EXHIBIT 3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT made and entered into, effective the 6th day of
June, 2000, by and between THE PERSONS NAMED IN ANNEX A hereto (herein
collectively referred to as "Depositors"); ASSOCIATED BANK MINNESOTA, a
corporate fiduciary with principal office in Minneapolis, Minnesota (hereinafter
called the "Escrow Agent"); FOUNDERS FOOD & ▇▇▇▇▇▇▇ LTD., a corporation with
principal offices in St. Louis Park, Minnesota (hereinafter called the "Issuer")
and the COMMISSIONER OF COMMERCE FOR THE STATE OF MINNESOTA (hereinafter called
the "Commissioner");
WITNESSETH THAT:
Each of the Depositors is the owner of common stock or options to
purchase common stock of the Issuer and each owns the number of units of such
security listed opposite his or her name on Annex A, attached hereto and made a
part hereof.
The Issuer has applied to the Commissioner for registration of its
securities for sale to residents of Minnesota, and as a condition of
registration the Depositors, the Escrow Agent and the Issuer agree to be bound
by this Agreement and the applicable rules and regulations of the Commissioner.
Each of the Depositors has deposited the securities listed opposite his
or her name on Annex A with the Escrow Agent, and the Escrow Agent hereby
acknowledges receipt thereof. These securities are herein collectively referred
to as "escrowed securities."
THEREFORE, the parties agree as follows:
1. The Escrow Agent agrees to hold the escrowed securities until such
time as Escrow Agent shall receive a written release issued by the Commissioner
permitting the release from escrow of all or a part of the escrowed securities
held under this Agreement. Upon receipt of such release, the Escrow Agent may
release to each Depositor all or a part of the escrowed securities in accordance
with the order of the Commissioner.
Subject to the above provisions, the term of escrow under this Agreement
shall run for a period of three (3) years from the date of the Order of
Registration, unless at an earlier date the Issuer shall have demonstrated
annual net earnings, after taxes and excluding extraordinary items, determined
in accordance with generally accepted accounting principles, for any two (2)
consecutive years after the date of the Order of Registration, of at least five
percent (5%) on an amount determined by multiplying the total number of
outstanding shares of the Issuer, including the escrowed securities, by the
average price per share paid by public investors. The existence of the required
annual net earnings shall be demonstrated by certification to that effect
furnished to the Commissioner by an independent certified public accountant or
an authorized officer of the Issuer. In addition, the Issuer and each of the
Depositors shall furnish the Commissioner a written statement that none of the
escrowed securities nor any interests therein have been sold, transferred or
otherwise disposed of (except as permitted by paragraph 4) as a condition of the
release from escrow.
Page 27 of 31 Pages
2. Notwithstanding any provision of paragraph 1, the Commissioner may,
in his or her discretion, terminate the term of escrow with respect to all or
any part of the escrowed securities of any Depositor before the expiration of
the period of occurrence of the event specified in paragraph 1 and release such
securities if the Commissioner determines that the release of such securities to
the Depositor(s) will not be detrimental to the Issuer, the public investors or
any other party concerned. At the time of release by the Commissioner of any
securities from escrow, the application of this Agreement shall terminate with
respect to the securities so released.
3. While it is held in escrow pursuant to this Agreement, no escrowed
security nor any interest therein, nor any right or title thereto, may be sold
or transferred, by means of transfer of the security separate from the
certificate representing it or otherwise, without the prior written release of
the Commissioner, except that the release of the Commissioner need not be
obtained to transfer escrowed shares by will or the laws of descent and
distribution or otherwise by order or process of any Court.
4. Upon receipt of such written release from the Commissioner directing
that some or all of the escrowed securities of the Depositor held under this
Escrow Agreement be released for the purpose of transfer to another person
against concurrent deposit of the securities so transferred, the Escrow Agent
may release such securities but only against such deposit under this Agreement
of all the transferred securities. The Commissioner shall authorize such
transfer of the escrowed securities only upon receipt of a signed statement by
the proposed transferee that he or she has full knowledge of the terms of this
Escrow Agreement and that the proposed transferee accepts such securities
subject to the conditions of this Escrow Agreement.
5. The Depositors agree that they shall be entitled to receive cash and
property dividends with respect to the escrowed securities while such securities
are held in escrow pursuant to this agreement to the same extent as other
security holders of the same class of security and that said cash or property
dividends shall be placed under the terms of this Escrow Agreement.
