ESCROW AGREEMENT
AGREEMENT made this ___ day of ________, 1997, by and among the Issuer and
the Underwriter whose names and addresses appear on the Information Sheet (as
defined herein) attached to this Agreement and EUROPEAN AMERICAN BANK, a New
York banking corporation with offices at ____________________________________
____________________________ (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Issuer has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (the "Registration Statement")
covering a proposed public offering of its securities (collectively, the
"Securities") as described on the Information Sheet; and
WHEREAS, the Underwriter proposes to offer the Securities, as agent for the
Issuer for sale to the public on a "best efforts, all or none" basis, 1,100,000
Shares of the Company, at a price per Share as set forth on the Information
Sheet; and
WHEREAS, the Issuer and the Underwriter propose to establish an escrow
account with the Escrow Agent in connection with such public offering and the
Escrow Agent is willing to establish such escrow account on the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Information Sheet.
Each capitalized term not otherwise defined in this Agreement shall have
the meaning set forth for such term on the information sheet which is attached
to this Agreement and is incorporated by reference herein and made a part hereof
(the "Information Sheet").
2. Establishment of Escrow Account.
2.1 The parties hereto shall establish an interest bearing escrow account
at the offices of the Escrow Agent, and bearing the designation, set forth on
the Information Sheet (the "Escrow Account"). The Underwriter and Selected
Dealers will instruct subscribers to make checks for subscriptions payable to
the Escrow Agent. Any checks received that are made payable to a party other
than the Escrow Agent shall be returned to the Selected Dealer who submitted the
check.
2.2 On or before the date of the initial deposit in the Escrow Account
pursuant to this Agreement, the Underwriter shall notify the Escrow Agent in
writing of the effective date of the Registration statement (the "Effective
Date") and the Escrow Agent shall not be required to accept any amounts for
deposit in the Escrow Account prior to its receipt of such notification.
2.3 The Offering Period, which shall be deemed to commence on the effective
Date, shall consist of the number of calendar days or business days set forth on
the Information Sheet. The Offering Period shall be extended by an Extension
Period only if the Escrow Agent shall have received written notice from the
Underwriter and the Issuer thereof at least five (5) business days prior to the
expiration of the Offering Period. The Extension Period, which shall be deemed
to commence on the next calendar day following the expiration of the Offering
Period, shall consist of the number of calendar days or business days set forth
on the Information Sheet. The last day of the Offering Period, or the last day
of the Extension Period (if the Escrow Agent has received written notice thereof
1 Escrow Agreement
as hereinabove provided), is referred to herein as the "Termination Date".
Except as provided in Section 4.3 hereof, after the Termination Date the
Underwriter shall not deposit, and the Escrow Agent shall not accept, any
additional amounts representing payments by prospective purchasers.
2.4 During the escrow period, the Issuer is aware and understands that it
is not entitled to any funds received into escrow, and no amounts deposited in
the Escrow Account shall become the property of the Issuer or any other entity,
or be subject to the debts of the Issuer or any other entity.
3. Deposits in the Escrow Account.
3.1 All amounts received from prospective purchasers of the Securities
shall be deposited in the Escrow Account, which amounts shall be in the form of
checks, cash, or wire transfers representing the payment of money. The
Underwriter will transmit funds to the Escrow Agent by noon of the next business
day following receipt. All checks deposited into the Escrow Account shall be
made payable to, or endorse in blank to, "European American Bank, as Escrow
Agent". Any check payable or endorsed other than to the Escrow Agent as required
hereby shall be returned to the Underwriter (together with any Subscription
Information, as defined below, or other documents delivered therewith) by noon
of the next business day following receipt of such check by the Escrow Agent,
and such check shall be deemed not to have been delivered to the Escrow Agent
pursuant to the terms of this Agreement.
3.2 The Underwriter and Selected Dealers agree that they shall promptly
deliver all moneys received from subscribers for the payment of the Units to the
Escrow Agent for deposit in the Escrow Account together with a written account
of each sale, which account shall set forth, among other things, the
subscriber's name and address, the number of Units purchased, the amount paid
therefor, and whether the consideration received was in the form of a check,
draft, or money order and the subscriber's social security or tax identification
number (collectively, the Subscription Information"). All moneys so deposited in
the Escrow Account are hereinafter referred to as the "Escrow Amount".
