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations under this Escrow Agreement, but shall not be
discharged from any liability for actions taken as escrow agent hereunder prior
to such succession. After any retiring Escrow Agent's resignation or removal,
the provisions of this Escrow Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it served as Escrow Agent under
this Escrow Agreement.
7. Liability of Escrow Agent.
a. Escrow Agent shall have no liability or obligation with respect to the
Escrow Funds except for Escrow Agent's negligence. Escrow Agent's sole
responsibility shall be for the safekeeping and disbursement of the Escrow Funds
in accordance with the terms of this Escrow Agreement. Escrow Agent shall have
no implied duties or obligations and shall not be charged with knowledge or
notice of any fact or circumstance not specifically set forth herein. Escrow
Agent may rely upon any instrument, whether bearing original, conformed or
facsimile signatures, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein which Escrow Agent shall in good faith believe to be genuine,
to have been signed or presented by the person or parties purporting to sign the
same and to conform to the provisions of this Escrow Agreement. Escrow Agent
shall not be obligated to take any legal action or commence any proceeding in
connection with the Escrow Funds or any account in which the Escrow Funds are
deposited or this Escrow Agreement, or to appear in, prosecute or defend any
such legal action or proceeding. Without limiting the generality of the
foregoing, Escrow Agent shall not be responsible for or required to enforce any
of the terms or conditions of any subscription agreement with Subscribers or any
other agreement between Issuer and/or Subscribers. Escrow Agent shall not be
responsible or liable in any manner for the performance by Issuer or any
Subscribers of their respective obligations under any subscription agreement nor
shall Escrow Agent be responsible or liable in any manner for the failure of
Issuer or any third party (including Subscribers) to honor any of the provisions
of this Escrow Agreement. Upon prior notice to Issuer, Escrow Agent may consult
legal counsel selected by it in the event of any dispute or question as to the
construction of any of the provisions hereof or of any other agreement or of its
duties hereunder. Issuer shall promptly pay, upon demand, the reasonable fees
and expenses of any such counsel.
b. Escrow Agent is authorized, in its reasonable discretion, to comply with
orders issued or process entered by any court with respect to the Escrow Funds,
without determination by Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, Escrow Agent is authorized, upon prior written notice to Issuer, to rely
upon and comply with any such order, writ, judgment or decree which it is
advised by legal counsel selected by it that is binding upon it without the need
for appeal or other action; and if Escrow Agent complies with any such order,
writ, judgment or decree, it shall not be liable to any of the parties hereto or
to any other person or entity by reason of such compliance even though such
order, writ, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
8. Indemnification of Escrow Agent. From and at all times after the date of
this Escrow Agreement, Issuer shall, except as otherwise hereinafter provided,
to the fullest extent permitted by law, indemnify and hold harmless Escrow Agent
and each partner, employee, agent and affiliate of Escrow Agent (collectively,
the "Indemnified Parties") against any and all actions, claims (whether or not
valid), losses, damages, liabilities, costs and expenses of any kind or nature
whatsoever (including without limitation reasonable attorneys' fees, costs and
expenses) incurred by or asserted against any of the Indemnified Parties from
and after the date hereof, whether direct, indirect or consequential, as a
result of, arising from or in any way relating to any claim, demand, suit,
action or proceeding (including any inquiry or investigation) by any person,
including without limitation Issuer or Subscribers, whether threatened or
initiated, asserting a claim for any legal or equitable remedy against any
person under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable cause or
otherwise, arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this Escrow Agreement or any
transactions contemplated herein, whether or not any such Indemnified Party is a
party to any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified hereunder for any liability that resulted from the negligence
of such Indemnified Party. If any such action or claim shall be brought or
asserted against any Indemnified Party, such Indemnified Party shall promptly
notify Issuer in writing and Issuer shall promptly assume and enter an
appropriate defense for such Indemnified Party, including the employment of
counsel and the payment of all expenses. The obligations of Issuer under this
Section 8 shall survive any termination of this Escrow Agreement and the
resignation or removal of Escrow Agent.
