EXHIBIT NO. 99(iii)
ESCROW AGREEMENT
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AGREEMENT dated ____ , 2000 between Metropolitan National Bank (the
"Escrow Agent"), and SLS International, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Company proposes to offer up to 4,000,000 Units (the "Units"),
each Unit consisting of one share of the Company's common stock having a par
value of $.001 per share and two redeemable Warrants each to purchase one share
of common stock at $.25 per Unit for aggregate offering proceeds of up to
$1,000,000 (the "Offering Proceeds"); and
WHEREAS, the Company will offer the Units on a "best-efforts, all or none"
basis (the "Offering") pursuant to an effective registration statement filed
with the Securities and Exchange Commission; and
WHEREAS, the Company desires to establish an escrow account in which funds
received from subscribers will be deposited, pending completion of the sale of
the Units during the escrow period; and
WHEREAS, the Escrow Agent agrees to serve as escrow agent in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Establishment of Escrow Account. The parties hereto shall establish a
non-interest bearing escrow account with the Escrow Agent, which escrow account
shall be entitled "SLS International, Inc. Escrow Account" (the "Escrow
Account"). The Escrow Agent undertakes to maintain the escrowed funds in
accordance with the terms hereof.
2. Delivery of Checks. The Placement Agent and any members of the
selling group will instruct subscribers to make checks for subscriptions payable
to the order of Metropolitan National Bank as Escrow Agent for SLS
International, Inc. which checks shall be delivered to the Metropolitan National
Bank at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000, Attention: Branch
Manager. Any checks received that are made payable to a party other than the
Escrow Agent shall be returned to the sender by the Escrow Agent (together with
any Subscription Information, as defined below, or other documents delivered
therewith) within two business days following receipt of such check by the
Escrow Agent with copy or written advice of such to the Company; and such
check shall be deemed not to have been delivered to the Escrow Agent pursuant to
the terms of this Agreement.
3. Escrow Period. The Company, through its officers, shall deliver to
the Escrow Agent, a certificate setting forth the date when the Offering shall
expire, which certificate shall be attached as Exhibit A hereto. When and if
the Offering is extended, the Company shall deliver to the Escrow Agent, at
least two business days prior to the
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effective date of such extension, a certificate setting forth the date when the
Offering, as extended, shall expire (such initial or extended date is
hereinafter referred to as the "Expiration Date").
4. Deposits into the Escrow Account. The Company agrees that it shall,
by noon the next business day deliver all monies received from subscribers for
the payment of the Units to the Escrow Agent for the deposit in the Escrow
Account together with a written account of each sale, which account shall set
forth, among other things, the subscriber's name, address and taxpayer
identification number, the number of Units purchased, the amount paid therefor
(collectively, the "Subscription Information"), and whether the consideration
received was in the form of a check, draft or money order. The Escrow Agent
shall not be required to make deposits into the Escrow Account which are not
accompanied by Subscription Information (which funds may be returned to
subscribers by the Escrow Agent advising of the discrepancy) with copy of advice
furnished to the Company. All monies properly deposited in the Escrow Account
which have cleared the banking system are hereinafter referred to as the "Escrow
Amount".
5. Disbursement from the Escrow Account.
(a) If on or prior to the close of business on the Expiration Date,
the Escrow Agent has received subscriptions, checks and/or wires for the
purchase of all of the Units and if, within up to 14 days thereafter, the
Escrow Agent is in possession of cleared funds in the amount of $1,000,000, the
Escrow Agent, within two business days after the clearance of such funds, shall
notify the Company and upon receipt of written instructions from the Company,
disburse all funds in the Escrow Account, pursuant to said instructions, unless
such funds are otherwise made subject to judicial restraint served on the Escrow
Agent.
(b) Upon presentation of a certificate signed by the Company,
stating that the Company is terminating the Offering or if the Escrow Agent has
determined that it has not received, prior to the Expiration Date, subscriptions
for the Units, or if the Escrow Agent has received subscriptions for all of the
Units prior to expiration date, but has determined that it has not received
cleared funds in the amount of $ 1,000,000 in the escrow account within 14
days after the expiration date, then the "all or none" condition of the Offering
shall not have been satisfied and the Escrow Agent shall, as soon as practicable
thereafter, cause to be distributed back to each subscriber, the amount received
from such subscriber, without interest, except to the extent that such amount is
then subject to judicial restraint served on the Escrow Agent.