3.3 Simultaneously with each deposit into the Escrow Account made by the
Underwriter, it shall deliver to the Escrow Agent a copy of the "buy ticket"
setting forth the Subscription Information.
3.4 The Escrow Agent shall not be required to accept for deposit into the
Escrow Account checks which are not accompanied by the appropriate Subscription
Information. Wire transfers and cash representing payments by prospective
purchasers shall not be deemed deposited in the Escrow Account until the Escrow
Agent has received in writing the Subscription Information required with respect
to such payments.
3.5 The Escrow Agent shall not be required to accept any amounts
representing payments by prospective purchasers, whether by check, cash or wire
transfer, except during the Escrow Agent's regular banking hours.
3.6 Amounts deposited in the Escrow Account which have cleared the banking
system and have been collected by the Escrow Agent are herein referred to as the
"Fund".
3.7 The Escrow Agent shall refund any portion of the Fund prior to
disbursement of the Fund in accordance with Section 4 hereof upon instructions
in writing signed by both the Issuer and the Underwriter.
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4. Disbursement from the Escrow Account.
4.1 Subject to Section 4.3 below, in the event that at the close of regular
banking hours on the Termination Date the amount in the Fund (a) shall be less
than the Minimum Dollar Amount, or (b) shall represent the sale of less than the
Minimum Unit Amount, as indicated by the Subscription Information submitted by
the Underwriter, then in either such case, the Escrow Agent shall promptly
refund to each prospective purchaser the amount of payment received from such
purchaser which is then held in the Fund or which thereafter clears the banking
systems, with interest thereon, and the Escrow Agent shall notify the Issuer and
the Underwriter of its distribution of the Fund.
4.2 Subject to section 4.3 below, in the event that at any time up to the
close of banking hours on the Termination Date, the amount in the Fund shall be
at least equal to the Minimum Dollar Amount and shall represent the sale of not
less than the Minimum Unit Amount, the Escrow Agent shall notify the Issuer of
such fact in writing within a reasonable time thereafter. The Escrow Agent shall
hold the Fund until the Escrow Agent receives, at least two (2) business days
prior to the date on which the Fund is to be disbursed, instructions in writing
signed by both the Issuer and the Underwriter as to the disbursement of the
Fund.
4.3 In the event that the Escrow Agent or the Underwriter has on hand at
the close of business on the Termination Date any uncollected amounts which when
added to the Fund would raise the amount in the Fund to the Minimum Dollar
Amount and result in the Fund representing the sale of the Minimum Unit Amount,
a Collection Period (consisting of the number of business days set forth on the
Information Sheet) shall be utilized to allow such uncollected amounts to clear
the banking system. During the Collection Period, the Underwriter and the Issuer
shall not deposit, and the Escrow Agent shall not accept, any additional
amounts. If at the close of business on the last day of the Collection Period an
amount sufficient to raise the amount in the Fund to the Minimum Dollar Amount
and which would result in the Fund representing the sale of the Minimum Unit
Amount shall not have cleared the banking system, the Escrow Agent shall notify
the Issuer and the Underwriter in writing of such fact and shall return all
amounts then in the Fund, and any amounts which thereafter clear the banking
system, to the prospective purchasers as provided in subsection 4.1 hereof. If a
sufficient amount has cleared by such time, the parties shall proceed as
provided in subsection 4.2 hereof.
4.4 Upon disbursement of the Fund pursuant to the terms of this Section 4,
the Escrow Agent shall be relieved of all further obligations and released from
all liability under this Agreement. It is expressly agreed and understood that
in no event shall the aggregated amount of payments made by the Escrow Agent
exceed the amount of the Fund.
5. Rights, Duties and Responsibilities of the Escrow Agent. It is expressly
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature, and that:
5.1 The Escrow Agent shall not be responsible for or be required to enforce
any of the terms or conditions of the underwriting agreement or any other
agreement between the Underwriter and the Issuer nor shall the Escrow Agent be
responsible for the performance by the Underwriter or the Issuer of their
respective obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the Underwriter
(or the Issuer or Selected Dealers) any Subscription Information pertaining to
prospective purchasers unless such Subscription Information is accompanied by
checks, cash or wire transfers representing the payment of money, nor shall the
Escrow Agent be required to keep records of any information with respect to
payments deposited by the Underwriter (or the Issuer or Selected Dealers) except
as to the amount of such payments; however, the Escrow Agent shall notify the
Underwriter within a reasonable time of any discrepancy between the amount set
forth in any Subscription Information and the amount delivered to the Escrow
Agent therewith. Such amount need not be accepted for deposit in the Escrow
Account until such discrepancy has been resolved.
