ESCROW AGREEMENT
Escrow Agreement (the
“Agreement”), dated as of ____________________, among The Bank of New York, a New York banking
corporation with its principal corporate trust office at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx Xxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the “Escrow Agent”), and _______________________________________, a
_________________________ corporation, with its principal office at (the “Company”) and
_____________________________________ as sales agent (the “Sales Agent”) for itself and for and on
behalf of its selected dealers (the “Selected Dealers”) the identity of which will be disclosed to
Escrow Agent as the same are selected by the Sales Agent.
WHEREAS, the Company intends to
offer for sale (the “offering”) up to ________ units (the “Units”) each consisting of
________ shares of _________________________________ stock, par value $_____________ per share of the Company
in a private placement under the Securities Act of 1933, as amended, pursuant to its Confidential Private
Placement Memorandum, dated ____________ 19___;
WHEREAS, the Sales Agent and the
Selected Dealers are expected to offer the Units on behalf of the Company:
WHEREAS, the Company and the Sales
Agent propose to engage the Escrow Agent for the purpose of receiving, depositing and holding in a segregated
non interest-bearing account all funds (“Proceeds” shall mean all funds wired into the escrow
account and funds presumed cleared from check deposits) from subscribers for Units (“Subscribers”)
received in connection with the sale of Units until such time as such funds are to be released to the Company
or returned to the Subscribers; and
WHEREAS, the Escrow Agent has
agreed to act as escrow agent in connection with the proposed subscription and sale of Units.
NOW, THEREFORE, it is agreed as
follows:
Section 1. Establishment
of Escrow Account; Deposits.
(a) The Escrow Agent shall
promptly (and, in any case, on or prior to the commencement of the Offering) cause to be opened a fully
segregated non interest-bearing escrow account, which escrow account shall be entitled ___________________
— Escrow Account (the “Escrow Account”) for the purpose of holding in trust all Proceeds for
the Company and the Subscribers. The Sales Agent and the Selected Dealers shall, as to each Subscriber in
connection with all Proceeds received under
the Offering, instruct each
subscriber to remit the purchase price in the form of checks (which checks must be certified if remitted
during the last five (5) business days of the offering period) or wire transfers to (insert “the
Company” or “Sales Agent”) the Sales Agent for forwarding to the Escrow Agent as promptly as
possible. All such checks and wire transfers forwarded to the Escrow Agent shall be accompanied by information
identifying each Subscriber, subscription, the Subscriber’s social security or ID number and address.
Wire transfers to the Escrow Account shall be made in Federal Funds transferred as follows:
Bk of NYC
ABA No. 000000000
GLA 111-565
Cust A/C #
A/C Name_
ABA No. 000000000
GLA 111-565
Cust A/C #
A/C Name_
(b) On the terms and conditions of
this Agreement, the Escrow Agent shall deposit the Proceeds and any interest earned thereon in the Escrow
Account. The Proceeds shall be invested as promptly as practicable upon their receipt by the Escrow Agent, in
accordance with this Agreement. All amounts deposited in the Escrow Account shall be invested and reinvested
in the manner provided in Section 2 hereof.
(c) Except as and to the extent
provided herein, the Escrow Agent shall not be obligated nor, without the consent of the Company and the Sales
Agent, is it authorized to accept instructions under this Agreement directly from any Selected Dealer.
Section 2.
Investment of Proceeds.
Proceeds (and any earnings
thereon), and until such time as all Proceeds and earnings thereon have been disbursed from the Escrow Account
as provided in Section 4 and Section 5, shall be invested and reinvested by the Escrow Agent without
unreasonable delay and only in such obligations issued or guaranteed by the United States Government or any
agency thereof, or in such commercial paper, or in such bank or trust company certificates of deposit, and
with such maturities, as shall be designated in writing from time to time by the Company, such writing to
specify the particular investment. Temporarily uninvested funds held hereunder shall be deposited in The Bank
of New York Deposit Reserve. The Escrow Agent shall not be responsible for interest losses, taxes or other
charges on investments. Interest actually earned from the time the Proceeds are deposited into the Escrow
Account until the close of business on the date preceding the date the Proceeds are disbursed by the Escrow
Agent as provided herein shall be held in trust for the Subscribers and, upon the occurrence of the conditions
set forth in Section 4 and Section 5 hereof, shall be payable in accordance with the provisions set forth in
Section 5 hereof. If, at the time the Escrow Agent is
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required to make a disbursement
pursuant to Section 5, the Proceeds are invested as provided in this Section 2, the Escrow Agent shall, in
anticipation of such disbursement, sell or otherwise liquidate such investments. Instructions from the Company
as to any such investments or the sale or other disposition thereof shall be confirmed in writing (but no
delay or failure by the Company to confirm in writing an instruction given by telephone shall effect the
validity of such instruction or result in any liability to the Escrow Agent for acting on such
instruction).
