Exhibit 10.11
PROCEEDS ESCROW AGREEMENT
This Proceeds Escrow Agreement (the "Agreement") is made and entered into this
day of May, 1998, by and between Summa Metals Corp., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, a Nevada corporation (the "Company/Issuer"),
American Securities Transfer & Trust, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as escrow agent (the "Escrow Agent"), and Boe & Company, Inc.,
▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (the "Underwriter").
Premises
The Company proposes to offer for sale to the general public, through the
Underwriter of up to 510,000 Units on a "best efforts all or none,' basis as to
the first 130,000 Units, and a "best efforts only" basis as to the remaining
380,000 Units (the "Offering"), each Unit consisting of one (1) share of common
stock of the Company, par value $.001 per share, one (1) Class A Warrant to
purchase one share of common stock, and one (1) Class 3 Warrant to purchase one
share of common stock, pursuant to a Registration Statement on Form SB-2 (the
"Registration Statement") filed with the Securities and Exchange Commission.
Agreement
NOW, THEREFORE, the parties hereto agree as follows:
1. Commencing on the Effective Date of the Offering, and until termination
of this Agreement, all funds collected by the Underwriter from subscriptions for
the purchase of Units in the subject Offering shall be forwarded promptly to the
Escrow Agent, but in any event no later than noon of the next business day
following receipt, and the Escrow Agent shall promptly deposit such funds with
the Union Bank & Trust Company, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Depository").
2. Collections. All subscription payments for Units (which payments shall
be made payable to "Summa Metals Corp. /Escrow Account") received by the
Underwriter will be transmitted to the Escrow Agent by the Underwriter by noon
of the next business day following receipt by the Underwriter, and the Escrow
Agent shall promptly deposit same with the Depository. The Underwriter shall
include a written account of sale, which shall include the Investor's name and
address, the number of Units purchased, the amount paid therefor, social
security number, taxpayer identification number, and whether the consideration
received was in the form of a check, draft or money order ("Payment").
3. The Escrow Agent shall establish the Escrow Account with the Depository
and forward all Payments received by it to the Depository for deposit into the
Escrow Account. Any Payment received that is payable to a party other than Summa
Metals Corp./Escrow Account, and any Payment returned unpaid to the Escrow Agent
shall be returned to the Underwriter. In the event the Issuer rejects an
Investor after the Investor's Payment has been deposited into the Escrow
Account, Issuer shall certify in writing to the Escrow Agent the fact of such
rejection, the name of the Investor so rejected, and the amount of Payment for
Units made by such Investor, and shall direct Escrow Agent to return to such
Investor a check in the amount of such payment, without deduction, provided,
however, that if Payment by such Investor has been forwarded for collection but
funds on which have not been collected, Escrow Agent shall have no duty to make
payment pursuant to this paragraph until receipt of such collected funds by
Escrow Agent. In the event Issuer rejects an Investor before the Investor's
Payment has been deposited in the Escrow Account, Issuer shall direct Escrow
Agent to return promptly the Investor's Payment, without interest, directly to
Investor.
4. Interest. Escrow Agent shall deliver to Issuer in a single, lump sum
payment all interest earned on funds deposited in the Escrow Account. No
interest shall be earned by or payable to Investors.
5. Investments. Collected funds deposited into the Escrow Account shall be
invested only in investments permitted under rule 15c2-4 of the Securities
Exchange Act of 1935, as amended.
6. Concurrently with the transmitting funds to the Escrow Agent, the
Underwriter shall also deliver to the Escrow Agent a schedule setting forth the
name and address of each subscriber whose funds are included in such
transmittal, the number of Units subscribed for, and the dollar amount paid. All
funds so deposited shall remain the property of the subscriber until the minimum
dollar threshold of $780,000 is met pursuant to the Registration Statement.
Until the minimum threshold is reached, the subscribers' funds held by the
Escrow Agent shall not be subject to any lien or charges by the Escrow Agent, or
judgments or creditors, claims against the Company.
7. If at any time prior to the expiration of the minimum offering period,
as specified in Paragraph 8, $780,000 has been deposited pursuant to this
Agreement, the Escrow Agent shall confirm the receipt of such funds to the
Company and Underwriter, and the Escrow Agent shall promptly transmit the
balance to the Company (such event is hereafter referred to as the "Closing") by
wire transfer and deliver all documents including the Shares as required.
