ESCROW AGREEMENT
EXHIBIT
10.1
This
Escrow Agreement (the “Agreement”) is dated as of May 14, 2007 and is made by
and between Palm Desert National Bank (the “Escrow Agent”), US Euro Securities,
Inc., a California Corporation (the “Underwriter”) and U.S. Dry Cleaning
Corporation, a Delaware corporation (the “Company”).
WHEREAS,
the
Company proposes to issue up to 3,000,000 units (the “Units”) for aggregate
proceeds of $7,500,000 (the “Maximum Amount”), each Unit consisting of one share
of the common stock of the Company and one redeemable common stock purchase
warrant, in a public offering on a best efforts basis, at the purchase price
of
$2.50 per Unit (the “Offering”);
WHEREAS,
the
terms of the Offering provide that all proceeds received from the Offering
will
be placed into an interest-bearing escrow account and not be released to the
Company until at least the minimum offering amount of 1,500,000 Units, for
aggregate proceeds of $3,750,000 (the “Minimum Amount”), are subscribed for and
paid for by the investors (the “Subscribers”) during the time period prescribed
for the Offering; and
WHEREAS,
the
Company and the Underwriter desire that the Escrow Agent be engaged for the
purpose of receiving, depositing, and holding in a segregated account all funds
received (the “Proceeds”) from the Subscribers in connection with the Offering
until such time as such funds are to be released to the Company, the
Underwriter, or returned to the Subscribers pursuant to the terms of this
Agreement.
NOW,
THEREFORE,
it is
agreed as follows:
Section
1. Appointment
of Escrow Agent
The
Company hereby appoints the Escrow Agent as escrow agent and custodian for
the
purposes of this Agreement, and the Escrow Agent accepts such appointment,
each
upon the terms and subject to the conditions set forth in this
Agreement.
Section
2. Establishment
of Escrow Account
The
Escrow Agent shall, prior to the effective date of the Offering, cause to be
opened a fully segregated, escrow account entitled “Palm Desert National Bank
for the benefit of U.S. Dry Cleaning Corporation Public Offering Escrow Account”
(the “Escrow Account”) for the purpose of holding in trust all Proceeds on
behalf of the Company, the Underwriter, and the Subscribers. Checks and wires
may come in with unintentional variations on this name such as, PDNB f/b/o
USDC
or USDC IPO Account or USDC Escrow Account. Any of these names will be deemed
acceptable with reference to Sections 3 and Section 4 of this Agreement. The
Escrow Agent shall invest funds in a non-interest-bearing Palm Desert National
Bank Account, which is FDIC insured "to
the
fullest extent of the law.".
Company
acknowledges that the Palm Desert National Bank deposit account is designed
to
meet the needs of escrow and other corporate trust customers of Palm Desert
National Bank.
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Section
3. Deposits
(a) The
Escrow Agent shall deposit the Proceeds in the Escrow Account on the terms
and
conditions of this Agreement.
(b) Except
as
provided herein, the Escrow Agent is not authorized absent the Company’s and the
Underwriter’s express written consent to accept instructions under this
Agreement from anyone other than both the Company and the
Underwriter.
(c) The
Company and/or its designees shall, in connection with all Proceeds received
under the Offering, instruct each Subscriber to remit the purchase price in
the
form of checks or wire transfers payable to the Escrow Agent. Checks must list
the name of the Subscriber and the Subscriber’s address and telephone number on
its face. Checks must be certified if remitted during the last five business
days of the offering period. Wire transfers shall be made in Federal Funds
transferred as follows:
Palm
Desert National Bank
f/b/o
US
Dry Cleaning Corporation Public Offering Escrow Account
00-000
Xx
Xxxxx
Xxxx
Xxxxxx, XX 00000
Attn:
Xxxxx Xxxxxx
ABA
#:
000000000
Acct
#:
001-097040
Wire
transfers must be accompanied by the name of the Subscriber and the Subscriber’s
address and telephone number. The Escrow Agent shall deposit promptly into
the
Escrow Account all of the Proceeds received in accordance herewith.
(d) The
Escrow Agent shall furnish to the Company and the Underwriter at least once
a
day the following information: (i) a copy of the subscription agreements and
checks of all Subscribers who have tendered funds; (ii) the proceeds that the
Escrow Agent has received from each Subscriber, and (iii) how much of the
proceeds are held in good funds.
