EXHIBIT 1.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of
_____________ _____, 1998, by and between State Street Bank & Trust Company,
N.A. (the "Escrow Agent"), having its principal place of business at 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and Amazon Herb Company, a Florida
corporation (the"Company"), having its principal place of business at 0000
Xxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxx 00000.
RECITALS
A. The Company proposes to offer for sale to investors up to 380,000
shares of Common Stock, par value $.01 per share, for a maximum aggregate
offering price of $2,090,000 (the "Proceeds").
B. The Company desires to establish an escrow account in which funds
received from subscribers for the Common Stock will be deposited pending
completion of the escrow period. State Street Bank & Trust Company, N.A. agrees
to serve as Escrow Agent in accordance with the terms and conditions set forth
herein and subject to the approval of the State securities administrators set
forth on the list attached hereto as Exhibit "A" (hereinafter referred to as the
"State Administrators"). The purpose of this Agreement is to comply with the
provisions of Rules 10(b)-9 and 15c2-4 promulgated under the Securities Exchange
Act of 1934, as amended, and under the applicable securities laws of all States
in which the offering of Common Stock (the "Offering") is made.
C. The Escrow Agent must be satisfactory to the State Administrators
and it is not affiliated with the Company.
AGREEMENT
1. ESTABLISHMENT OF ESCROW ACCOUNT. Effective as of the date of the
commencement of the Offering, the parties hereby establish an escrow account
with the Escrow Agent, which escrow account shall be entitled "Amazon Herb
Company/State Street Bank & Trust Company, N.A. Escrow Account (the "Escrow
Account"). The Company will instruct subscribers to make checks for
subscriptions payable to "STATE STREET BANK & TRUST COMPANY, N.A.., AS ESCROW
AGENT FOR AMAZON HERB COMPANY" until a minimum of
275,000 shares of Common Stock have been sold in the Offering. Any checks
received that are made payable to a party other than the Escrow Agent shall be
returned to the subscriber, with notification to the Company.
2. ESCROW PERIOD. The period for the existence of the escrow (the
"Escrow Period") shall begin with the commencement of the Offering and shall
terminate upon the earlier to occur of the following dates:
A. The date upon which the Escrow Agent confirms to the State
Administrators as hereinafter provided that it has received in the Escrow
Account gross proceeds of $1,512,500 in deposited funds (the "Minimum Offering
Amount"); or
B. The expiration of ninety (90) days from the date of commencement of
the Offering (unless extended as permitted in the Registration Statement filed
with the Securities and Exchange Commission in connection with the Offering for
an additional ninety (90) days at the sole discretion of the Company with a copy
of such extension to the Escrow Agent and the State Administrators); or
C. The date upon which a determination is made by the Company to
terminate the Offering prior to the sale of the Minimum Offering Amount.
The Company shall notify the Escrow Agent in writing as to the
commencement of the Offering and as to the date upon which a determination is
made by the Company to terminate the Offering in accordance with Paragraph 2.C.
During the Escrow Period, the Company is aware and understands that it
is not entitled to any funds received into escrow and no amounts deposited in
the Escrow Account shall become the property of the Company or any other entity,
or be subject to the debts of the Company or any other entity. During The Escrow
Period, all funds in the Escrow Account shall be held in the name of "State
Street Bank & Trust Company, N.A., as Escrow Agent for Amazon Herb Company."
3. DEPOSITS INTO THE ESCROW ACCOUNT. All monies received from
subscribers of the Common Stock will be deposited with the Escrow Agent by
twelve o'clock noon, New York City time, of the next business day after receipt
of said monies from subscribers, together with a written account of each sale,
which account shall set forth, among other things, the subscriber's name and
address, the number of shares of Common Stock purchased, the amount paid
therefor, whether the consideration received was in the form of a check, draft,
or money order, the
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date of said check, draft, or money order, and the date received and delivered
to the Escrow Agent. All monies so deposited in the Escrow Account are
hereinafter referred to as the "Escrow Amount." The State Administrators shall
have the authority to inspect the Escrow Account without obtaining any further
permission from the Company and/or the Escrow Agent.
Unless and until all of the State Administrators order the release of
the Escrow Amount to the Company, such Escrow Amount shall not be, nor shall
such Escrow Amount be considered to be, assets of the Company.
