(Revised Form (02/18/97)
FUND ESCROW AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _____________,
19___, by and among the following:
(a) American International Consolidated Inc. (the "Company"), a Delaware
corporation whose address is 14603 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(b) I.A. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc. ("I.A. ▇▇▇▇▇▇▇▇▇▇"), a __________
corporation whose address is ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
(c) Worthington Capital Group, Inc. ("Worthington Capital"), a __________
corporation whose address is ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
(d) American Securities Transfer & Trust, Incorporated (the "Escrow
Agent"), whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Recitals
A. The Company has filed a Registration Statement on Form S-1 and
amendments thereto (the "Registration Statement"), pursuant to which the Company
proposes to issue, and offer for public sale (the "Public Offering") a minimum
of 700,000 and a maximum of 800,000 shares of Common Stock, $.001 par value (the
"Common Stock"), and a minimum of 700,000 and a maximum of 800,000 redeemable
Common Stock purchase warrants (the "Warrants") on a "best efforts" basis at an
offering price of $5.00 per share and $.10 per Warrant.
B. Pursuant to the terms of the Registration Statement, provision must be
made to impound in escrow for certain periods commencing upon the effective date
of the Registration Statement ("Effective Date") and for the benefit of
purchasers in the Public Offering, the gross proceeds from sale of the Common
Stock and Warrants;
C. I.A. ▇▇▇▇▇▇▇▇▇▇ and Worthington Capital (collectively, the
"Underwriters") are the underwriters of the Public Offering, I.A. ▇▇▇▇▇▇▇▇▇▇
serves as the representative (the "Representative") of the Underwriters, and the
members of the selling group for the Public Offering are as set forth on Exhibit
A attached to and made a part of this Agreement; and
D. The Company and the Underwriters desire to enter into an agreement with
the Escrow Agent for the purpose of fulfilling the escrow requirements as set
forth in the Registration Statement.
NOW THEREFORE, in consideration of the foregoing recitals, and the mutual
promises and covenants contained herein, the parties agree as follows:
1. The Underwriters agree to deliver to the Escrow Agent, promptly upon
receipt, all proceeds, including customer checks or money orders payable to the
Escrow Account (as defined in Section 2 below), from the sale of the Common
Stock and Warrants in the Public Offering at an offering price of $5.00 per
share and $.10 per Warrant, together with a written account of each sale, which
account shall set forth, among other things the names, addresses and social
security or taxpayer identification numbers of the purchasers, the number of
shares of Common Stock and Warrants purchased by each, the amount paid therefor,
and whether the consideration received was in the form of cash or evidenced by a
check. The Escrow Agent shall have the right to reject and return to the
remitter thereof any funds that are not accompanied by the required information
or that do not reconcile to the amounts set forth in the written account of the
sale at the time of deposit with the Escrow Agent. In the event that an
Underwriter or selling group member desires to withdraw a subscriber from the
Public Offering or to replace a subscriber prior to the expiration of the Escrow
Period, that Underwriter or selling group member shall provide a written request
to Escrow Agent stating the reason for such withdrawal or replacement and shall
provide Escrow Agent with such information as Escrow Agent shall reasonably
request. The Underwriters agree to deliver to Escrow Agent on the Effective Date
a final "blue sky" memorandum which shall indicate the states in which the
Public Offering may occur and the Escrow Agent shall have the right to reject
proceeds received from subscribers who are residents of states that are not
shown in the "blue sky" memorandum to be states in which the Public Offering may
occur.
2. All funds or remittances delivered to the Escrow Agent pursuant hereto
shall be deposited immediately by the Escrow Agent in a separate non-interest
bearing account at Union Bank & Trust (the "Bank"), ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA# ▇▇▇▇▇▇▇▇, Credit Account #_________, designated
substantially as follows: American International Consolidated Inc. Escrow
Account (the "Escrow Account"). The Escrow Account shall be created and
maintained subject to the customary rules and regulations of the Bank and Escrow
Agent pertaining to such accounts.
3. During the Escrow Period (as hereinafter defined), none of the amounts
deposited in the Escrow Account shall become the property of the Company or any
other entity, or subject to the debts of the Company or any other entity, and,
except as expressly provided herein with respect to payments by the Escrow Agent
to the Company and others, the Escrow Agent shall make or permit no
disbursements from the Escrow Account.
4. The Escrow Period shall begin on the Effective Date and shall terminate
on the earlier to occur of:
(a) The date upon which 700,000 shares of Common Stock and 700,000
Warrants offered by the Company are sold; or
(b) Expiration of 30 days from the Effective Date, which period may be
extended by up to any additional 60 days by mutual written consent of the
Company and the Underwriters, if by which time a minimum of 700,000 shares of
Common Stock and 700,000 Warrants have not been purchased and the proceeds
thereof ($3,570,000 in collected funds) have not been delivered to the Escrow
Agent; or
(c) the election of the Company to terminate the Offering.