Thereafter, the Escrow Agent shall continue to accept deposits from the
Underwriter and transmit, upon written request of the Company the balance to the
Company until the Offering is terminated. The Company shall notify the Escrow
Agent in writing of the completion of the Offering and shall schedule a final
closing for the final disbursement and settlement of the balance of funds in the
offering.
8. If the Underwriter has not deposited a minimum of $780,000 with the
Escrow Agent on or before 1998, but in any event no later than 180 days from the
Effective Date of the Offering, the Escrow Agent shall so notify the Company and
shall promptly transmit to those Investors who subscribed for the purchase of
Units from the Company, the amount of money each such Investor so paid without
interest. The Escrow Agent shall furnish to the Company verification of refunds
to all subscribers.
9. If at any time prior to the termination of this escrow, the Escrow Agent
is advised by the Securities and Exchange Commission, or any state securities
division, that a stop order has been issued with respect to the Registration
Statement, the Escrow Agent shall thereon return all funds with interest to the
respective subscribers.
10. It is understood and agreed that the duties of the Escrow Agent are
entirely ministerial, being limited to receiving monies from the Underwriter and
holding and disbursing such monies in accordance with this Agreement.
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11. The Escrow Agent is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness, or validity of any instrument
deposited with it, or with respect to the form or execution of the same, or the
identity, authority, or rights of any person executing or depositing the same.
12. The Escrow Agent shall not be bound by notice of any default by any
person or to take any action with respect to such default involving any expense
or liability, unless notice in writing is given to any officer of the Escrow
Agent of such default by the Company or the Underwriter, and unless the Escrow
Agent is indemnified in manner satisfactory to it against any expense or
liability arising therefrom.
13. The Escrow Agent shall not be liable for acting on any notice, request,
waiver, consent, receipt, or other paper or document believed by it to be
genuine, and to have been signed by the proper party or parties.
14. The Escrow Agent shall not be liable for any error of judgment or for
any act done or step taken or omitted by it in good faith, or for any mistake of
fact or law, or for having anything which it may do or refrain from doing in
connection herewith, except its own willful misconduct.
15. The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the consideration of the foregoing instructions or its
duties hereunder and it shall incur no liability and shall be fully protected in
acting in accordance with the opinion and instructions of such counsel.
16. In the event of any disagreement between the undersigned, or any of
them, the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and; or demands being made in
connection with or for any papers, money or property involved herein or affected
hereby, the Escrow Agent shall be entitled at its option to refuse to comply
with any such claim or demand so long as such disagreement shall continue and,
in so refusing, the Escrow Agent shall not be or become liable to the
undersigned or any of them or to any person named in the foregoing instructions
for the failure or refusal to comply with such conflicting or adverse demands,
and the Escrow Agent shall be entitled to continue to so refrain and refuse to
so act until:
(a) The rights of adverse claimants have been finally adjudicated in a
court assuming and having jurisdiction over the parties and the money,
papers and property involved herein or affected hereby; and/or
(b) All differences shall have been adjusted by agreement and the Escrow
Agent shall have been notified thereof in writing signed by all of the
persons interested.
17. The fee of the Escrow Agent is $5,000, payable as follows: $2,500 upon
execution of this Agreement and $2,500 upon the Closing. In addition, the Escrow
Agent shall be paid $5,000 on account of its expenses for acting as Escrow
Agent. Escrow Agent shall account to the Company for such expenses and refund
any remaining balance. The Escrow Agent shall be responsible for fees of the
Depository. The fee agreed upon for services rendered hereunder
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is intended as full compensation for the Escrow Agent's services as contemplated
by this Agreement, however, in the event that the conditions of this Agreement
are not fulfilled, or the Escrow Agent renders any material service not
contemplated by this Agreement, or there is any assignment of interest in the
subject matter of this Agreement, or any material modification thereof, or if
any material controversy arises hereunder, of the Escrow Agent is made a party
to or justifiably intervenes in any litigation pertaining to this Agreement, or
the subject matter hereof, the Escrow Agent shall be fully reimbursed for all
such extraordinary expenses, including reasonable attorney's fees, and all
extraordinary expenses shall be paid by the Company.