Section 3.
Acceptance or Rejection of Subscription.
As soon as practicable following
receipt of each subscription, the Company will determine whether or not the subscription is to be accepted or
rejected in whole or in part.
With respect to each subscription
which is to be accepted, the Company will notify the Escrow Agent of such acceptance. With respect to each
subscription which is to be rejected (in whole or in part), the Company will notify the Escrow Agent of such
rejection in writing, and upon receipt of such notification, the Escrow Agent will promptly as practicable
transfer the amount represented by such subscription reflected in part only) and issue a check in the amount
of the rejected Subscriber’s subscription directly to the rejected Subscriber.
Section 4.
Disbursements from the Proceeds.
(a) If subscriptions of at least
____Units have not been deposited in the Escrow Account and accepted by the Company on or before the earlier
of (i) _____________ or (ii) the date upon which the Company or the Sales Agent elects to terminate the
Offering (the “Termination Date”), upon instruction by the Sales Agent as to the amounts and
recipients of the funds then held in escrow, the Escrow Agent shall terminate the Escrow Account and return
the subscription funds to each Subscriber.
(b) If subscriptions for at least
____ Units have been deposited in the Escrow Account and accepted by the Company on or before the Termination
Date, pursuant to the joint instructions of the Sales Agent and the Company identifying the Subscribers whose
subscriptions are to be accepted, the Escrow Agent shall on the date designated by the Sales Agent and the
Company in such joint instructions (the “Interim Closing Date”) which date shall be at any time on
or after the giving of such notice) release to the Company all or a specified portion of the Proceeds held by
the Escrow Agent (including all accrued interest thereon) in the Escrow Account in the manner described in
Section 4(a). With respect to any date subsequent to the Interim Closing Date on which the Escrow Agent is to
release Proceeds to the Company, but not later than ____________, (the “Final Closing Date”),
pursuant to the instructions of the Company identifying the Subscribers whose subscriptions are to be accepted
on the Final Closing Date and delivered at any time on or prior to such
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Final Closing Date, the Escrow
Agent shall release to the Company on such Final Closing Date all or the specified portion of the Proceeds
held by the Escrow Agent in the Escrow Account in the manner described in Section 5(a).
Section 5. Procedure
for Disbursement from the Escrow Account.
The Proceeds held in the Escrow
Account and interest earned thereon shall be subject to, and distributed in accordance with, the following
provisions:
(a) On the Interim Closing Date
and on the Final Closing Date, upon satisfaction of the applicable requirements of Section 4 hereof, the
Escrow Agent shall (i) transfer by wire to an account designated by the Company the Proceeds requested to be
transferred on such date in the notice jointly executed by the Company and the Sales Agent, and (ii) the
Escrow Agent shall within 10 business days of the applicable closing date transfer by check to each Subscriber
any interest actually earned on such Proceeds. At the time of such transfer, the Escrow Agent shall confirm in
writing to the Company and the Sales Agent the amount of interest earned for the account of each Subscriber
and the date such subscription was received.
(b) On the Interim Closing Date
and on the Final Closing Date, the Escrow Agent shall transfer by check the Proceeds and all interest (if any)
earned thereon, of any Subscribers whose subscriptions were obtained by the Sales Agent or the Selected Dealer
but rejected by the Sales Agent or the Company since the commencement of the Offering or the most recent
closing date (as applicable). At the time of such transfer, the Escrow Agent shall identify in writing to the
Company and the Sales Agent the amount of interest earned for the account of each Subscriber and the date such
subscription was received.