6. Upon declaration of any dividend in shares of the Issuer or a
subsidiary to which the escrowed securities are entitled pursuant to a share
dividend or split authorized by a vote of the shareholders, the Depositors and
the Escrow Agent shall forthwith enter into a Supplemental Escrow Agreement,
covering such share dividend, which Supplemental Escrow Agreement shall
incorporate all the conditions of escrow contained in this Agreement. The shares
received as dividend shall be forthwith deposited in escrow with the Escrow
Agent pursuant to such Supplemental Escrow Agreement, and the Escrow Agent shall
deliver to the Commissioner a receipt for the shares thus escrowed.
7. During the term of escrow, the Depositors shall not be entitled to
and hereby waive all rights to participate in any distribution of assets of
the Issuer in the event of liquidation, dissolution, or winding up, until the
public investors shall have received cash or property in an amount or value
equal to the price paid by public investors for securities purchased by such
public investors; and thereafter the Depositors shall participate without the
public investors until they shall have received cash or other property in an
amount or value equal to the price paid by the Depositors for the escrowed
securities; and thereafter the public investors and the Depositors shall
participate
Page 28 of 31 Pages
equally according to the terms of their securities. Any Depositor(s) seeking
release of all or any part of the escrowed securities pursuant to this
paragraph 7 shall furnish the Commissioner a written statement that none of
the escrowed securities nor any interests therein have been sold, transferred
(except as provided in paragraph 4) or otherwise disposed of, without the
consent of the Commissioner, as a condition of the release from escrow.
8. This Escrow Agreement shall not be construed to prohibit any
Depositor from participating in any distribution of securities of any
corporation other than the Issuer resulting from the sale of assets of the
Issuer or a merger or consolidation of the Issuer with or into any other
corporation or corporations. In the event of such a transaction, the Escrow
Agent should obtain written authorization from the Commissioner prior to the
release of the escrowed securities, and, any such distribution payable in
securities of any corporation other than the Issuer paid with respect to the
escrowed securities shall be delivered to the Escrow Agent and held pursuant to
a Supplemental Escrow Agreement prepared and executed as described in paragraph
7, above. In the event of a merger or consolidation of the Issuer with or into
any other corporation or corporations, any securities shall be delivered to the
Escrow Agent and held pursuant to a Supplemental Escrow Agreement prepared and
executed as described in paragraph 6, above.
9. The Escrow Agent may conclusively rely upon and shall be protected in
acting upon any statement, certificate, notice, request, consent, order, or
other document believed by it to be genuine and to have been signed or presented
by the proper party or parties. 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 Escrow Agreement. The Escrow Agent shall be under no obligation to
institute or defend any action, suit, or proceeding in connection with this
Escrow Agreement unless first indemnified to its satisfaction. The Escrow Agent
may consult counsel in respect of any question arising under this Escrow
Agreement and the Escrow Agent shall not be liable for any action take or
omitted in good faith upon advice of such counsel. All securities held by Escrow
Agent pursuant to this Escrow Agreement shall constitute trust property for the
purposes for which they are held and the Escrow Agent shall not be liable for
any interest thereon.
10. The Escrow Agent shall be entitled to receive from the Issuer
reasonable compensation for its services as contemplated herein. In the event
that the Escrow Agent shall render any additional service not provided for
herein or that any controversy shall arise hereunder or that the Escrow Agent
shall be made a party or shall intervene in any action, suit or proceeding
pertaining to this Escrow Agreement, it shall be entitled to receive reasonable
compensation from the Issuer for such additional services.
11. This Escrow Agreement shall be binding upon and inure to the benefit
of the parties hereto, their heirs, successors, and assigns.
12. This Escrow Agreement shall terminate in its entirety when all
escrowed securities covered hereby and by any Escrow Agreements supplemental
hereto have been released as provided in paragraph 1.
Page 29 of 31 Pages
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement on
the Date first above written.
ESCROW AGENT: ISSUER:
ASSOCIATED BANK MINNESOTA FOUNDERS FOOD & ▇▇▇▇▇▇▇ LTD.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------- ----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: Assistant Vice President Its: President and Chief Executive
Officer
DEPOSITORS:
BREWING VENTURES LLC
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇ III
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇ III
ACCEPTED FOR FILING:
/s/ illegible
------------------------------------
Commissioner of Commerce
Page 30 of 31 Pages
ANNEX A
Number of
Name and Address of Depositor Description of Escrowed Security Escrowed Securities
----------------------------- -------------------------------- -------------------
Brewing Ventures LLC Common Stock 1,662,500
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇ III Stock Option dtd 8/18/97 10,000
2515 Manitou Island Stock Option dtd 8/18/98 5,000
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Stock Option dtd 8/19/99 5,000
Page 31 of 31 Pages