18. Resignation. The Escrow Agent may resign at any time and be discharged
from its duties as Escrow Agent hereunder by giving the other parties hereto at
least fifteen (15) days notice hereof. As soon as practicable after the
resignation, the Escrow Agent shall turn over to a successor escrow agent all
monies and property held hereunder (less such amount as Escrow Agent is entitled
to retain) upon presentation to Escrow Agent of the document appointing the new
escrow agent and its acceptance of such appointment. If no successor escrow
agent is appointed within a thirty (30) day period following such notice of
resignation, Escrow Agent shall deposit the monies and property with the
Superior Court of the State of Colorado in and for the County of Denver, or the
United States District Court for the Colorado District, as it deems appropriate.
19. Representations and Warranties. Issuer makes the following
representations and warranties to Escrow Agent:
(a) Issuer is a corporation duly formed and validly subsisting under the
laws of the State of Nevada, and has full power and authority to execute
and deliver this Escrow Agreement and to perform its obligations hereunder.
(b) This Escrow Agreement has been duly approved by all necessary corporate
action of the Issuer, including any necessary shareholder approval, has
been executed by duly authorized officers of the Issuer, and constitutes a
valid and binding agreement of the Issuer, enforceable in accordance with
its terms.
(c) The execution, delivery, and performance by the Issuer of this Escrow
Agreement will not violate, conflict with, or cause a default under the
articles of incorporation or By-laws of the Issuer, any applicable law or
regulation, any court order or administrative ruling or decree to which
issuer is a party or any of its property is subject, or any agreement,
contract, indenture, or other binding arrangement to which the Issuer is a
party or any of its property is subject.
(d) No party other than the parties hereto and the prospective Subscribers
have, or shall have, any lien, claim or security interest in the Escrow
Funds or any part thereof. No financing statement under the Uniform
Commercial Code is on file in any jurisdiction claiming a security interest
in or describing (whether specifically or generally) the Escrow Funds or
any part thereof.
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(e) Issuer hereby acknowledges that the status of Escrow Agent is that of
agent only for the limited purposes set forth herein, and hereby represents
and covenants that no representation or implication shall be made that the
Escrow Agent has investigated the desirability of advisability of
investment in the Shares or has approved, endorsed or passed upon the
merits of the investment therein and that the name of the Escrow Agent has
not and shall not be used in any manner in connection with the offer or
sale of the Shares other than to state that the Escrow Agent has agreed to
serve as escrow agent for the limited purposes set forth herein.
(f) All of the representations and warranties of the Issuer contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any deposit to or disbursement form the Escrow
Funds.
20. Arbitration. Except as expressly provided herein, the parties agree
that any dispute which arises under this Agreement that cannot be resolved
through good faith discussions, shall be settled by arbitration to be held in
the City of Denver, Colorado using the Standard Commercial Arbitration Rules of
the American Arbitration Association.
21. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(50 days after deposit in the United States mail, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
after delivery to any overnight courier, or when transmitted by facsimile
transmissions facilities, and addressed to the party to be notified as follows:
If to Issuer: Summa Metals Corp.
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With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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If to the Escrow Agent: American Securities Transfer & Trust, inc.
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If to the Underwriter: Boe & Company
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or to such other address as each party may designate for itself by like notice.
22. Amendments or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties hereto. No
delay or omission by any party in exercising any right with respect thereto
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shall operate as a waiver. A waiver on any one occasion shall not be construed
as a bar to, or waiver of, any right or remedy on any future occasion.
23. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
24. Governing Law. This Escrow Agreement shall be construed and interpreted
in accordance with the internal laws of the State of Colorado without giving
effect to the principles or rules governing conflict of laws.
25. Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the acceptance, collection, holding,
investment and disbursement of the Escrow Funds and sets forth in their entirety
the obligations and duties of the Escrow Agent and Depository with respect to
the Escrow Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers, as of the date first
above written.
SUMMA METALS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Executive Vice-President
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By:
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BOE & COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇, President
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▇▇▇▇▇▇▇ ▇▇▇, President
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