Exhibit 99.1
ESCROW AGREEMENT
This agreement dated August 15, 2003 is among Regions Bank (the "Escrow
Agent"), Xxxxxxxxx Communities Inc., a Georgia corporation (the "Company") and
Xxxxxxxxx Securities LLC ("Broker-Dealer Agent").
The Company proposes to offer for sale to investors (the "Offering") up to
5,000,000 shares of its Series A Convertible Preferred Stock (the "Shares") at a
price of $10.00 per share as described in its Prospectus. The Offering will be
made directly by the Company and through the Broker-Dealer Agent. The Company
desires to establish an escrow account in which funds received from investors
(the "Proceeds") will be deposited pending completion of the escrow period.
Regions Bank agrees to serve as Escrow Agent in accordance with the terms and
conditions of this agreement, including the attached Exhibit A, and certifies
that it is not affiliated with the Company.
1. Establishment of Escrow Account. Effective as of the date of the
commencement of the Offering, the Company establishes an interest bearing escrow
account with the Escrow Agent, entitled "Regions Bank, Escrow Agent u/a
Xxxxxxxxx Communities Inc. Escrow Account No. 00-0000-000," or some similar
designation (the "Escrow Account").
2. Escrow Period. The Escrow Period shall begin with the commencement of
the Offering and shall terminate upon the earlier to occur of: (a) the date upon
which the Escrow Agent has received in the Escrow Account gross proceeds of
$2,000,000 in deposited funds (the "Minimum"), (b) March 31, 2004, or (c) the
date upon which a determination is made by the Company to terminate the offering
prior to the sale of the Minimum.
3. Deposits into the Escrow Account. The Company and the Broker-Dealer
Agent each agree that it shall properly deliver, by noon of the next day after
receipt, all monies received from investors for the payment of the Shares to the
Escrow Agent for deposit in the Escrow Account, accompanied with a copy of the
form of "Share Purchase Agreement" attached as Exhibit A, which shall include
the name, address and tax identification number of each investor and the date
and amount of purchase, executed by the Company and the investor. Checks from
investors will be made payable to "Regions Bank, as Escrow Agent." Any checks
payable to the Company shall be endorsed by the Company for deposit to the
Escrow Account. If checks are delivered to the Escrow Agent unendorsed, the
Escrow Agent may supply the Company's endorsement and deposit them into the
Escrow Account. The Company shall date and number-stamp each Share Purchase
Agreement and provide the Escrow Agent with, and maintain for its own records, a
copy of each Share Purchase Agreement.
4. Disbursements from the Escrow Account.
A. In the event the Escrow Agent does not receive the Minimum
deposits totaling $2,000,000 prior to the termination of the Escrow Period, or
in the event the Escrow Agent does not receive a certificate from an officer of
the Company that the Company has received a $362,500 investment from Cornerstone
Ministries Investments, Inc., the Escrow Agent shall promptly refund to each
investor, in accordance with paragraph 6, the amount received from such
investor, with interest and without deduction, penalty or expense to such
investor, and the Escrow Agent shall notify the Company of such distribution.
The purchase money returned to each investor 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 prior to the
termination of the Escrow Period, and also receives a certificate from an
officer of the Company that the Company has received a $362,500 investment from
Cornerstone Ministries Investments, Inc., the funds in the Escrow Account which
are collected funds will be released to the Company upon receipt by the Escrow
Agent of written direction from the Company. 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, plus any
interest accrued on such funds. The Minimum may be met by funds that are
deposited from the effective date of the offering up to and including the date
on which the Minimum must be received.
C. Upon the return or release of funds in the Escrow Account, the
Escrow Agent shall notify Xxxxxxxxxxx X. Prior, Assistant Director, Division of
Corporation Finance, Pennsylvania Securities Commission, Eastgate Office
Building, 2nd Floor, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000 (the
Administrator.) The Administrator has the right to inspect and make copies of
the records of the Escrow Agent at any reasonable time wherever the records are
located.
5. Collection Procedure. The Company agrees that if a deposited check is
returned unpaid for any reason, the Escrow Agent may charge the Escrow Account
for the amount of the check. However, the Escrow Agent may, in its sole
discretion, re-present a returned check for payment to the financial institution
on which it is drawn, but the Escrow Agent is not required to do so. The Escrow
Agent may re-present the check without notifying the Company that it is doing so
or that the check was not paid. Any check returned unpaid to the Escrow Agent a
second time shall be returned to the Company.