6. Collection Procedures.
(a) The Escrow Agent is hereby authorized to forward each check for
collection and, upon collection of the proceeds of each check, deposit the
collected proceeds in the Escrow Account. Any check returned unpaid to the
Escrow Agent shall be returned to the subscriber, and, in such cases, the Escrow
Agent will promptly notify the Company of such return.
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(b) If the Company rejects any subscription for which the Escrow
Agent has already collected funds, the Escrow Agent shall, within two business
days after receipt of written notice of rejection from the Company, issue a
refund check to the rejected subscriber. If the Company rejects any
subscription for which the Escrow Agent has not yet collected funds, but has
submitted the subscriber's check for collection, the Escrow Agent shall within
two business days after the Escrow Agent has cleared such funds or has received
notice of rejection from the Company, issue a check to the rejected subscriber
in the amount of the subscriber's check, and so advise the Company. The Escrow
Agent shall not be required to comply with the provisions of this subparagraph
(b) if the funds in question are then subject to any judicial restraint
concerning such funds served on the Escrow Agent.
7. Reimbursement of Escrow Agent. The Company shall reimburse the
Escrow Agent for all of its fees and out-of-pocket expenses as incurred in
connection with this agreement or the performance of its services hereunder.
If it is necessary for the Escrow Agent to return funds to subscribers of the
Units, the Company shall pay to the Escrow Agent an additional amount sufficient
to reimburse it for its actual cost in disbursing such funds. These amounts
shall be in addition to the fees set forth in Section 8 hereof. However, no
such, reimbursement for fees, costs and expenses, indemnification for any
damages incurred by the Escrow Agent, or any monies whatsoever shall be paid out
of or chargeable to the funds on deposit in the Escrow Account.
8. Fees. Upon execution of this Agreement, the Company shall pay the
Escrow Agent a fee in the amount of $______, which shall cover fees of the
Escrow Agent in connection with services provided under this Agreement.
9. Escrow Agent's Rights and Duties. It is understood and agreed by the
parties to this Agreement as follows:
(a) The Escrow Agent shall not be responsible for or be required to
enforce any of the terms or conditions of any agreement between the Placement
Agent or the Company. Nor shall the Escrow Agent be responsible for the
performance by the Placement Agent and the Company of their respective
obligations under is Agreement.
(b) The Escrow Agent is not and shall not be deemed to be a trustee
for any party for any purpose and is merely acting as a depository and in a
ministerial capacity hereunder with the limited duties herein prescribed.
(c) The Escrow Agent shall be entitled to rely upon the accuracy,
act in reliance upon the contents, and assume genuineness, of any notice,
instruction, certificate, signature, instrument or other document which is given
to the Escrow Agent without verifying the truth or accuracy thereof. The Escrow
Agent shall not be obligated to make any inquiry as to the authority, capacity,
existence or identity of any person purporting to give any such notice or
instructions or the execution of any such certificate, instrument or other
document which is given to the Escrow Agent or to verify the truth or accuracy
thereof.
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(d) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Amount or the Offering Proceeds which, in its sole determination, are in
conflict either with other instructions received by it or with any provision of
this Agreement, it shall be entitled to hold the Offering Proceeds, or a portion
thereof, in the Escrow Account pending the resolution of such uncertainty to the
Escrow Agent's sole satisfaction, by final judgment of a court or courts of
competent jurisdiction or otherwise; or the Escrow Agent, at its sole option,
may dispose of the Offering Proceeds (and any other amounts that thereafter
become part of the Offering Proceeds) with the Clerk of a court of competent
jurisdiction in a proceeding to which all parties in interest are joined. Upon
the deposit by the Escrow Agent of the Offering Proceeds with the Clerk of any
court, the Escrow Agent shall be relieved of all further obligations and
released from all liability hereunder.
(e) The Escrow Agent is not and shall not be deemed to be liable for
any action taken or omitted by it in good faith and may rely upon, and act in
accordance with, the advice of its counsel without liability on its part for any
action taken or omitted in accordance with such advice. In any event, its
liability hereunder shall be limited to liability for gross negligence, willful
misconduct or bad faith on its part.
(f) The Escrow Agent shall have no duty or obligation to invest any
amounts received from the prospective purchasers, or their agents, and shall
keep any and all such amounts so received deposited in a non-interest bearing
escrow account established hereunder during the term of this Agreement.
(g) The Company agrees to save harmless, indemnify and defend the
Escrow Agent for, from and against loss, damages, liability, judgment, cost and
expense whatsoever, including attorney's fees, suffered or incurred by it by
reason of, or on account of, any misrepresentation made to it or its status or
any activities in connection with this agreement except for any loss, damage,
liability, judgment, cost or expense resulting from gross negligence, willful
misconduct or bad faith on the part of the Escrow Agent.