(e) The
Escrow Agent shall notify the Company and the Underwriter of any checks which
are received by the Escrow Agent that are made payable to a party other than
the
Escrow Agent or do not otherwise meet the requirements set forth in Section
3(c)
above so that they may contact the Subscriber and take appropriate corrective
action. If the Escrow Agent does not receive instructions from the Company
or
the Underwriter respecting the disposition of said check prior to the close
of
business on the fifth business day after notifying the Company and the
Underwriter of receipt of said check, then the Escrow Agent shall return the
funds to the prospective Subscriber.
(f) The
Escrow Agent shall notify the Company and the Underwriter in the event that
the
Escrow Agent receives a wire transfer that does not comport with the
requirements set forth in Section 3(c) above. If the Escrow Agent does not
receive instructions from the Company or the Underwriter respecting the
disposition of said wire prior to the close of business on the fifth business
day after notifying the Company and the Underwriter of receipt of said wire,
then the Escrow Agent shall return the funds to the prospective
Subscriber.
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Section
4. Rejection
of Subscriptions
Since
any
subscriptions shall relate to the offering of the Units pursuant to a
registration statement declared effective by the Securities and Exchange
Commission (“SEC”), it will be presumed that all subscriptions received by the
Escrow Agent will be acceptable to the Company. Notwithstanding the foregoing,
the terms of the Offering provide that any subscription may be accepted or
rejected in whole or in part by the Company or the Underwriter. The Escrow
Agent
shall furnish to the Company and the Underwriter at least once a week a list
containing the names and addresses of Subscribers and the number of Units
subscribed for by each Subscriber. With respect to each subscription which
is
rejected, the Company will notify the Underwriter and the Escrow Agent of such
rejection in writing, and upon receipt of such notification, the Escrow Agent
will within five business days, assuming the Subscriber’s funds have cleared,
issue a check in the amount of the rejected Subscriber’s subscription with
accrued interest directly to the rejected Subscriber.
Section
5. Disbursements
from Proceeds
(a) If
subscriptions for the Minimum Amount have not been deposited in the Escrow
Account and accepted by the Company on or before (i) 60 days after the effective
date of the registration statement filed by the Company in connection with
the
Offering, if the Company has not extended the offering period by up to an
additional 60 days; or (ii) in the event that the Company has extended the
offering period by up to an additional 60 days, the date on which any such
extension of the offering period will end as notified by the Company to the
Escrow Agent; or (iii) the date upon which the Company elects to terminate
the
Offering (the “Termination Date”), then upon instruction by the Company as to
the amounts and recipients of the funds then being held in escrow, the Escrow
Agent shall terminate the Escrow Account and return the subscription funds
to
each Subscriber within five business days thereafter.
(b) Upon
receipt of (i) at least the Minimum Amount (or such greater amount as the
Company may direct in writing) and (ii) receipt of the Escrow Release Letter,
in
a form substantially similar to Exhibit A attached hereto and incorporated
herein by this reference, signed by the Company and Underwriter (the “Escrow
Release Letter”) that funds may be released from escrow, the Escrow Agent shall
release all of the Proceeds held in the Escrow Account to the Company and the
Underwriter in accordance with Section 6.
Section
6. Procedure
for Disbursement from the Escrow Account
The
Proceeds held in the Escrow Account shall be subject to and distributed in
accordance with the following provisions:
(a) The
Escrow Agent may act in reliance upon any signature believed by it to be
genuine, and may assume that that any person whose name appears on Schedule
I,
who has
been designated by the Company and the Underwriter to give any written
instructions, notice or receipt, or make any statements in connection with
the
provisions hereof has been duly authorized to do so. The Escrow Agent shall
have
no duty to make inquiry as to the genuineness, accuracy or validity of any
statements or instructions or any signatures on statements or instructions.
The
names and true signatures of each individual authorized to act singly on behalf
of the Company and the Underwriter are stated in Schedule
I,
which
is attached hereto and made a part hereof. The Company and the Underwriter
may
each remove or add one or more of its authorized signatories stated in
Schedule
I
by
notifying the Escrow Agent in writing of such change in accordance with this
Agreement, which notice shall include the true signature for any new authorized
signatories.
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(b) If
by the
Termination Date, the Escrow Agent has not received a Escrow Release Letter
for
any particular amounts received from Subscribers and deposited in the Escrow
Account, the Escrow Agent shall refund all of the Subscribers’ funds in the
Escrow Account to the applicable Subscribers not earlier than five business
days
after the Company and the Underwriter receive written notice from Escrow Agent
of Escrow Agent’s intent to return such Subscribers’
funds
to the
applicable Subscribers.
(c) Upon
satisfaction of the applicable requirements of this Section, the Escrow Agent
shall transfer by wire or interaccount transfer the Proceeds requested to be
transferred on such date as directed in the Escrow Release Letter.