6. Investment of and Interest on Funds in Escrow Account. Pending
disposition of the funds in the Escrow Account, the Escrow Agent shall invest
those funds in bank accounts, short-term certificates of deposit issued by a
bank or short-term securities issued or guaranteed by the United States
government. Refunds to investors pursuant to paragraph 4A shall include each
investor's pro-rata share of any interest earned while the investor's funds were
on deposit.
7. Records to be Maintained by the Escrow Agent. Records and accounts of
the transactions kept by the Escrow Agent shall include records of all
transactions in the Escrow Account and copies of all Share Purchase Agreements.
The Company shall maintain the original Share Purchase Agreements and copies of
all checks, along with any other records of transactions for a period of five
years after the termination of the Escrow Period.
8. Compensation of Escrow Agent. The Company shall pay the Escrow Agent
fees for its escrow services as set forth in Exhibit B. The fee agreed upon its
services rendered hereunder is intended as compensation for Escrow Agent's
services as contemplated by this Agreement; provided, however, that in the event
the conditions for the disbursement of funds under this Agreement are not
fulfilled or Escrow Agent renders any material service not contemplated in the
Agreement, or there is any assignment of interest in the subject matter of this
Agreement, or any material modification hereunder, or if any material
controversy arises hereunder, or Escrow Agent is made a party to any litigation
under this Agreement or the subject matter hereof, then Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs and expenses, including reasonable attorney's fees occasioned by any
delay, controversy, litigation or event, and the same shall be recoverable out
of the Escrow Deposit under paragraph 11(b) below.
9. Protection of the Escrow Agent from Liability. The sole duty of the
Escrow Agent, other than specified in this Agreement, shall be to establish and
maintain the Escrow Account and receive and hold the funds deposited by the
Company. The Company acknowledges that the Escrow Agent is performing the
limited function of Escrow Agent and that this fact in no way means the Escrow
Agent has passed in any way upon the merits or qualifications of, or has
recommended, or given approval to, any person, security or transaction. The
Escrow Agent may conclusively rely on, and shall be protected, when it acts in
good faith upon, a writing signed by Xxxx X. Xxxxxxxx, President and Chief
Executive Officer of the Company. Provided it uses due care, the Escrow Agent
shall have no duty or liability to verify any such statement, certificate,
notice, request, consent, order or other document and its sole responsibility
shall be to act only as expressly set forth in this Agreement. The Escrow Agent
shall be under no obligation to institute or defend any action, suit or
proceeding in connection with the Agreement unless it is indemnified to its
satisfaction. The Escrow Agent may consult counsel in respect of any questions
arising under this Agreement and the Escrow Agent shall not be liable for any
action taken, or omitted, in good faith upon advice of such counsel.
10. Indemnification of the Escrow Agent. The Company hereby agrees to
defend, indemnify, and to hold the Escrow Agent harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
the part of Escrow Agent arising out of or in connection with its entering into
this Agreement and carrying out its duties hereunder, including the cost and
expense of defending itself against any claim or liability from whatever source.
11. Direction by Court. (a) In the event the Escrow Agent shall be
uncertain as to its duties or rights hereunder or it shall receive instructions,
claims or demands from any of the parties hereto or from third parties with
respect to the property held hereunder, which, in its opinion, are in conflict
with any provision of this Agreement, it shall be entitled to file a complaint
for interpleader and/or may refrain from taking any action (other than to keep
safely the funds in the Escrow Account) until it shall be directed to act by
order or judgment of a court of competent jurisdiction. The fees and
expenses of the Escrow Agent charged and incurred in performing its obligation,
including, but not limited to under this paragraph 11 of the Agreement, shall be
paid out of the Escrow Deposit, subject to section 11(b) below.
(b) To provide security to the Escrow Agent in the event the Escrow Agent
must act in accordance with section 11(a) above, and/or for compensation for
extraordinary services and/or reimbursement for costs and expenses in accordance
with section 9 above, the Company shall purchase a certificate of deposit or
similar instrument equal to Twenty Five Thousand and No/Dollars ($25,000.00)
(the Escrow Deposit) that the Company shall pledge as security to the Escrow
Agent. The Company also agrees to undertake any and all actions including, but
not limited to, delivery of possession of the certificate of deposit or similar
instrument to the Escrow Agent, requested by the Escrow Agent to facilitate
perfection of the security interest of the Escrow Agent in the certificate of
deposit or similar instrument. The Company further agrees to execute any and all
documents including, but not limited to, a deposit account control agreement or
similar agreement, requested by the Escrow Agent to perfect the security
interest of the Escrow Agent in the pledged certificate of deposit or similar
instrument.