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
A. In the event the Escrow Agent does not receive deposits totalling
the Minimum Offering Amount prior to the termination of the Escrow Period in
accordance with the provisions of Paragraph 2, the Escrow Agent shall promptly
notify the State Administrators by telephone, confirmed in writing, of such fact
and shall, upon approval by the State Administrators, promptly thereafter refund
to each subscriber the amount received from the subscriber, without deduction,
penalty, or expense to the subscriber, and the Escrow Agent shall notify the
Company of its distribution of the funds. The purchase money returned to each
subscriber shall be free and clear of any and all claims of the Company or any
of its creditors.
B. In the event the Escrow Agent receives the Minimum Offering Amount
prior to termination of the Escrow Period, the Escrow Amount will not be
released to the Company until such amount is received by the Escrow Agent in
collected funds and the release provisions set forth in paragraph C below are
complied with. For purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal banking
channels and are in the form of cash. The Minimum Offering Amount may be met by
funds that are deposited from the effective date of the Offering up to and
including the date on which the contingency must be met, i.e., during the Escrow
Period. However, escrow cannot be broken and the Offering may not proceed to
closing until customer checks have been collected through the normal banking
channels in an aggregate amount sufficient to meet the Minimum Offering Amount.
Purchases made after the Escrow Period has terminated, but prior to the date
escrow is broken pending clearance of subscribers' funds, may not subsequently
be counted to meet the Minimum Offering Amount should checks tendered prior to
the termination of the Escrow Period fail to clear the banking system.
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C. In no event will funds be released to the Company until the State
Administrators have entered an Order authorizing the release of funds in the
Escrow Account. Such Order will be entered only after receipt by the State
Administrators of an application that includes the following:
(1) A verified statement duly executed by the Escrow Agent setting
forth the total amount in collected funds on deposit with the Escrow Agent on
the termination date (including purchases for which a check or other payment had
been received by the Escrow Agent and were subsequently collected as provided in
paragraph 4B hereof) and states therein that all of the conditions of this
Agreement have been met.
(2) A verified statement duly executed by the Company which states:
(a) That all required proceeds from the sale of the Common Stock have
been placed with the Escrow Agent in accordance with the terms and conditions of
this Agreement and that there have been no material omissions or changes in the
financial condition of the Company, or other changes of circumstances, that
would render the amount of the proceeds inadequate to finance the Company's
proposed plan of operations, business or enterprise;
(b) That the required proceeds are represented by unconditional
subscription agreements which are not loans and are not subject to rescission or
rejection by the Company or the subscribers;
(c) That there have been no material omissions or changes that would
render the representations contained in the Registration Statement to be
fraudulent, false or misleading; and
(d) Such other information as the State Administrators may require.
5. COLLECTION PROCEDURE. 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. As an alternative,
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the Escrow Agent may telephone the bank on which the check is drawn to confirm
that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Company. In such cases, the Escrow Agent will promptly notify the Company of
such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly 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 promptly issue a check in the
amount of the subscriber's check to the rejected subscriber after the Escrow
Agent has cleared such funds. If the rejected subscriber's check which has been
submitted for collection by the Escrow Agent is uncollectible, and if the Escrow
Agent has issued a check to the rejected subscriber hereunder, then the Escrow
Agent shall notify the Company and the Company shall immediately reimburse the
Escrow Agent for the amount of such funds. If the Escrow Agent has not yet
submitted a rejected subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber and shall
promptly notify the Company as to such action.
6. INVESTMENT OF ESCROW AMOUNT. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in (1) bank accounts,
(2) bank money-market accounts, (3) short-term certificates of deposit issued by
a bank, or (4) short-term securities issued or guaranteed by the U.S.
Government.
7. COMPLIANCE WITH TAXATION MATTERS. The Company shall provide the
Escrow Agent with a completed Internal Revenue Service ("IRS") Form W-8 or Form
W-9 upon the execution of this Agreement. The Escrow Agent may delay accepting
escrow funds until the IRS forms have been provided. For purposes of reporting
to tax authorities, the Escrow Agent will treat all income earned by the Escrow
Agent as paid to the Company at the time income is received by the
Escrow Account.