(d) The
Escrow Agent does not have any property interest in the funds deposited in the
Escrow Account (the “Escrowed Property”) but is serving only as escrow holder
and custodian thereof. Upon request, the Company shall pay or reimburse the
Escrow Agent for any transfer taxes or other taxes relating to the Escrowed
Property incurred in connection herewith and shall indemnify and hold harmless
the Escrow Agent for any amounts that it is obligated to pay in the way of
such
taxes. This paragraph shall survive the termination of this Escrow Agreement
or
the resignation of the Escrow Agent.
Section
7. Termination
of Escrow
The
Escrow Account will remain open until the earliest to occur of the following:
(i) the release of the Maximum Amount in accordance with Sections 5 and/or
6 of
this Agreement; or (ii) the termination of the Offering by the Company. At
which
time, the Agreement shall terminate and the Escrow Agent shall be relieved
of
all responsibilities in connection with the Escrowed Property provided for
in
this Agreement, except for claims that are occasioned by its negligence, bad
faith or willful misconduct.
Section
8. Compensation
of Escrow Agent.
(a) For
its
services hereunder, the Escrow Agent shall be entitled to receive from the
Company: (i) a fee of $5,000.00 for escrow setup and maintenance upon the
execution and delivery of this Agreement, and (ii) reimbursement for any
reasonable out-of-pocket expenses incurred by the Escrow Agent in connection
with the services provided in accordance with this Agreement and the Escrow
Agent’s fee schedule.
(b) The
provisions of this Section shall survive the termination of this Agreement
and/or the resignation or removal of the Escrow Agent.
Section
9. Responsibilities
of Escrow Agent; Notices
(a) The
Escrow Agent shall be under no duty to enforce the payment of any subscription
for which funds are tendered in connection herewith; provided, however, that
the
Escrow Agent must inform the Company and Underwriter within five business days
in the event that any tendered payment is denied or deemed
uncollectible.
(b) The
Escrow Agent shall be obligated to perform only such duties as are expressly
set
forth in this Agreement. No implied covenants or obligations shall be inferred
from this Agreement against the Escrow Agent, nor shall the Escrow Agent be
bound by the provisions of any agreement with the Company beyond the specific
terms hereof.
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(c) The
Escrow Agent shall not be liable hereunder except for its own gross negligence,
bad faith, or willful misconduct and the Company agrees to indemnify the Escrow
Agent and hold it harmless as to any loss, liability, or expense, including
reasonable attorney’s fees and expenses, incurred without gross negligence, bad
faith, or willful misconduct on the part of the Escrow Agent and arising out
of
or in connection with the Escrow Agent’s duties under this
Agreement.
(d) The
Escrow Agent shall be entitled to rely upon any order, judgment, certification,
instruction, notice, opinion or other writing delivered to it in compliance
with
the provisions of this Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety
or
validity of service thereof. The Escrow Agent may act in reliance upon any
instrument comporting with the provisions of this Agreement and upon signature
believed by it to be genuine and may assume that any person purporting to give
notice or receipt or advice or to make any statement or execute any document
in
connection with the provisions hereof has been duly authorized to do
so.
(e) The
Escrow Agent may at any time request in writing, an instruction in writing
from
the Company and the Underwriter, and may at its own option include in such
request the course of action that the Escrow Agent proposes to take and the
date
on which it proposes to act, regarding any matter arising in connection with
its
duties and obligations hereunder. The Escrow Agent shall not be liable for
acting without the Company’s and the Underwriter’s consent in accordance with
such a proposal on or after the date specified therein, provided that the
specified date shall be at least five business days after the Company and the
Underwriter receives the Escrow Agent’s request for instructions and its
proposed course of action, and provided that, prior to so acting, the Escrow
Agent has not received written instructions from the Company and the
Underwriter.
(f) The
Escrow Agent may act pursuant to the advice of counsel chosen by it with respect
to any matter relating to this Agreement.
(g) The
Escrow Agent shall not be called upon to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect to any
securities or other property deposited hereunder.
(h) No
provision of this Agreement shall require the Escrow Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder.
(i) The
Escrow Agent shall be deemed conclusively to have given and delivered any notice
required to be given or delivered to the Company and the Underwriter if it
is in
writing, signed by any one of the Escrow Agent’s authorized officers, five
business days after it is deposited in the United States Mail, postage paid,
express, registered or certified mail, return receipt requested, or one business
day after it is deposited with a recognized national overnight delivery service,
addressed to the Company and to the Underwriter at:
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U.S.