(c) As soon as practicable after
the Termination Date (but in no event later than the 30th business day following the Termination Date), all
Proceeds received by the Escrow Agent (other than Proceeds previously disbursed or to be distributed by the
Escrow Agent pursuant to Section 5(a) or Section 5(b) shall be returned by check directly to the Subscriber
having provided such Proceeds, without deduction, penalty or expense to the Subscriber and together with each
such Subscriber’s pro rata portion of the interest actually earned thereon. The Escrow Agent shall notify
the Company and the Sales Agent of the distribution of such funds to the Subscribers.
(d) The Escrow Agent does not have
any interest in the Escrowed Property deposited hereunder but is serving as escrow holder only and having only
possession thereof. The Company shall pay or reimburse the Escrow Agent upon request for any transfer taxes or
other taxes relating to the Escrowed Property incurred in connection herewith and shall indemnify and
hold
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harmless the Escrow Agent any
amounts that it is obligated to pay in the way of such taxes. Any payments of income from this Escrow Account
shall be subject to withholding regulations then in force with respect to United States taxes. The parties
hereto will provide the Escrow Agent with appropriate W-9 forms for tax I.D., number certifications, or W-8
forms for non-resident alien certifications. It is understood that the Escrow Agent shall be responsible for
income reporting only with respect to income earned on investment of funds which are a part of the Escrowed
Property and is not responsible for any other reporting. This paragraph and paragraph (9) shall survive
notwithstanding any termination of this Escrow Agreement or the resignation of the Escrow Agent.
Section 6.
Termination of Escrow.
In the event of the release of all
Proceeds and all accrued interest in accordance with Section 4 and Section 5 of this Agreement, this Agreement
shall terminate and the Escrow Agent shall be relieved of all responsibilities in connection with the escrow
deposits provided for in this Agreement, except claims which are occasioned by its negligence, bad faith or
willful misconduct.
Section 7.
Compensation of Escrow Agent.
(a) At the time of execution of
this Agreement the Company shall pay the Escrow Agent an acceptance fee of $__________. In addition, the
Company shall pay Escrow Agent $____________ annually, payable upon execution of this Agreement and on each
[Date] thereafter, for any and all services rendered by Escrow Agent hereunder.
(b) The Company shall pay monthly
an investment transaction fee of $____________ for each purchase or sale made by the Escrow Agent pursuant to
Section 2.
(c) The Company shall reimburse
the Escrow Agent upon request for all expenses, disbursements, and advances incurred or made by the Escrow
Agent in implementing any of the provisions of this Agreement, including compensation and the expenses and
disbursements of its counsel, except any such expense, disbursement, or advance as may arise from its gross
negligence or willful misconduct.
The Company hereby grants to the
Escrow Agent a lien on the Proceeds such that, in the event that any and all charges payable under Section 7
and Section 8 shall not be timely paid by the Company, the Escrow Agent shall have the right to pay itself
from the Proceeds the full amount owed, provided that written notice of the Escrow Agent’s intent to
proceed under this Section 7 be given at least five (5) business days in advance of such action.
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Section 8.
Responsibilities of Escrow Agent; Notices.
(a) The Escrow Agent shall be
under no duty to enforce payment of any subscription which is to be paid to and held by it;
(b) The Escrow Agent shall be
under no duty to accept funds, checks, drafts or instruments for the payment of money from anyone other than
the Company, the Sales Agent or any Selected Dealers or to give any receipt therefor except to the
Company;
(c) 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 among the Company or Sales Agent beyond the specific terms
hereof.
(d) The Escrow Agent shall not be
liable hereunder except for its own gross negligence or willful misconduct and the Company agrees to indemnify
the Escrow Agent for and hold it harmless as to any loss, liability, or expense, including attorney’s
fees and expenses, incurred without gross negligence 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. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any liability in connection with its
investment, reinvestment or liquidation, in good faith and in accordance with the terms hereof, of any
Escrowed Property held by it hereunder, including without limitation any liability for any delay not resulting
from gross negligence or willful misconduct in such investment, reinvestment or liquidation, or for any loss
of income incident to any such delay.
(e) 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 or
signature believed by it to be genuine and may assume that any person purporting to give notice or receipt or
advice or make any statement or execute any document in connection with the provisions hereof has been duly
authorized to do so.
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At
any time the Escrow Agent may request in writing an instruction in writing from
the Company, and may at its own option include in such request the course of
action it 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 consent
in accordance with such a proposal on or after the date specified therein,
provided that the specified date shall be at least two (2) business days after
the Company 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 the written instructions requested.
