Exhibit 10.1
ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into this first day of September
1999 by and between e-SCRUB, Inc. a Virginia Corporation (the "COMPANY"); Three
Arrows Capital Corp. (the "UNDERWRITER") and The Business Bank, (the "ESCROW
AGENT").
BACKGROUND. Pursuant to the Offering of the Company dated on or about
October 15, 1999, the Company is offering for sale through Three Arrows Capital
Corp., shares of common stock (the "SHARES"), $______ par value per share, of
the Company (the "COMMON STOCK") at a price of $20.00 per share (the
"OFFERING"). Those persons who desire to purchase shares ("SUBSCRIBERS") are
required to execute and deliver to the Underwriter a subscription agreement
("SUBSCRIPTION AGREEMENT") and are required to pay the purchase price of the
shares subscribed for by check, directed or made payable, to the Escrow Agent as
escrow agent for the Company.
The sale of any shares pursuant to the Offering is subject to various
conditions, including the receipt of acceptable Subscriptions and payment in
respect of the shares of Common Stock. The purpose of this Escrow Agreement is
to assure that no proceeds of the Offering are disbursed to or on behalf of, the
Company until the conditions set forth herein shall be satisfied. Once
acceptable Subscriptions and funds for the minimum number of shares have been
received, the Escrow Agent, pursuant to this Escrow Agreement, funds will be
released to the Company. The parties hereto, wish to set forth herein the terms
and conditions governing the escrow account and the funds being delivered to and
held by the Escrow Agent.
NOW THEREFORE, in consideration of the mutual promises herein contained,
each intending to be legally bound hereby, the parties hereto agree as follows:
1. ESCROW AGENT. On behalf of the Subscribers, the Company hereby
designates and appoints The Business Bank as Escrow Agent to serve in accordance
with the terms and conditions of this Escrow Agreement and the Escrow Agent
agrees to act as such Escrow Agent in accordance with the terms and conditions
of this Escrow Agreement.
2. CREATION OF ESCROW. At any time and from time to time after the date
hereof until completion of the Offering and Closing thereunder, the Underwriter
shall cause to be delivered to the Escrow Agent, from the Subscribers, funds or
instruments payable to the Escrow Agent as escrow agent representing the
purchase price of shares subscribed for by Subscribers. The Escrow Agent shall
accept and hold in escrow all such funds so received by it for deposit in escrow
hereunder (the "ESCROWED FUNDS") until released as set forth herein. The Escrow
Agent shall maintain books and records of account detailing the source of all
funds received by the Escrow Agent.
3. INVESTMENT OF ESCROWED FUNDS. Pending release from escrow, the Escrowed
Funds shall be invested by the Escrow Agent in interest bearing short-term
United States government securities or other short-term federally insured money
market investments which are readily liquid. All interest accrued on the
Escrowed Funds or interest earned on the Escrowed Funds shall be retained by the
Escrow Agent as part of the Escrowed Funds and released in accordance with the
provisions of this
1
Escrow Agreement. It is acknowledged and agreed that the Escrowed Funds,
including any interest or earnings thereon, are not assets or deposit
liabilities of the Escrow Agent or the Company, but constitute funds submitted
to the Escrow Agent by the Subscribers for safekeeping, pending disbursement in
accordance with the provisions of this Escrow Agreement.
4. INFORMATION. The Company has undertaken responsibility for tax reporting
of the interest or other amounts earned on the Escrowed Funds with respect to
each Subscriber in the event of the release of Escrowed Funds in accordance with
the provisions of Section 5(b) hereof, and disbursement of said interest or
other earnings to Subscribers. From time to time upon the request of the
Underwriter as agent for the Subscribers, the Escrow Agent shall furnish to the
Underwriter a statement of the amount of Escrowed Funds held by the Escrow
Agent, the approximate amount of any accrued interest thereon, and such
information as the Underwriter may reasonably request, The Escrow Agent shall
immediately notify the Underwriter if any check or instrument representing
Escrowed Funds or other purported transfer to Escrow Agent of Escrowed Funds
fails to result in the actual delivery of funds to the Escrow Agent.
