1
EXHIBIT 1.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of
___________, 1997, by and among Bank (the "Escrow Agent"), having its
Principal place of business at , , California and Cuidao Holding
Corp., a Florida corporation (the"Company"), having its principal place of
business at 3201 West Griffin Road, Suite 204, Ft. Lauderdale, Florida
33312-6900.
RECITALS
A. The Company proposes to offer for sale to investors up to 260,000
Units, each Unit consisting of one share of the Company's common stock, $.0001
par value ("Common Stock") and one Common Stock Purchase Warrant, for a maximum
aggregate offering price of $1,495,000 (the "Proceeds").
B. The Company has engaged West America Securities Corp., a member of
the National Association of Securities Dealers, Inc. (the "Placement Agent") to
use its best efforts to sell, as exclusive agent for the Company, the Units. The
Placement Agent shall be bound by this Agreement. However, for purposes of
communications and directives, the Escrow Agent need only accept those signed by
the Company.
C. The Company desires to establish an escrow account in which funds
received from subscribers for the Units will be deposited pending completion of
the escrow period. Bank agrees to serve as Escrow Agent in accordance
with the terms and conditions set forth herein and subject to the approval of
the state securities administrators set forth on the list attached hereto as
Exhibit "A" (hereinafter referred to as the "State Administrators"). The purpose
of this Agreement is to comply with the provisions of Rules 10(b)-9 and 15c2-4
promulgated under the Securities Exchange Act of 1934, as amended, and under the
applicable securities laws of all states in which the offering of Units (the
"Offering") is made.
D. The Escrow Agent must be satisfactory to the State Administrators
and it is not affiliated with the Company.
AGREEMENT
1. ESTABLISHMENT OF ESCROW ACCOUNT. Effective as of the date of the
commencement of the Offering, the parties hereby establish an escrow account
with the Escrow Agent, which escrow account shall be entitled "Cuidao Holding
Corp./ Bank Escrow Account (the "Escrow Account"). The Company and the
Placement Agent will instruct subscribers to make checks for subscriptions
payable to " BANK , AS ESCROW AGENT FOR CUIDAO HOLDING CORP." until a
minimum of 95,000 Units have been sold in the Offering. Any checks received that
are made payable to a party other than the Escrow Agent shall be returned to the
Company or the Placement Agent.
2
2. ESCROW PERIOD. The period for the existence of the escrow (the
"Escrow Period") shall begin with the commencement of the Offering and shall
terminate upon the earlier to occur of the following dates:
A. The date upon which the Escrow Agent confirms to the State
Administrators as hereinafter provided that it has received in the Escrow
Account gross proceeds of $546,250 in deposited funds (the "Minimum Offering
Amount"); or
B. The expiration of ninety (90) days from the date of
commencement of the Offering (unless extended as permitted in the Registration
Statement filed with the Securities and Exchange Commission in connection with
the Offering for an additional ninety (90) days at the sole discretion of the
Company with a copy of such extension to the Escrow Agent and the State
Administrators); or
C. The date upon which a determination is made by the Company to
terminate the Offering prior to the sale of the Minimum Offering Amount.
During the Escrow Period, the Company 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 Company or any other entity, or
be subject to the debts of the Company or any other entity.
3. DEPOSITS INTO THE ESCROW ACCOUNT. All monies received from
subscribers of the Units will be deposited with the Escrow Agent by twelve
o'clock noon of the next business day after receipt of said monies from
subscribers, 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, whether the consideration received
was in the form of a check, draft, or money order, the date of said check,
draft, or money order, and the date received and delivered to the Escrow Agent.
All monies so deposited in the Escrow Account are hereinafter referred to as the
"Escrow Amount." The State Administrators shall have the authority to inspect
the Escrow Account without obtaining any further permission from the Company
and/or the Escrow Agent.
Unless and until all of the State Administrators order the release of the
Escrow Amount to the Company, such Escrow Amount shall not be, nor shall such
Escrow Amount be considered to be, assets of the Company.