Dry
Cleaning Corporation
000
Xxxxxxxx Xxxxxx Xxx, Xxxxx 000
Xxxx
Xxxxxxx, XX 00000
Phone:
(000) 000-0000
Attention:
Chief Executive Officer
US
Euro
Securities
Attn:
Xxxxxxx Xxx Xxxxxx, Chairman
Penthouse
Floor
00000
Xxxxxxx Xxx Xxxxx
Xxxxxxx
Xxx, XX 00000
Phone:
(000) 000-0000
(j) The
Escrow Agent shall be deemed conclusively to have received any notice required
to be given or delivered to the Escrow Agent if it is in writing, signed by
any
one of the authorized officers of the Company or Underwriter, when it is hand
delivered by an officer of the Company or the Underwriter at or five business
days after it is deposited in the United States Mail, postage paid, express,
registered or certified mail, return receipt requested, or one business day
after it is deposited with a recognized national overnight delivery service,
addressed to the Escrow Agent at:
Palm
Desert National Bank
00-000
Xx
Xxxxx
Xxxx
Xxxxxx, XX 00000
Attn:
Xxxxx Xxxxxx
Phone:
(000) 000-0000
(k) The
Escrow Agent hereby accepts its obligations under this Agreement, and represents
and warrants that the Escrow Agent has the power and legal authority to enter
into this Agreement and to perform the Escrow Agent’s obligations under this
Agreement. The Escrow Agent covenants and agrees that all Escrowed Property
shall be identified as being held in escrow in connection with this Agreement.
The Escrow Agent further covenants and agrees that all documents and records
with respect to the matters subject to and transactions contemplated by this
Agreement will be available, upon reasonable written notice, for examination
by
the Company, the SEC or any state securities authorities.
(l) The
provisions of this Section shall survive termination of this Agreement and/or
the resignation or removal of the Escrow Agent.
Section
10. Resignation
of Escrow Agent; Successor
Notwithstanding
anything to the contrary herein, the Escrow Agent may resign at any time by
giving at least 30 days written notice thereof. The Company may remove the
Escrow Agent at any time by giving at least 15 days written notice thereof.
Within ten days after receiving such notice, the Company shall appoint a
successor escrow agent at which time the Escrow Agent shall either (i)
distribute as directed by the Escrow Release Letter the funds held in the Escrow
Account, less the Escrow Agent’s fees, costs and expenses or other obligations
owed to the Escrow Agent, or (ii) hold such funds pending distribution until
such fees, costs and expenses or other obligations are paid. If a successor
escrow agent has not been appointed or has not accepted such appointment by
the
end of the ten day period, then the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor escrow agent or for
other appropriate relief, and the costs, expenses and reasonable attorneys
fees
which the Escrow Agent incurs in connection with such a proceeding shall be
paid
by the Company.
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Section
11. Claims
Respecting Funds in Escrow
In
the
event of any dispute or conflicting claims by, between or among the Company
and/or the Underwriter and/or any other person or entity with respect to any
Proceeds held in the Escrow Account, the Escrow Agent shall be entitled, at
its
sole discretion, to refuse to comply with any and all claims, demands or
instructions with respect to such Proceeds so long as such dispute or conflict
shall continue, and the Escrow Agent shall not be or become liable in any way
to
the Company for the Escrow Agent’s failure or refusal to comply with such
conflicting claims, demands or instructions, except to the extent that such
failure would constitute gross negligence, bad faith or willful misconduct
on
the part of the Escrow Agent. The Escrow Agent shall be entitled to refuse
to
act until, at its sole discretion, either such conflicting or adverse claims
or
demands shall have been finally determined in a court of competent jurisdiction
or settled by agreement between the conflicting parties as evidenced in writing
satisfactory to the Escrow Agent, or the Escrow Agent shall have received
security or an indemnity reasonably satisfactory to the Escrow Agent sufficient
to hold the Escrow Agent harmless from and against any and all loss, liability
or expense which the Escrow Agent may incur by reason of the Escrow Agent’s
acting. The Escrow Agent may in addition elect at its sole discretion to
commence an interpleader action or seek other judicial relief or order as the
Escrow Agent may deem necessary.
Section
12. Dispute
Resolution
Except
as
otherwise provided in this Agreement and except for ancillary measures in aid
of
arbitration and for proceedings to obtain provisional remedies and interim
relief, including, without limitation, injunctive relief, any controversy,
dispute or claim between the parties hereto arising out of or in connection
with
or relating to this Agreement shall be finally settled by arbitration conducted
expeditiously in accordance with the Commercial Arbitration Rules then in force
of the American Arbitration Association. The situs for any arbitration shall
be
Palm Springs, California.