12. Reliance by Escrow Agent on Instruments. The Escrow Agent may rely
upon any instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein, with which the 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 Agreement.
13. Escrow Funds not Subject to Claims. During the Escrow Period, the
Company is aware and understands that it is not entitled to any funds received
into the Escrow Account, such funds are not assets of the Company and no amounts
deposited in the Escrow Account shall become property of the Company or any
other entity, or be subject to the debts of the Company or any other entity. The
funds in the Escrow Account are not subject to claims by creditors of the
Company, or any of its affiliates, associates or underwriters until the funds
have been released to the Company pursuant to the terms of this Agreement.
14. Binding upon Successors. This Agreement shall be binding upon, and
inure to, the benefit of the parties hereto, their heirs, successors and
assigns.
15. Termination of Agreement. This agreement shall terminate in its
entirety when all funds in the Escrow Account have been distributed as provided
in paragraph 4., above.
16. Notices. All statements and other notices produced by the Escrow Agent
related to the Escrow Account shall be made via United States Postal Service
regular mail or facsimile transmission to the Company at:
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000 Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, President
Except for deposits, all notices and other communications from the Company
shall be made via United States Postal Service regular mail or facsimile
transmission to the Escrow Agent at:
Regions Bank
00 Xxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx XX 00000 Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
The Escrow Agent shall be entitled to rely on all notices and instructions
received from Xxxx X. Xxxxxxxx, President of the Company.
All notices and other communications to the Broker-Dealer Agent shall be
made via United States Postal Service regular mail or facsimile transmission to
the Escrow Agent at:
Xxxxxxxxx Securities LLC
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000 Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxxx
17. Governing Law. This Agreement shall be governed by Alabama law and any
action or proceeding, including arbitration, arising in connection with this
Agreement shall be brought and held in Alabama.
18. Resignation of the Escrow Agent. Escrow Agent or any successor may
resign its position and be discharged of its duties or obligations hereunder by
giving thirty (30) days written notice to the parties hereto. Such resignation
shall take effect at the earliest to occur of the end of such thirty (30) days,
provided the escrow funds have been tendered into the registry or custody of any
court of competent jurisdiction or the appointment by the Company of, and
delivery of the escrow funds to, a successor and Escrow Agent shall be released
from any liability and/or responsibility for the Escrow Account on such date..
From and after the effective date of such resignation or appointment of a
successor, Escrow Agent shall not be obligated to perform any of the duties of
Escrow Agent hereunder, other than prompt transfer of the escrow funds to a
successor, or if no successor is appointed, the registry or custody of any court
of competent jurisdiction, and will not be liable for any nonperformance thereof
nor for any act or failure to act whatsoever on the part of any successor Escrow
Agent.
19. Amendment. No modification or amendment to this Escrow Agreement shall
be valid unless produced in writing and signed by the parties hereto.
Regions Bank Xxxxxxxxx Communities Inc. Xxxxxxxxx Securities LLC
By: /S/Xxxxxx X. Xxxxxxxx By: /S/Xxxx X. Xxxxxxxx By: /S/Xxxxx Xxxxxxx
-------------------- ------------------- ---------------
Xxxxxx X. Xxxxxxxx Xxxx X. Xxxxxxxx Xxxxx Xxxxxxx
Senior Vice President and President President
Corporate Trust Officer
Exhibit A to Escrow Agreement
SHARE PURCHASE AGREEMENT
(For assistance in filling out this form, please see the reverse side)
Mail Completed Form to: Xxxxxxxxx Communities Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Please issue shares of Xxxxxxxxx Communities Inc. Series A convertible
preferred stock in the amount(s) and name(s) shown below. I have received the
Prospectus by which the shares are offered. I am purchasing for investment.
Signature:
------------------------------------- ------------------------
Date
Signature:
------------------------------------- ------------------------
Date
Enclosed is payment for _____ (minimum 100 shares)
at $10.00 per share, totaling $______________.
Make checks payable to: Regions Bank, as Escrow Agent
Register the shares in the following name(s):
Name (1) __________________________
Social Security or Taxpayer ID number*______________Birthdate__________
Name (2) __________________________
Social Security or Taxpayer ID number*______________Birthdate__________
* (I certify (i) that this is my correct taxpayer identification number, and
(ii) that I am not subject to backup withholding.)