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
A. In the event the Escrow Agent does not receive deposits
totalling the Minimum Offering Amount prior to the termination of the Escrow
Period, the Escrow Agent shall promptly notify the State Administrators by
telephone, confirmed in writing, of such fact and shall, upon approval by the
State Administrators, promptly thereafter refund to each subscriber the amount
received from the subscriber, without deduction, penalty, or expense to
2
3
the subscriber, and the Escrow Agent shall notify the Company and the Placement
Agent of its distribution of the funds. The purchase money returned to each
subscriber shall be free and clear of any and all claims of the Company or any
of its creditors.
B. In the event the Escrow Agent receives the Minimum Offering
Amount prior to termination of the Escrow Period, the Escrow Amount will not be
released to the Company until such amount is received by the Escrow Agent in
collected funds and the release provisions set forth in paragraph C below are
complied with. For purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal banking
channels and are in the form of cash. The Minimum Offering Amount may be met by
funds that are deposited from the effective date of the Offering up to and
including the date on which the contingency must be met, i.e., during the Escrow
Period. However, escrow cannot be broken and the Offering may not proceed to
closing until customer checks have been collected through the normal banking
channels in an aggregate amount sufficient to meet the Minimum Offering Amount.
Purchases made after the Escrow Period has terminated, but prior to the date
escrow is broken pending clearance of subscribers' funds, may not subsequently
be counted to meet the Minimum Offering Amount should checks tendered prior to
the termination of the Escrow Period fail to clear the banking system. In no
event may the Placement Agent substitute its own good check for the check of a
purchaser that has insufficient funds nor otherwise purchase Units to satisfy
the offering contingency unless purchasing for investment prior to the
termination of the Escrow Period and the offering document discloses the maximum
amount of such potential purchase and such arrangement has been approved by the
State Administrators.
C. In no event will funds be released to the Company until the
State Administrators have entered an Order authorizing the release of funds in
the Escrow Account. Such Order will be entered only five business days after
receipt by the State Administrators of an application that includes the
following:
(1) A verified statement duly executed by the Escrow Agent
setting forth the total amount in collected funds on deposit with the Escrow
Agent on the termination date (including purchases for which check or other
payment had been received by the purchaser and were subsequently collected as
provided in paragraph 4B hereof) and states therein that all of the conditions
of this Agreement have been met.
(2) A verified statement duly executed by the Company which
states:
(a) That all required proceeds from the sale of the
Units have been placed with the Escrow Agent in accordance with the terms and
conditions of this Agreement and that there have been no material omissions or
changes in the financial condition of the Company, or other changes of
circumstances, that would render the amount of the proceeds inadequate to
finance the Company's proposed plan of operations, business or enterprise;
3
4
(b) That the required proceeds are represented by
unconditional subscription agreements which are not loans and are not subject to
rescission or rejection by the Company or the subscribers;
(c) That there have been no material omissions or
changes that would render the representations contained in the Registration
Statement to be fraudulent, false or misleading; and
(d) Such other information as the State Administrators
may require.
5. COLLECTION PROCEDURE. 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
Company or the Placement Agent. In such cases, the Escrow Agent will promptly
notify the Company of such return.
If the Company 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 Company 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 rejected subscriber's check which has been
submitted for collection by the Escrow Agent is uncollectible, and if the Escrow
Agent has issued a check to the rejected subscriber hereunder, then the Escrow
Agent shall notify the Company and the Company shall immediately reimburse the
Escrow Agent for the amount of 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.
6. INVESTMENT OF ESCROW AMOUNT. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in (1) bank accounts,
(2) bank money-market accounts, (3) short-term certificates of deposit issued by
a bank, or (4) short-term securities issued or guaranteed by the U.S.
Government.
7. COMPLIANCE WITH TAXATION MATTERS. The Company shall provide the
Escrow Agent with a completed Internal Revenue Service ("IRS") Form W-8 or Form
W-9 upon the execution of this Agreement. The Escrow Agent may delay accepting
escrow funds until the IRS forms have been provided. For purposes of reporting
to tax authorities, the Escrow Agent will treat all income earned by the Escrow
Agent as paid to the Company at the time income is received by the Escrow
Account.
4
5
The Company shall be responsible for determining any requirements for
paying taxes or reporting any payments for tax purposes. The Company shall give
written directions to the Escrow Agent to prepare and file tax information or to
withhold any payments hereunder for tax purposes. The Company covenants and
agrees to indemnify and hold the Escrow Agent harmless against all liability for
tax withholding and/or reporting for any payments made by the Escrow Agent
pursuant to this Agreement.