Section
13. Extraordinary
Expense
(a) It
is
understood that fees and usual charges agreed upon for the Escrow Agent’s
services shall be considered compensation for its services as contemplated
by
this Agreement, and if the Escrow Agent renders any service not provided for
in
this Agreement, or if there is any assignment of any interest in the subject
matter of this Agreement by the Company, or if there is any modification of
this
Agreement, or if any controversy arises under this Agreement, or if the Escrow
Agent is made a party to any litigation pertaining to this Agreement or the
subject matter of this Agreement, then the Escrow Agent shall be reasonably
compensated for those extraordinary services and shall be reimbursed for all
costs and expenses occasioned by such services, controversy or litigation and
the Company hereby promises to pay such sums upon demand.
(b) The
provisions of this Section shall survive termination of this Agreement and/or
the resignation or removal of the Escrow Agent.
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Section
14. Governing
Law; Counterparts
This
agreement shall be governed by and construed in accordance with the laws of
the
State of California without reference to its provisions respecting conflicts
of
laws. This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument. Each of the Parties hereby waives the right to trial by jury and
to
assert counterclaims in any such proceedings. Each Party waives personal service
of process and consents to service of process by certified or registered mail,
return receipt requested, directed to it at the address last specified for
notices hereunder, and such service shall be deemed completed ten calendar
days
after the same is so mailed.
Section
15. Maintenance
of Record.
The
Escrow Agent shall maintain accurate records of all transactions hereunder.
Within three business days after the termination of this Agreement, and as
may
from time to time be reasonably requested by the Company or the Underwriter
before such termination, the Escrow Agent shall provide the Company or the
Underwriter with a copy of such records, certified by the Escrow Agent to be
a
complete and accurate account of all transactions hereunder. The authorized
representatives of the Company and the Underwriter shall also have access to
the
Escrow Agent’s books and records to the extent relating to their duties
hereunder, during normal business hours and upon reasonable notice to the Escrow
Agent.
Section
16. Miscellaneous.
(a) Nothing
in this Agreement is intended or shall confer upon anyone other than the parties
any legal or equitable right, remedy or claim.
(b) The
invalidity of any portion of this Agreement shall not affect the validity of
the
remainder hereof.
(c) This
Agreement is the final integration of the agreement of the parties with respect
to the matters covered by it and supersedes any prior understanding or
agreement, oral or written, with respect thereto.
(d) The
rights and obligations of each party hereto may not be assigned or delegated
to
any other person without the written consent of the other party hereto. Subject
to the foregoing, the terms and provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and
permitted assigns.
(e) Escrow
Agent shall not incur any liability for not performing any act or fulfilling
any
duty, obligation or responsibility hereunder by reason of any occurrence beyond
the control of Escrow Agent (including but not limited to any act or provision
of any present or future law or regulation or governmental authority, any act
of
God or war, or the unavailability of the Federal Reserve Bank wire or telex
or
other wire or communication facility).
(f) In
the
event any party hereto shall commence legal proceedings against the other to
enforce the terms hereof, or to declare rights hereunder, as the result of
a
breach of any covenant or condition of this Agreement, the prevailing party
in
any such proceeding shall be entitled to recover from the losing party its
costs
of suit, including reasonable attorneys' fees, as may be fixed by the
court.
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(g) The
section headings in this Agreement are for the convenience of the parties only,
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties hereto.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
|
US
Euro Securities, Inc.
By:
/s/ Xxxxxxx Xxx
Xxxxxx
Name:
Xxxxxxx Xxx Xxxxxx
Title:
Chairman
|
U.S.
Dry Cleaning Corporation
By:
/s/ Xxxxxx X.
Xxx
Name:
Xxxxxx X. Xxx
Title:
Chief Executive Officer
|
|
PALM
DESERT NATIONAL BANK
as
Escrow Agent
By: /s/
Xxxxx X.
Xxxxxx
Name:
Xxxxx X. Xxxxxx
Title:
Senior Vice President & Chief Compliance Officer
|
|
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Schedule
I
The
Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by any one of the following on behalf of the Company
and the Underwriter.
U.S.
DRY CLEANING CORPORATION, INC.
Name
True
Signature
Xxxxxx
X.
Xxx
_____________________________________
US
EURO SECURITIES, INC.
Name
True
Signature
Xxxxxxx
Xxx
Xxxxxx
_____________________________________
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