9. Compensation to Escrow Agent.
a. Fees. Issuer shall pay to Escrow Agent the fees set forth in Exhibit B
for the services provided under this Agreement.
b. Disbursements from Escrow Funds to Pay Escrow Agent or Other Parties.
Escrow Agent is not authorized to disburse to itself or any other person from
the Escrow Funds (i) any amounts due to Escrow Agent or any other party under
this Section 9, or (ii) any amount Escrow Agent or any Indemnified Party is
entitled to seek pursuant to Section 8 hereof.
10. Representations and Warranties.
a. Issuer makes the following representations and warranties to Escrow
Agent.
(1) Issuer is a corporation duly formed and validly subsisting under
the laws of Maryland, and has full power and authority to execute and
deliver this Escrow Agreement and to perform its obligations hereunder.
(2) This Escrow Agreement has been duly approved by all necessary
corporate action of Issuer, has been executed by duly authorized officers
of Issuer, and constitutes a valid and binding agreement of Issuer,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium, or other laws affecting creditors' rights generally,
or equitable principles affecting the enforceability or remedies
(regardless of whether the enforceability is considered in a proceeding at
law or in equity).
(3) The execution, delivery, and performance by Issuer of this Escrow
Agreement will not violate, conflict with, or cause a default under the
Certificate Of Incorporation and Bylaws of Issuer, any applicable law or
regulation, any court order or administrative ruling or decree to which
Issuer is a party or any of its property is subject, or any agreement,
contract, indenture or other binding arrangement to which Issuer is a party
or any of its property is subject.
(4) No party other than the Parties hereto and the prospective
Subscribers have, or shall have, any lien, claim or security interest in
the Escrow Funds or any part thereof. 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
Funds or any part thereof.
(5) Issuer hereby acknowledges that the status of the Escrow Agent is
that of agent only for the limited purposes set forth herein, and hereby
represents and covenants that no representation or implication shall be
made that Escrow Agent has investigated the desirability of advisability or
investment in the Shares or has approved, endorsed or passed upon the
merits of the investment herein and that the name of Escrow Agent has not
and shall not be used in any manner in connection with the offer or sale of
the Shares other than to state that Escrow Agent has agreed to serve as
escrow agent for the limited purposes set forth herein.
(6) All of the representations and warranties of Issuer contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any deposits to or disbursement from the Escrow
Funds.
11. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mail, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
after delivery to any overnight courier, or when transmitted by facsimile
transmission facilities, and addressed to the Party to be noticed as follows:
If to Issuer at: Del Mar Partners, Ltd.
000 Xxxxxxxxx Xxxxxx, Xxx. 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, President
With a copy to: Xxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to Escrow Agent: American National Bank
or to such other address as each Party may designate for itself by like notice.
12. Amendments or Waiver. This Escrow Agreement may be charged, waived,
discharged or terminated only by a writing signed by Issuer and Escrow Agent. No
delay or omission by any party in exercising any right with respect thereto
shall operate as a waiver. A waiver on any one occasion shall not be construed
as a bar to, or waiver of, any right or remedy on any future occasion.
13. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
14. Governing Law. This Escrow Agreement and any disputes arising hereunder
shall be construed and interpreted in accordance with the internal laws of the
State of Colorado without giving effect to the principles or rules governing
conflict of laws.
15. Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the acceptance, collection, holding,
investment and disbursement of the Escrow Funds and sets forth in their entirety
the obligations and duties of Escrow Agent with respect to the Escrow Funds.
16. Binding Effects. All of the terms of this Escrow Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of Issuer, Subscribers and
Escrow Agent.
17. Execution in Counterparts. This Escrow Agreement may be executed in two
or more counterparts, which when so executed shall constitute one and the same
agreement.
18. Termination. Upon the first to occur of the disbursement of all amounts
in the Escrow Funds to the Issuer or into court pursuant to Section 5 hereof,
this Escrow Agreement shall terminate and Escrow Agent shall have no further
obligation or liability whatsoever with respect to this Escrow Agreement or the
Escrow Funds.