8. COMPENSATION OF ESCROW AGENT. The Company shall pay the Escrow Agent
a fee for its escrow services hereunder in accordance with the fee schedule
attached hereto as Exhibit "B". However, no such fee or any monies whatsoever
shall be paid out of or chargeable to the funds on deposit in the Escrow
Account.
In the event Escrow Agent performs any service not specifically provided
hereinabove, or that there is any assignment or attachment of any interest in
the subject matter of this escrow or modification thereof, or that any
controversy arises hereunder, or that Escrow Agent is named a party to, or
intervenes in, any litigation pertaining to this escrow or the subject matter
thereof, Escrow Agent shall be reasonably compensated therefor and reimbursed
for all costs and expenses including attorneys' fees occasioned thereby. Escrow
Agent shall have a first lien on the property and papers held by it hereunder
for such compensation and expenses, and the Company agrees to pay the same.
9. RESIGNATION OF ESCROW AGENT. The Escrow Agent may not resign as
escrow agent without the express consent of the State Administrators, and may
further do so upon giving ten (10) days written notice of such resignation to
the Company at the address set forth hereinbelow. On the effectiveness of such
resignation, the Escrow Agent shall deliver to any escrow agent appointed by the
Company (or if there is no escrow agent appointed by the Company, then to the
purchasers of the Units), all documents and money in the Escrow Account, and
thereupon the Escrow Agent will be released of any further responsibility or
obligation in connection with the Escrow Account or this Agreement.
10. LIABILITY OF THE ESCROW AGENT. The Escrow Agent may rely on and
shall be protected, indemnified and held harmless by the Company in acting upon
the written or oral instructions of any officer or director of the Company or of
the Company's counsel, and the Escrow Agent will be entitled to request that
further instructions be given by such persons or to request that instructions be
given in writing.
In performing duties under this Agreement, the Escrow Agent is authorized
to rely upon any statement, consent, agreement or other instrument not only as
to its due execution, its validity, and the effectiveness of its provisions, but
also as to the truth and accuracy of any information contained therein, which
the Escrow Agent in good faith believes to be genuine or to have been
represented or signed by a proper person or persons. The Escrow Agent shall not
be liable for any error of judgement made in good faith by one of its officers
or directors, unless it shall be proved that the Escrow Agent or such officer or
director was grossly negligent in ascertaining the pertinent facts or acted
intentionally in bad faith. The Escrow Agent will have
5
6
no liability for any action or omission to act with respect to its duties under
this Agreement undertaken in good faith reliance upon reasonable advice of its
counsel or the Company's counsel.
Should the Escrow Agent, before or after the performance of its
obligations under this Agreement, receive or become aware of any conflicting
demands or claims with respect to funds deposited in the Escrow Account or the
rights of the Company or any of the subscribers, the Escrow Agent shall have the
right to discontinue any or all acts conducted pursuant to the terms of this
Agreement until such conflict has been resolved to its satisfaction. The Escrow
Agent shall have a further right to commence or defend any actions or
proceedings for the determination of such conflicting demands or complaints. The
Company hereby covenants and agrees to indemnify the Escrow Agent and hold it
harmless against any loss, liability or expense, and pay all costs, damages,
judgments and expenses, including reasonable attorneys' fees, suffered or
incurred by the Escrow Agent in connection with, or arising out of, this
Agreement, including without limitation, any suit in interpleader brought by the
Escrow Agent, except, that the Escrow Agent will not be indemnified against any
such loss, liability or expense arising out of the Escrow Agent's gross
negligence or willful misconduct. The Escrow Agent will be under no obligation
to institute, or defend any action, suit or legal proceeding in connection
herewith unless first indemnified and held harmless to the Escrow Agent's
satisfaction in accordance with the foregoing. In the event the Escrow Agent
shall bring a suit in interpleader, the Escrow Agent shall ipso facto be fully
released and discharged from all its obligations to perform any and all duties
or obligations under this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement or resignation of the Escrow Agent.