(f)
The Escrow Agent may act pursuant to the advice of counsel chosen by it with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted in accordance with such advice,
(g)
The Escrow Agent makes no representation as to the validity, value, genuineness
or collectability of any security or other document or instrument held by or
delivered to it.
(h)
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.
(i)
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.
(j)
The Escrow Agent shall be deemed conclusively to have given and delivered any
notice required to be given or delivered if it is in writing, signed by any one
of its authorized officers and mailed, by express, registered or certified mail
addressed to:
The Company at:
_____________________________
_____________________________
_____________________________
Telephone: ____________________
Facsimile: _____________________
_____________________________
_____________________________
_____________________________
Telephone: ____________________
Facsimile: _____________________
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(k) 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 Sales Agent or the Company, mailed, by
express, registered or certified mail addressed to and actually received by:
The Escrow Agent at:
The Bank of New York
000 Xxxxxxx Xx, 0xx Xxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Insurance Trust & Escrow
Telephone: (212) 896-
Facsimile: (000) 000-0000/3
The Bank of New York
000 Xxxxxxx Xx, 0xx Xxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Insurance Trust & Escrow
Telephone: (212) 896-
Facsimile: (000) 000-0000/3
(1) The provisions of Sections 7,
8 and 11 shall survive termination of this Agreement and/or the resignation or removal of the Escrow
Agent.
Section 9. Resignation
of Escrow Agent; Successor.
Notwithstanding
anything to the contrary herein, the Escrow Agent may resign at any time by
giving at least 15 days written notice thereof. The Company may remove the
Escrow Agent at any time (with or without cause) by giving at least 15 days
written notice thereof. Within 10 days after receiving such notice, the Company
and the Sales Agent shall jointly agree on and appoint a successor escrow agent
at which time the Escrow Agent shall either distribute the funds held in the
Escrow Account, less its fees, costs and expenses or other obligations owed to
the Escrow Agent as directed by the instructions of the Company and the Sales
Agent or 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 10 day period,
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.
Section 10.
Dispute Resolution.
In
the event of any dispute between or conflicting claims by or among the Company
or the Sales Agent 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, the Sales
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Agent or
the Selected Dealers for the Escrow Agent’s failure or refusal to comply with such
conflicting claims, demands or instructions, except to the extent under the circumstances
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 satisfactory to the Escrow Agent
sufficient to save 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 orders as the Escrow Agent may deem necessary.
Section 11.
Extraordinary Expense.
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 the Sales Agent or any
modification of this Agreement, or if any controversy arises under this Escrow
Agreement or the Escrow Agent is made a party to any litigation pertaining to
this Agreement or the subject matter of this Agreement, the Escrow Agent shall
be reasonably compensated for those extraordinary services and reimbursed for
all costs and expenses occasioned by such services, controversy or litigation
and the Company hereby promises to pay such sums upon demand.
Section 12.
Governing Law.
This
agreement shall be governed and construed in accordance with the laws of the
State of New York without reference to the principles thereof respecting
conflicts of laws. This Agreement may be executed in counterparts, each of which
so executed shall be deemed an original, and said counterparts together shall
constitute one and the same instrument.
Section 13.
Maintenance of Record.
The
Escrow Agent shall maintain accurate records of all transactions hereunder.
Promptly after the termination of this Agreement, and as may from time to time
be reasonably requested by the Company before such termination, the Escrow Agent
shall provide the Company 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 Sales Agent shall also have
access to the Escrow Agent’s books and records to the extent relating to
its duties
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hereunder, during normal
business hours upon reasonable notice to the Escrow Agent.
Section 14.
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 parties 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) No printed or other material
in any language, including prospectuses, notices, reports, and promotional material which mentions “The
Bank of New York” by name or the rights, powers, or duties of the Escrow Agent under this Agreement shall
be issued by any other parties hereto, or on such party’s behalf, without the prior written consent of
Escrow Agent.
NAME OF COMPANY | |||
| By: | |||
| Name: Title: |
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NAME OF SALES AGENT | |||
| By: | |||
| Name: Title: |
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THE BANK OF NEW YORK as Escrow Agent | |||
| By: | |||
| Name: Title: |
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