As (check one):
Individual __ Joint Tenants __ Custodial (for shares to be owned by minors) __
Tenants in Common __ Corporation __ Trust __ Other __
RETIREMENT ACCOUNT ( ) Traditional XXX ( ) Xxxx XXX ( ) XXXXX
Custodian:__________________________________
Mailing Address for the person(s) who will be registered shareowner(s):
Address:
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City, State & Zip Code:
---------------------------------------------
Telephone Number: Business: ( ) Home: ( )
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Yes, I want to save the cost of printing and mailing financial reports, proxy
statements, and other documents. Please send all shareowner communications to my
email address: __________________________ Signature: _______________________
(Please attach any special mailing instructions other than shown above)
NO SUBSCRIPTION IS EFFECTIVE UNTIL ACCEPTANCE
(You will be mailed a signed copy of this
agreement to retain for your records.)
Subscription accepted by Xxxxxxxxx Communities Inc.:
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Xxxx X. Xxxxxxxx, President Date
Share Purchase Agreement page 2
How to Complete the Share Purchase Agreement
How can I purchase shares? Personal check, bank check, or money orders are the
only acceptable forms of payment. No cash or credit cards accepted.
Who should sign it? The person who is making the decision to buy shares. This
may be different from the persons in whose names the shares are being
registered.
Whose check can be used for payment? It should be either an account in the name
of the person signing the share purchase agreement or the name(s) in which the
shares are to be registered. We can not, for instance, accept a check on a
corporate bank account, where the registered shareowner is to be an
individual--unless there is an accompanying certified corporate resolution
authorizing the use of corporate funds for that purpose.
Can I buy shares for more than one person on the same form? Yes, you can either
squeeze in the other names and numbers of shares, or put "see attached" or
"over" next to "Name(s)" on the form and put the names and number of shares on
another sheet or the back of the form.
How can I buy shares for a person who is under 18 years old? There are Uniform
Gift to Minors Acts in the states. The "Custodial" box can be checked and the
shares can be registered in a form like: "Xxxx Xxx, as custodian for Minor Doe,
under UGMA." The effect is that Xxxx Xxx can sell the shares, receive dividends
and otherwise manage the investment, until Minor Doe becomes 18. Then, Xxxx Xxx
can request a replacement certificate in Minor Doe's name. If you want some
other legal arrangement, such as holding the shares until the minor is older
than 18, you would have to create a trust agreement, using a lawyer or a
do-it-yourself guide. You would then check the "Trust" box and fill in the name
something like: "Xxxx Xxx, trustee for Minor Doe," or "Xxxx Xxx, Trustee under
Trust Agreement dated June 30, 2003."
Can I purchase shares for an XXX or other retirement account? If your trust
agreement permits it--that's between the investors and their trustees. If your
trust agreement does not permit it (many brokerage, mutual fund or bank trustees
will not permit it), then you may choose to "roll over" or open a new account
with another trustee. The check needs to be from the trustee. You would check
"Trust" on the form and write in something like: "ABC Company, trustee for Xxxx
Xxx XXX."
Guide to registering investments
Joint Tenants: two or more persons jointly own Shares. If one person passes
away, all of the shares are transferred to the surviving
partner(s).
Tenants In Common: Shares are jointly owned by two or more persons. If one
person passes away, half (or whatever individual share)
automatically goes to the deceased's estate and not to the
surviving partner(s).
Trust: If you have an established Trust for yourself, Family or
Children. Please be sure to include exact name of Trust and
the Trust's taxpayer ID number.
Custodial: Usually established for a minor to maintain control/voting
rights of the stock until the minor becomes of legal age
(18). Registration should read as follows: Xxxx Xxx as
Custodian for Minor Doe under UGMA. Make sure to list the
minor's social security number, not yours.
Other: 1) Partnership - Make sure to list Tax ID #
2) XXX (Xxxxx, SEP or other retirement plan): Make sure your
trust agreement allows for investments of this kind, check
with your plan administrator. If not, you can establish a
new XXX. Registration for all IRA's should read as follows:
[(Trustee or name of Plan) as Trustee for Xxxx Xxxxx XXX
Account # _________]
Exhibit B to Escrow Agreement
Regions Bank
EXHIBIT B
$2,000 Acceptance Fee
$2,000 Annual Fee
This excludes out of pocket expenses and attorney fees for document review
and any other extra-ordinary expenses.
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GEN-141 RG