11. MAINTENANCE OF RECORDS. The Escrow Agent shall at all times keep and
maintain a complete set of books, records and accounts relating to the
subscriptions received by the Escrow Agent hereunder, and the disposition by the
Escrow Agent of the proceeds thereof. All such records maintained by the Escrow
Agent shall be available for inspection by the State Administrators, and the
Escrow Agent shall furnish to the State Administrators, upon demand, at such
place designated in such demand, true, correct, complete and current copies of
any or all of such records.
12. MISCELLANEOUS.
A. All notices, reports, instructions, requests and other
communications given under this Agreement shall be either (a) sent in writing
and served personally by delivery to a responsible officer at the party's
offices listed on the signature pages hereto; or delivered by first class
registered or certified U.S. mail, return receipt requested, postage prepaid; or
(b) sent by telex or telecopier and then acknowledged as received by return
telex or telecopier by the intended recipient. Notices shall be deemed received
only upon receipt. Notices shall be directed to the addresses or telex or
telecopier numbers indicated on the signature pages hereto; provided that a
party may change its address or numbers for notices by giving notice to all
other
6
7
parties in accordance with this paragraph. Escrow Agent shall be protected in
acting upon any notice, request, waiver, consent, receipt or other paper or
document believed by Escrow Agent to be signed by the proper party or parties.
B. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California. This
Agreement, together with any exhibits and/or schedules referred to herein,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
undertakings of the parties in connection herewith.
C. All of the terms, covenants, conditions and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto and to their
respective representatives, successors and assigns.
D. No failure or delay on the part of the Escrow Agent in
exercising any right, power or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power or remedy
preclude any other or further exercise of any other right, power or remedy.
E. The invalidity of any provision hereof shall in no way affect
the validity of any other provision hereof. Each of the parties hereto shall at
the request of the other party, deliver to the requesting party all further
documents or other assurances as may reasonably be necessary or desirable in
connection with this Agreement.
F. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
G. In the event of any dispute arising out of the subject matter
of this Agreement, the prevailing party shall recover, in addition to any other
damages assessed, its attorneys' fees and court costs incurred in litigating or
otherwise settling or resolving such dispute.
H. Escrow Agent may consult with legal counsel in the event of
any dispute or question as to the instructions provided hereunder or Escrow
Agent's duties thereunder, and Escrow Agent shall incur no liability and/or
expense therefor by acting in accordance with instructions of legal counsel.
I. Escrow Agent shall not be required to take or be bound by
notice of such default involving any expense or liability, unless notice in
writing is given to the Escrow Agent at the office above named, and unless it is
indemnified in a manner satisfactory to it against such expense or liability.
7
8
J. In the event the escrow created by this Agreement is canceled
for any reason, the Company will nevertheless pay the escrow fee, plus all other
costs and expenses of Escrow Agent, as established under Section 8 of this
Agreement. Should the Escrow Agent resign as escrow hereunder pursuant to
Section 9 of this Agreement, Escrow Agent shall be entitled to reimbursement
only for those costs and expenses incurred by Escrow Agent to date of such
resignation.
The Company and the Escrow Agent have entered into this Agreement on this
___ day of _____, 1998 in multiple counterparts, each of which shall be
considered an original. Escrow Agent, by its signature hereon, accepts the
escrow agency created by this Agreement, and agrees to carry out its duties as
escrow agent pursuant to the terms and conditions contained herein.
COMPANY
Cuidao Holding Corp.
By:________________________________________
President
Address for Notices:
3201 West Griffin Road, Suite 204
Ft. Lauderdale, Florida 33312-6900
Facsimile: (954) 964-7087
ESCROW AGENT
Bank
By:________________________________________
Authorized Officer
Address for Notices:
, California
8
9
EXHIBIT A
STATE SECURITIES COMMISSIONS
1. Colorado Department of Regulatory Agencies, Division of Securities
2. Delaware Division of Securities
3. Florida Division of Securities and Investor Protection
4. Georgia Secretary of State, Securities Division
5. Illinois Securities Department
6. Maryland Office of the Attorney General, Division of Securities
7. New Jersey Department of Law and Public Safety, Division of Consumer
Affairs, Bureau of Securities
8. New York Department of Law
9. North Carolina Secretary of State, Securities Division
10. Ohio Division of Securities
11. Virginia Corporation Commission, Division of Securities and Retail
Franchising
9
10
EXHIBIT B
ESCROW FEE SCHEDULE
10