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5.3 The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent is hereby
authorized to forward each check for collection and, upon collection of the
proceeds of each check, deposit the collected proceeds in the Escrow Account. As
an alternative, the Escrow Agent may telephone the bank on which the check is
drawn to confirm that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Selected Dealer (or the Underwriter) that submitted the check. In such cases,
the Escrow Agent will promptly notify the Issuer of such return.
If the Issuer rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check to
the rejected subscriber. If the Issuer rejects any subscription for which the
Escrow Agent has not yet collected funds but has submitted the subscriber's
check for collection, the Escrow Agent shall promptly issue a check in the
amount of the subscriber's check to the rejected subscriber after the Escrow
Agent has cleared such funds. If the Escrow Agent has not yet submitted a
rejected subscriber's check for collection, the Escrow Agent shall promptly
remit the subscriber's check directly to the subscriber.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy, act in
reliance upon the contents, and assume the genuineness, of any notice,
instruction, certificate, signature instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document.
5.5 All funds deposited hereunder shall be invested by the Escrow Agent
only in investments permissible under SEC Rule 15c2-4, which is incorporated
herein by reference, such that the total amount on deposit in the Escrow Account
shall be readily available for disbursement pursuant to Section 4 hereof.
5.6 In the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions with respect to the Escrow
Account or the Fund which, in its sole determination, are in conflict either
with other instructions received by it or with any provision of this Agreement,
it shall be entitled to hold the Fund, or a portion thereof, in the Escrow
Account pending the resolution of such uncertainty to the Escrow Agent's sole
satisfaction, by final judgment of a court or courts of competent jurisdiction
or otherwise; or the Escrow Agent, at its sole option, may deposit the Fund (and
any other amounts that thereafter become part of the Fund) with the Clerk of a
court of competent jurisdiction in a proceeding to which all parties in interest
are joined. Upon the deposit by the Escrow Agent of the Fund with the Clerk of
any court, the Escrow Agent shall be relieved of all further obligations and
released from all liability hereunder.
5.7 The Escrow Agent shall not be liable for any action taken nor omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct. The Escrow Agent shall be entitled
to consult with counsel of its own choosing and shall not be liable for any
action taken, suffered or omitted by it in accordance with the advice of such
counsel.
5.8 The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Fund or any part thereof or
to file any financing statement under the Uniform Commercial Code with respect
to the Fund or any part thereof.
4 Escrow Agreement
6. Amendment; Resignation. This Agreement may be altered or amended only
with the written consent of the Issuer, the Underwriter and the Escrow Agent.
The Escrow Agent may resign for any reason upon three (3) business days' written
notice to the Issuer and the Underwriter. Should the Escrow Agent resign as
herein provided, it shall not be required to accept any deposit, make any
disbursement or otherwise dispose of the Fund, but its only duty shall be to
hold the Fund for a period of not more than five (5) business days following the
effective date of such resignation, at which time (a) if a successor escrow
agent shall have been appointed and written notice thereof (including the name
and address of such successor escrow agent) shall have been given to the
resigning Escrow Agent by the Issuer, the Underwriter and such successor escrow
agent, then the resigning Escrow Agent shall promptly refund the amount in the
Fund to each prospective purchaser, without interest therefrom, and the
resigning Escrow Agent shall notify the Issuer and the Underwriter in writing of
its liquidation and distribution of the Fund; whereupon, in either case, the
Escrow Agent shall be relieved of all further obligations and released from all
liability under this Agreement. Without limiting the provisions of Section 8
hereof, the resigning Escrow Agent shall be entitled to be reimbursed by the
Issuer and the Underwriter for any expenses incurred in connection with its
resignation, transfer of the Fund to a successor escrow agent or distribution of
the Fund pursuant to this Section 6.