(h) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement. If any such legal proceeding is instituted against it, the
Escrow Agent agrees promptly to give notice of such proceeding to the Company.
The Escrow Agent shall not be required to institute legal proceedings of any
kind.
(i) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either under
this Agreement or generally, unless such waiver be in writing, and no waiver
shall be valid unless it is in writing, signed by the Escrow Agent, and only to
the extent expressly therein set forth. A waiver by the Escrow Agent under the
terms of this Agreement shall not be construed as a bar to, or waiver of, the
same or any other such right or remedy which it would otherwise have on any
other occasion.
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(j) The Escrow Agent may resign as such hereunder by giving thirty
(30) days written notice thereof to the Company. Should the Escrow Agent resign
as herein provided, it shall not be required to accept any deposit, make any
disbursements or otherwise dispose of the Offering Proceeds, but its only duty
shall be to hold the Offering Proceeds for a period of not more than twenty (20)
days following the effective date of such resignation, at which time (a) if the
successor escrow agent, which shall be a bank meeting the requirements of Rule
15c-4(b) under the Securities Exchange Act of 1934, as amended, shall be
appointed and written notice thereof (including the name and address of such
successor escrow agent) shall have been given to the resigning Escrow Agent by
the Company, then the resigning Escrow Agent shall pay over to the successor
escrow agent the Offering Proceeds; or (b) if the resigning Escrow Agent shall
not have received written notice signed by the Company and the Placement Agent
and a successor escrow agent, then the resigning Escrow Agent shall promptly
refund the Offering Proceeds to each prospective purchaser, without interest
thereon or deduction therefrom, (to the extent that such Proceeds are not then
subject to Judicial restraints served on the Escrow Agent) and the resigning
Escrow Agent shall notify the Company in writing of its liquidation and
distribution of the Offering Proceeds; whereupon, in either case, the Escrow
Agent and the Company shall each be relieved of all further obligations and the
resigning Escrow Agent and the Company shall release each other from all
liability under this Agreement. Without limiting the provisions of Section 7
hereof, the resigning Escrow Agent shall not be entitled to be reimbursed by the
Company or the Placement Agent for any expenses incurred in connection with its
resignation, transfer of the Offering Proceeds to a successor escrow agent or
distribution of the Offering Proceeds pursuant to this Section 9. Each
substitute Escrow Agent shall thereafter hold any funds received by it pursuant
to the terms of this Agreement and otherwise act hereunder as if it were the
Escrow Agent originally named herein. The Escrow Agent's duties and
responsibilities hereunder shall terminate upon the disbursement of the Escrow
Amount then held in escrow according to such written instructions or upon such
delivery as herein provided. This Agreement shall not otherwise be assignable
by the Escrow Agent without the prior written consent of the Company.
10. Notices. All communication hereunder will be in writing and
effective only on receipt at the appropriate address specified in this Section
10 as follows:
If sent to the Escrow Agent:
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Att: Xxxx Xxxxxx
Fax No.:
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If sent to the Company:
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Att: Xxxx Xxxx
Fax No. (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxx X Xxxxx PLLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax No. (000) 000-0000
11. General. This Agreement (a) constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof; (b) supersedes any and
all prior understandings or agreements relating to the subject matter hereof;
(c) may not be assigned, modified, amended or terminated except in writing
signed by all the parties hereto; (d) shall be governed by, and construed in
accordance with the laws of the State of Missouri; (e) shall be binding upon an
inure solely to the benefit of the parties hereto and their respective
successors and assigns; (f) shall not confer upon any person not referred to in
(e) hereof any rights or remedies of any nature whatsoever under or by reason of
this Agreement; and (g) may be executed in counterparts, each of which shall be
deemed to be an original, but which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have Agreement on the date and year
first above written.
SLS INTERNATIONAL, INC.
By __________________________________
Xxxx X. Xxxx
Metropolitan National Bank
By __________________________________
Name:_____________________________
Title:____________________________
A Duly Authorized Signatory
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CERTIFICATE
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This shall certify that the offering of up to ___________________ Units of
common stock and Warrants of SLS International, Inc. (the "Company") shall
expire on _______________, 2000 unless extended for a period of an additional
_______ days at the option of the Company.
SLS INTERNATIONAL, INC.
By __________________________________
Name:_____________________________
Title:____________________________
A Duly Authorized Signatory
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