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The Company shall be responsible for determining any requirements for
paying taxes or reporting any payments for tax purposes. The Company shall give
written directions to the Escrow Agent to prepare and file tax information or to
withhold any payments hereunder for tax purposes. The Company covenants and
agrees to indemnify and hold the Escrow Agent harmless against all liability for
tax withholding and/or reporting for any payments made by the Escrow Agent
pursuant to this Agreement.
8. COMPENSATION OF ESCROW AGENT. The Company shall pay the Escrow Agent
a fee for its escrow services hereunder in accordance with the fee schedule
attached hereto as Exhibit "B". However, no such fee or any monies whatsoever
shall be paid out of or chargeable to the funds on deposit in the Escrow
Account.
In the event Escrow Agent performs any service not specifically
provided hereinabove, or that there is any assignment or attachment of any
interest in the subject matter of this escrow or modification thereof, or that
any controversy arises hereunder, or that Escrow Agent is named a party to, or
intervenes in, any litigation pertaining to this escrow or the subject matter
thereof, Escrow Agent shall be reasonably compensated therefor and reimbursed
for all costs and expenses including attorneys' fees and expenses occasioned
thereby. Escrow Agent shall have a first lien on the property and papers held by
it hereunder for such compensation and expenses, and the Company agrees to pay
the same.
9. RESIGNATION OF ESCROW AGENT. The Escrow Agent may not resign as
escrow agent without the express consent of the State Administrators, and
further, may do so upon giving ten (10) days written notice of such resignation
to the Company at the address set forth hereinabove. On the effectiveness of
such resignation, the Escrow Agent shall deliver to any escrow agent appointed
by the Company (or if there is no escrow agent appointed by the Company, then to
the purchasers of the Common Stock), all documents and money in the Escrow
Account, and thereupon the Escrow Agent will be released of any further
responsibility or obligation in connection with the Escrow Account or this
Agreement.
10. LIABILITY OF THE ESCROW AGENT. The Escrow Agent may rely on and
shall be protected, indemnified and held harmless by the Company in acting upon
the written or oral instructions, confirmed forthwith in writing, of any officer
or director of the Company or of the Company's counsel, and the Escrow Agent
will be entitled to request that further instructions be given by such persons
or to request that instructions be given in writing.
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In performing duties under this Agreement, the Escrow Agent is
authorized to rely upon any statement, consent, agreement or other instrument
not only as to its due execution, its validity, and the effectiveness of its
provisions, but also as to the truth and accuracy of any information contained
therein, which the Escrow Agent in good faith believes to be genuine or to have
been represented or signed by a proper person or persons. The Escrow Agent shall
not be liable for any error of judgment made in good faith by one of its
officers or directors, unless it shall be proved that the Escrow Agent or such
officer or director was grossly negligent in ascertaining the pertinent facts or
acted intentionally in bad faith. The Escrow Agent will have no liability for
any action or omission to act with respect to its duties under this Agreement
undertaken in good faith reliance upon reasonable advice of its counsel or the
Company's counsel.
Should the Escrow Agent, before or after the performance of its
obligations under this Agreement, receive or become aware of any conflicting
demands or claims with respect to funds deposited in the Escrow Account or the
rights of the Company or any of the subscribers, the Escrow Agent shall have the
right to discontinue any or all acts conducted pursuant to the terms of this
Agreement until such conflict has been resolved to its satisfaction. The Escrow
Agent shall have a further right to commence or defend any actions or
proceedings for the determination of such conflicting demands or complaints. The
Company hereby covenants and agrees to indemnify the Escrow Agent and hold it
harmless against any loss, liability or expense, and pay all costs, damages,
judgments and expenses, including reasonable attorneys' fees and expenses,
suffered or incurred by the Escrow Agent in connection with, or arising out of,
this Agreement, including without limitation, any suit in interpleader brought
by the Escrow Agent, except, that the Escrow Agent will not be indemnified
against any such loss, liability or expense arising out of the Escrow Agent's
gross negligence or willful misconduct. The Escrow Agent will be under no
obligation to institute, or defend any action, suit or legal proceeding in
connection herewith unless first indemnified and held harmless to the Escrow
Agent's satisfaction in accordance with the foregoing. In the event the Escrow
Agent shall bring a suit in interpleader, the Escrow Agent shall ipso facto be
fully released and discharged from all its obligations to perform any and all
duties or obligations under this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement or resignation of the Escrow Agent.