7. Representations and Warranties. The Issuer and the Underwriter hereby
jointly and severally represent and warrant to the Escrow Agent that;
7.1 No party other than the parties hereto and the prospective purchasers
have, or shall have, any lien, claim or security interest in the Fund or any
part thereof.
7.2 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 Fund or any part thereof.
7.3 The Subscription Information submitted with each deposit shall, at the
time of submission and at the time of the disbursement of the Fund, be deemed a
representation and warranty that such deposit represents a bona fide sale to the
purchaser described therein of the amount of Securities set forth in such
Subscription Information.
7.4 All of the information contained in the Information Sheet is, as of the
date hereof, and will be at the time of any disbursement of the Fund, true and
correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow
Agent Fee set forth on the Information Sheet, payable upon execution of this
Agreement. In addition, the Issuer and the Underwriter jointly and severally
agree to reimburse the Escrow Agent for any reasonable expenses incurred in
connection with this Agreement, including but not limited to reasonable counsel
fees. Upon receipt of the Minimum Dollar Amount, the Escrow Agent shall have a
lien upon the Fund to the extent of its fees for services as Escrow Agent.
9. Indemnification and Contribution.
9.1 The Issuer and the Underwriter (collectively referred to as the
"Indemnitors") jointly and severally agree to indemnify the Escrow Agent and its
officers, directors, employees, agents and shareholder (jointly and severally
the "Indemnitees") against, and hold them harmless of any from, any all loss,
liability, cost, damage and expense, including, without limitation, reasonable
counsel fees which the Indemnitees may suffer or incur by reason of any action,
claim or proceeding brought against the Indemnitees arising out of or relating
in any way to this Agreement or any transaction to which this Agreement relates,
unless such action, claim or proceeding is the result of the willful misconduct
of the Indemnitees.
5 Escrow Agreement
9.2 The provisions of this Section 9 shall survive any termination of this
Agreement, whether by disbursement of the Fund, resignation of the Escrow Agent
or otherwise.
10. Governing Law and Assignment. This Agreement shall be construed in
accordance with the governed by the laws of the State of New York and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that any assignment or transfer by any party of its rights
under this Agreement or with respect to the Fund shall be void as against the
Escrow Agent unless (a) written notice thereof shall be given to the Escrow
Agent; and (b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
11. Notices. All notices required to be given in connection with this
Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office, and addressed, if to the
Issuer or the Underwriter, at their respective addresses set forth on the
Information Sheet, and if to the Escrow Agent, at its address set forth above,
to the attention of the Trust Department.
12. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
13. Execution in Several Counterparts. This Agreement may be executed in
several counterparts or by separate instruments and all of such counterparts and
instruments shall constitute one agreement, binding on all of the parties
hereto.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings (written or oral) of the
parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
EUROPEAN AMERICAN BANK
By:
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PATCOMM CORPORATION
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇, President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
By:
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▇▇▇▇ ▇▇▇▇▇▇, President
6 Escrow Agreement
EUROPEAN AMERICAN BANK
ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer.
Name: PATCOMM CORPORATION
Address: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇ of Incorporation: Nevada
2. The Underwriter.
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. 10017
State of Incorporation: New York
The term "Selected Dealer" as used herein shall include the Underwriter
and other co-underwriters and/or other Selected Dealers as part of the Selling
Group. All Selected Dealers shall be bound by this Agreement. However, for
purposes of communications and directives, the Escrow Agent need only accept
those signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
3. The Securities.
Description of the Securities to be offered: Shares of Common Stock, par value
$.001 per Share.
Offering Price per Share: $5.00
4. Minimum Amounts Required for Disbursement of the Escrow Account: $5,500,000.
Aggregate dollar amount which must be collected before the Escrow Account
may be disbursed to the Issuer ("Minimum Dollar Amount"): $5,500,000.
Total number of Units which must be subscribed for before the Escrow
Account may be disbursed to the Issuer ("Minimum Share Amount"): 1,100,000
Shares.
5. Plan of Distribution of the Securities.
Offering Period: 90 calendar days
Extension Period: 90 calendar days
Collection Period: Ten calendar days
6. The Escrow Account.
Title of the Escrow Account: Escrow Account for the Benefit of
Subscribers to Patcomm Corporation.
Branch address where the Escrow Account is to be established:
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7. Escrow Agent Fee.
Amount due on execution of the Escrow Agreement: $
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7 Escrow Agreement