5. RELEASE OF ESCROWED FUNDS.
(a) RELEASE OF ESCROWED FUNDS TO THE COMPANY. Immediately upon the receipt
of the Officer's Certificate of the Company as described below, the Escrow Agent
shall release and deliver to the Company such portion of the Escrowed Funds as
represents payment of the purchase price of shares in respect of which the
Company has accepted Subscriptions plus all interest or other earnings accrued
on such portion of the Escrowed Funds. The Escrow Agent shall not release any
portion of the Escrowed Funds to the Company unless the following condition (the
"CONDITION") shall have been satisfied: it has received a certification of the
President or Chairman of the Board of Directors of the Company to the effect
that (i) the Company has received acceptable Subscriptions (including payment in
full of the purchase price) with respect to not less than 15,000 shares, and has
accepted Subscriptions with respect to not less than 15,000 shares, and all
terms of the Offering have been complied with. Such certification shall also
indicate the number of shares with respect to which Subscriptions have been
accepted and the number of shares, if any, and identity of the Subscribers with
respect to which Subscriptions have been rejected. Notwithstanding anything to
the contrary contained herein, the delivery of the foregoing certification shall
be in the sole discretion of the Company, and nothing contained herein shall
constitute any obligation, express or implied, of the Company to deliver such
certification, or to deliver it at any specified time.
(b) RELEASE OF ESCROWED FUNDS TO SUBSCRIBERS. Immediately after receiving a
certification of the President or Chairman of the Board of Directors of the
Company to the effect that the Company has either (i) terminated the Offering in
whole or in part; or (ii) rejected, revoked or canceled in whole or in part any
Subscription; or if the Condition shall not have been satisfied prior to October
15, 2000 then the Escrow Agent shall return to the Subscriber whose Subscription
shall have been rejected, revoked or canceled, in whole or in part, as a result
of termination of the Offering, the failure of satisfaction of the Condition
prior to October 15, 2000 or otherwise, Escrowed Funds representing such
Subscriber's rejected, revoked or canceled payments, or all Subscribers'
payments in the event of termination of the Offering as a whole or the failure
of satisfaction of the Condition, without such Subscriber's share of any
interest or other earnings accrued on such portion of the
2
Escrowed Funds.
6. LIMITATION OF LIABILITY. It is agreed that the duties of the Escrow
Agent are limited to those herein specifically provided and are ministerial in
nature. It is further agreed that the Escrow Agent shall incur no liability
whatsoever except by reason of its willful misconduct, gross negligence or bad
faith. The Escrow Agent shall be under no obligation in respect to amounts held
in escrow hereunder other than faithfully to follow the instructions herein
contained or delivered to the Escrow Agent in accordance with this Escrow
Agreement. It shall not be required to institute legal proceedings of any kind.
It shall have no responsibility for the genuineness or validity of any document
or other item deposited with it, and it shall be fully protected in acting in
accordance with the Escrow Agreement upon written instructions given to it and
reasonably believed by it to have been duly executed by the Company or
Underwriter in accordance herewith. The Company shall indemnify and hold the
Escrow Agent harmless with respect to anything done by the Escrow Agent in good
faith in any and all matters covered by this Agreement in accordance with the
instructions or provisions set forth herein. NEITHER THE ESCROW AGENT NOR ANY OF
ITS OFFICERS, DIRECTORS OR EMPLOYEES HAVE REVIEWED THE OFFERING NOR HAVE THEY OR
DO THEY MAKE ANY REPRESENTATIONS, OR STATEMENTS REGARDING THE TRUTH, ACCURACY OR
EFFECTIVENESS OF THE OFFERING.
7. COMPENSATION. The Company shall pay all compensation, expenses and other
charges of the Escrow Agent relating to its services hereunder, including all
fees and commissions relating to the investment of the aforesaid escrowed funds,
for so long as the Escrow Agent holds any amount in Escrow hereunder. The Escrow
Agent shall not make any deduction or setoff of the amount of compensation for
its services hereunder (including all expenses, fees and commissions) against
the Escrowed Funds.
8. RESIGNATION. The Escrow Agent, or any successor to it hereafter
appointed, may at any time resign by giving notice in writing to the Company and
Underwriter and, upon the appointment of a successor Escrow Agent as hereinafter
provided, shall be discharged from any further duties hereunder, In the event of
such resignation, a successor Escrow Agent, which shall be a bank or trust
company organized under the laws of the United States of America, shall be
appointed by the Company. Any such successor Escrow Agent shall deliver to the
Company and Underwriter a written instrument accepting such appointment
hereunder, and thereupon it shall succeed to all of the unaccrued rights and
duties of the Escrow Agent hereunder and shall be entitled to receive all of the
then remaining amounts held in escrow hereunder.