11. MAINTENANCE OF RECORDS. The Escrow Agent shall at all times keep
and maintain a complete set of books, records and accounts relating to the
subscriptions received by the Escrow Agent hereunder, and the disposition by the
Escrow Agent of the proceeds thereof. All such records maintained by the Escrow
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Agent shall be available for inspection by the State Administrators, and the
Escrow Agent shall furnish to the State Administrators, upon demand, at such
place designated in such demand, true, correct, complete and current copies of
any or all of such records.
12. MISCELLANEOUS.
A. All notices, reports, instructions, requests and other
communications given under this Agreement shall be either (a) sent in writing
and served personally by delivery to a responsible officer at the party's
offices listed on the signature pages hereto; or delivered by first class
registered or certified U.S. mail, return receipt requested, postage prepaid; or
(b) sent by telex or telecopier and then acknowledged as received by return
telex or telecopier by the intended recipient. Notices shall be deemed received
only upon receipt. Notices shall be directed to the addresses or telex or
telecopier numbers indicated on the signature pages hereto; provided that a
party may change its address or numbers for notices by giving notice to all
other parties in accordance with this paragraph. Escrow Agent shall be protected
in acting upon any notice, request, waiver, consent, receipt or other paper or
document believed by Escrow Agent to be signed by the proper party or parties.
B. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Florida, except that the rights,
obligations and liabilities of the Escrow Agent under this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York. This Agreement, together with any exhibits and/or schedules
referred to herein, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings of the parties in connection
herewith.
C. All of the terms, covenants, conditions and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto and to their
respective representatives, successors and assigns.
D. No failure or delay on the part of the Escrow Agent in exercising
any right, power or remedy may be, or may be deemed to be, a waiver thereof; nor
may any single or partial exercise of any right, power or remedy preclude any
other or further exercise of any other right, power or remedy.
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E. The invalidity of any provision hereof shall in no way affect the
validity of any other provision hereof. Each of the parties hereto shall at the
request of the other party, deliver to the requesting party all further
documents or other assurances as may reasonably be necessary or desirable in
connection with this Agreement.
F. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
G. In the event of any dispute arising out of the subject matter of
this Agreement, the prevailing party shall recover, in addition to any other
damages assessed, its attorneys' fees and court costs incurred in litigating or
otherwise settling or resolving such dispute.
H. Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the instructions provided hereunder or Escrow Agent's
duties thereunder, and Escrow Agent shall incur no liability and/or expense
therefor by acting in accordance with instructions of legal counsel whose fees
and expenses shall be paid by the Company.
I. Escrow Agent shall not be required to take or be bound by notice of
such default involving any expense or liability, unless notice in writing is
delivered to the Escrow Agent at the office hereinafter named, and unless it is
indemnified in a manner satisfactory to it against such expense or liability.
J. In the event the escrow created by this Agreement is canceled for
any reason, the Company will nevertheless pay the escrow fee, plus all other
costs and expenses, including reasonable legal and other professional fees and
expenses, of Escrow Agent, as established under Paragraph 8 of this Agreement.
Should the Escrow Agent resign as escrow hereunder pursuant to Paragraph 9 of
this Agreement, Escrow Agent shall be entitled to reimbursement only for those
costs and expenses as stated therein, incurred by Escrow Agent to the date of
such resignation.
The Company and the Escrow Agent have entered into this Agreement on
this
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___ day of ______________, 1998 in multiple counterparts, each of which
shall be considered an original. Escrow Agent, by its signature hereon, accepts
the escrow agency created by this Agreement, and agrees to carry out its duties
as escrow agent pursuant to the terms and conditions contained herein.
COMPANY
AMAZON HERB COMPANY.
By:
--------------------------------------
President
ESCROW AGENT
STATE STREET BANK &
TRUST COMPANY, N.A.
By:
--------------------------------------
Authorized Officer
Address for Notices:
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
EXHIBIT A
STATE SECURITIES COMMISSIONS
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EXHIBIT B
ESCROW FEE SCHEDULE
11