19. Dealings. This Escrow Agreement is not intended to prohibit, to the
extent not otherwise prohibited by any applicable law, regulation or order,
Escrow Agent or any stockholder, director, officer or employee of Escrow Agent
from buying, selling or dealing in any of the securities of Issuer or from
becoming pecuniarily interested in any transaction in which Issuer may be
interested, or contracting or lending money to Issuer or otherwise acting as
fully and freely as though it were not Escrow Agent under this Agreement.
Nothing herein shall preclude Escrow Agent from acting in any other capacity for
the Subscribers or any other capacity for the Subscribers or an other person or
entity.
20. Signatures by Facsimile. Any facsimile signature of any party hereto
shall constitute a legal, valid and binding execution hereof by such Party.
IN WITNESS WHEREOF, the Parties have caused this Escrow Agreement to be
executed under seal as of the date first above written.
ISSUER: Del Mar Income Partners, Ltd.
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
ESCROW AGENT: American National Bank
By:
-----------------------------------
Name:
Title:
Exhibit A
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SUBSCRIPTION AGREEMENT
Del Mar Income Partners, Ltd.
000 Xxxxxxxxx Xxxxxx, Xxx. 000
Xxxxxx, XX 00000
Gentlemen and Ladies:
The undersigned desires to invest in Del Mar Income Partners, Ltd. (the
"Company") on the terms and conditions described in this subscription agreement
(the "Subscription Agreement") and the Company's Prospectus dated
_______________. The undersigned acknowledges that the undersigned has received
the Prospectus.
1. Subscription
The undersigned hereby offers to purchase, in the aggregate dollar amount
set forth later in this Subscription Agreement, shares of Common Stock, at $7.25
per share, that are offered by the Company pursuant to the Prospectus. A check
in that amount payable to "Del Mar Income Partners, Ltd. Escrow" is enclosed.
2. Miscellaneous
(a) This subscription shall be irrevocable, and may not be assigned by the
undersigned. Subject to the foregoing, this Subscription Agreement shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the undersigned.
(b) This Subscription Agreement will be construed and enforced in
accordance with and governed by the laws of the State of Colorado, except for
matters arising under the Securities Act of 1933, as amended, without reference
to principles of conflicts of law.
(c) It is understood that a social security number must be provided to
avoid backup withholding. Under the provisions of Section 3406(a)(1)(c) of the
Internal Revenue Code, payers are required to withhold 20% from all taxable
interest, dividend and certain other payments on accounts which do not reflect a
certified social security number or tax identification number. This referred to
as "backup withholding." "Backup withholding" is not an additional tax or
penalty. Any amount withheld from an account may be used as a credit from
federal income tax.
With such full understandings and acknowledgements, the undersigned does
hereby affirm the undersigned's subscription to the purchase of the shares of
common stock being offered by the Company as described in the Prospectus and
this Subscription Agreement. The undersigned does further acknowledge the
undersigned's understandings of all the terms and provisions of this
Subscription Agreement and agrees to be bound by all of the terms and conditions
of this Subscription Agreement.
Please complete the following:
Date: Dollar Amount Invested: $
------------------------ -----------
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Exact Name in Which Title is to be Held
---------------------------------------- ----------------------------------
Signature Signature of Co-Owner
---------------------------------------- ----------------------------------
Print Name Print Name of Co-Owner
---------------------------------------- ----------------------------------
Social Security Number Social Security Number
or Taxpayer I.D. Number or Taxpayer I.D. Number
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Address
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City, State, Postal or Zip Code, Country
* If the Common Stock is to be held in joint tenancy or as tenants in common,
both persons must sign above and please indicate the manner in which the Common
Stock is to be held:
_____ Tenants in Common _____ Joint Tenants
The undersigned, under the penalties of perjury, certifies that the information
provided above is true, correct and complete, that he/she is not subject to
back-up withholding under the provisions of Section 3406(a)(1)(C) of the
Internal Revenue Code:
------------------------------- ---------------------------------
Date Signature of Co-Owner
This subscription is accepted by Del Mar Income Partners, Ltd. on this _____ day
of __________, _________.
DEL MAR INCOME PARTNERS, LTD.
By:
--------------------------------
Signature
--------------------------------
Printed Name and Title
Exhibit B
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SCHEDULE OF FEES