9. TERMINATION. This Escrow Agreement shall terminate upon the earlier of,
(i) the receipt by the Escrow Agent of a written notice of termination signed by
the Company accompanied by sufficient certifications or other documentation to
verify that all Subscriptions and commitments to which the Escrowed Funds relate
shall have been accepted and certificates representing such Shares issued, or
rejected in whole; or (ii) the distribution of all of the Escrowed Funds in
accordance with this Escrow Agreement. Upon termination pursuant to clause (i)
above, the Escrow Agent shall deliver any Escrowed Funds remaining after return
to Subscribers of Escrowed Funds representing rejected Subscriptions as
instructed in such notice of termination in accordance with the provisions of
Section 5(b) hereof
3
10. NOTICES. Except as otherwise provided in this Agreement, any notice or
other communication hereunder shall be in writing and shall be deemed delivered
upon personal delivery or upon receipt if sent by facsimile transmission,
express delivery service or mailed by registered or certified first class mail,
postage prepaid, and addressed as follows:
To the Company: e-SCRUB, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇ ▇▇▇▇
To the Escrow Agent: The Business Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
To the Underwriter: Three Arrows Capital Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇ ▇▇▇▇
or to such other addresses or persons as the parties, from time to time, may
furnish one another by notice given in accordance with this section.
11. MISCELLANEOUS.
(a) ASSIGNMENT. This Escrow Agreement and the rights of the parties
hereunder may not be assigned by the Escrow Agent without the consent of the
Company and Underwriter, which consent may be withheld in the absolute
discretion of the Company and Underwriter, and any attempted assignment in
Violation of this Section 11 (a) shall be void. This Escrow Agreement and all
action taken hereunder in accordance with its terms shall be binding upon and
inure to the benefit of each of the parties hereto and its respective
successors, permitted assigns, heirs, and legal representatives.
(b) AMENDMENT. This Escrow Agreement may be amended, consistent with the
protection of the interests of the Subscribers, upon written notice to the
Escrow Agent at any time by the Company or Underwriter, however the duties,
responsibilities or compensation of the Escrow Agent may not be modified without
its consent.
(c) WAIVER, Waiver of any term or condition of this Escrow Agreement by any
party shall not be construed as a waiver of a subsequent breach or failure of
the same term or condition, or a waiver of any other term, or condition of this
Escrow Agreement.
4
(d) GOVERNING LAW. This Escrow Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
(e) INTEGRATION. This Escrow Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and there
are no other agreements, covenants, representations or warranties except as set
forth herein.
(f) AUTHORITY. Each party executing this Escrow Agreement warrants its
authority to execute this Escrow Agreement.
(g) COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
(h) ATTORNEYS FEES. In the event Escrow Agent is required to seek legal
advise, take any legal action or defend any legal action the Company shall
reimburse Escrow Agent for all attorney's fees and costs associated therewith
which are incurred by Escrow Agent.
(i) BENEFICIARIES. The terms and provisions of this Escrow Agreement shall
create no right in any person, firm or corporation other than the parties and
their respective successors and assigns and no third party shall have the right
to enforce of benefit from the terms hereof.
(j) TRANSMITTAL. The Underwriter specifically agrees to transmit all
received funds to the Escrow Agent no later than noon of the day following
receipt.
(k) COMMENCEMENT OF THE OFFERING. The Escrow Period will commence upon
qualification of the Offering by the Securities and Exchange Commission.
(l) COLLECTED FUNDS. The phrase "collected funds" relates to the total
amount of funds received by the Escrow Agent from the Underwriter.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
be signed the day and year first above written,
ATTEST:
E-SCRUB, INC.
_______________________________ By: _____________________________
Name: _________________________ Name: _____________________________
5
Title: _________________________ Title: _____________________________
THREE ARROWS CAPITAL CORP.
_______________________________ By: ____________________________
Name: _________________________ Name: ____________________________
Title: _________________________ Title: _____________________________
THE BUSINESS BANK
_______________________________ By: ____________________________
Name: _________________________ Name: ____________________________
Title: _________________________ Title: _____________________________
6