5. In the event the proceeds of at least $3,570,000 are received and
collected in the Escrow Account prior to the events specified in paragraph 4(b)
above, the Escrow Agreement shall immediately provide notice to the Company and
the Underwriters that cleared and collected funds deposited in the Escrow
Account total at least $3,570,000, the Company and the Underwriters or their
respective counsel shall provide the Escrow Agent with a written request for a
closing, and the Escrow Agent shall deliver and pay over, on or before the close
of the business day immediately following the receipt of at least $3,570,000, to
the Company and to such other recipients as are specified by the Company and the
Underwriters, all collected amounts deposited in the Escrow Account less an
aggregate amount payable to the Underwriters equal to the sum of (a) 10% of all
gross proceeds from the Public Offering of Common Stock and Warrants pursuant to
the terms of the Registration Statement, and (b) an amount equal to 3% of the
gross proceeds from the Public Offering less $25,000.00, and, upon the making of
such payments, the Escrow Agent shall instruct the Company's stock transfer
agent to issue, in accordance with the written instructions of the Company and
the Underwriters, the shares of Common Stock and Warrants for which payment has
been made.
6. In the event the Escrow Period terminates pursuant to paragraph 4(b),
then the Escrow Agent, as promptly as possible, shall return to each of the
purchasers of the Common Stock and Warrants, the amount paid in by them for the
purchase of the Common Stock and Warrants and collected by the Escrow Agent,
without interest and without any deductions. Each amount paid or payable to each
purchaser pursuant to this paragraph shall be deemed to be the property of each
purchaser, free and clear of any and all claims of the Company or any of its
creditors, and the respective agreements to purchase the Common Stock and
Warrants made and entered into in the Public Offering thereupon shall be deemed
to be cancelled, without any further liability of said purchasers to pay for the
Common Stock and Warrants purchased. The Escrow Agent shall be required to make
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such payment only to the person named in the written account of each sale to be
furnished by the Underwriters pursuant to paragraph 1 hereof at the address
given in such paragraph 1 written account. Any funds payable to the purchasers
of the Common Stock and Warrants which the Escrow Agent cannot disburse to said
purchasers because the address given in the paragraph 1 written account is
defective or which the Escrow Agent cannot disburse for any other reason to said
purchaser, shall be retained by the Escrow Agent and dealt with in accordance
with applicable Colorado law. At such time as the Escrow Agent shall have made
all payments and remittances provided for in this paragraph, the Escrow Agent
shall be completely discharged and released of any and all further liabilities
and responsibilities hereunder.
7. The Company agrees to give the Escrow Agent appropriate written notice
of the date upon which the Registration Statement becomes effective and of any
extension of the offering period at the date hereof.
8. The Escrow Agent in its actions pursuant to this Agreement shall be
fully protected in every reasonable exercise of its discretion and shall have no
obligations hereunder to the Company or to any other party, except as expressly
set forth herein.
9. The Company shall pay the Escrow Agent a $3,000 fee, which shall cover
all fees and expenses of the Escrow Agent in connection with the action taken
under this Agreement, and such fee shall be paid regardless of whether this
Agreement terminates pursuant to paragraphs 4(a), 4(b) or 4(c). In addition, the
Company shall pay the Escrow Agent a refundable deposit of $5,000 which shall be
used to pay for costs and expenses incurred by Escrow Agent pursuant to the fee
schedule attached to and made a part of this Agreement as Exhibit B if funds
deposited in the subject escrow are returned to investors pursuant to paragraph
6 or otherwise. Any remaining portion of the said refundable deposit shall be
returned by the Escrow Agent to the Company upon termination of this Agreement.
10. The Escrow Agent shall have no obligation to invest any of the
deposited funds or to pay interest thereon.
11. The Escrow Agent shall not issue any certificates of deposit, stock
certificates, or any other instrument or document representing any interest in
the deposited funds, but written notice acknowledging receipt of the deposited
funds will be delivered from time to time, but no more frequently than once per
week, by the Escrow Agent to the Company and the Underwriters. The Escrow Agent
shall give the Company and the Underwriters prompt written notice when funds
deposited in the Escrow Account total $3,570,000. The Escrow Agent shall make an
accounting to the Company and the Underwriters when and if it pays escrow funds
to the Company or any other specified recipients pursuant to paragraph 5 or 6
hereof. The Escrow Agent shall not be responsible for fees in conjunction with
the issuance or transfer of securities.
12. The Company and the Underwriters agree to provide to the Escrow Agent
all information necessary to facilitate the administration of this Agreement,
and the Escrow Agent may rely upon such information provided. In performing any
of its duties hereunder, the Escrow Agent shall not incur any liability to
anyone for any claims, damages, losses, costs or expenses, except for wilful
misconduct or gross negligence, and it shall accordingly, not incur any such
liability with respect to (i) any action taken or omitted in good faith upon
advice of counsel given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent under this Agreement or (ii) any action
taken or omitted in reliance upon any instrument, including the written advices
provided for herein, not only as to its due execution and the validity and
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effectiveness of its provisions, but also as to the truth and accuracy of any
information contained therein, which the Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by a proper person or
persons, and to conform with the provision of this Agreement.
13. The Company and the Underwriters hereby agree to indemnify and hold
harmless the Escrow Agent against any and all losses, claims, damages,
liabilities, costs and expenses, including reasonable costs of investigation and
attorney's fees and disbursements, which may be imposed upon the Escrow Agent or
incurred by the Escrow Agent hereunder, or their performance of its duties
hereunder, including any litigation arising from this Agreement or involving the
subject matter hereof.
14. If at any time a dispute shall exist as to the duties of the Escrow
Agent and the terms hereof, or if funds deposited hereunder are not withdrawn on
or before thirty (30) days after the termination date set forth in paragraph 4,
the Escrow Agent may, in its discretion, deposit said funds with the Clerk of
the District Court for the City and County of Denver, State of Colorado and may
interplead the parties hereto as to the rights, if any, in such funds. Upon so
depositing such funds and filing its complaint in interpleader, the Escrow Agent
shall be completely discharged and released from all further liability or
responsibility under the terms hereof. The parties hereto, for themselves, their
successors and assigns, do hereby consent to the jurisdiction of said Court and
do hereby appoint the Clerk of said Court as their agent for service of all
process in connection with the proceeding mentioned in this paragraph.
15. All notices, demands or request required or authorized hereunder shall
be deemed given sufficiently if in writing and sent by registered mail or
certified mail, return receipt requested and postage prepaid, or by facsimile,
tested telex, telegram or cable to the person at his address set forth above. In
the case of any notices, demands or requests sent to the Company, a copy shall
also be delivered to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., Bearman Talesnick & ▇▇▇▇▇▇▇
Professional Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. In the case of any
notices, demands or requests sent to I.A. ▇▇▇▇▇▇▇▇▇▇, a copy shall also be
delivered to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Schneck, Weltman, Hashmall & ▇▇▇▇▇▇▇ L.L.P.,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. In the case of any
notices, demands or requests sent to Worthington Capital, a copy shall also be
delivered to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Brescia, P.C., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
16. The Escrow Agent is hereby expressly authorized and directed to
disregard any and all notices or warnings given by any of the parties hereto,
other than those notices and warnings specifically called for in this Agreement,
or by any other person or corporation, excepting only orders of process of
court, and is hereby expressly authorized to comply with and obey any and all
orders, judgments or decrees of any court. In the event that Escrow Agent obeys
or complies with any such order judgment, or decree of any court, it shall not
be liable to any of the parties hereto or to any such other person, firm or
corporation by reason of such compliance, notwithstanding that any such order,
judgment or decree may be subsequently reversed, modified, annulled or set aside
or vacated or found to have been entered without jurisdiction.
17. The Escrow Agent shall have no duty to know or determine performance or
non-performance of any provision of any agreement between the other parties
hereto, and the original, or a copy, of any such agreement deposited with the
Escrow Agent shall not bind such agent in any manner. The Escrow Agent assumes
no responsibility for the validity or sufficiency of any documents or paper or
payments deposited or called for hereunder except as may be expressly and
specifically set forth in this Agreement in clear and unambiguous language, and
the duties and responsibilities of the Escrow Agent are limited to those
expressly and specially stated in this Agreement in such language.
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18. This Agreement shall be governed and interpreted by the laws of the
State of Colorado and shall be binding upon the parties hereto and their
respective successors and assigns. This Agreement may be executed in
counterparts.
IN WITNESS WHEREOF, the Company, each of the Underwriters and the Escrow
Agent have executed this Fund Escrow Agreement on the date first written above.
ESCROW AGENT COMPANY
American Securities Transfer American International Consolidated Inc.
& Trust, Incorporated
By: By:
----------------------------------- ------------------------------------
Authorized Officer Authorized Officer
UNDERWRITER
I.A. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
By:
-------------------------------------
Authorized Officer
UNDERWRITER
Worthington Capital Group, Inc.
By:
-------------------------------------
Authorized Officer
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