Exhibit 10.10
NOTE ESCROW AGREEMENT
AGREEMENT made as of the 26th day of April, 1996, by and among FIRST
AMERICAN RAILWAYS, INC. and its successor by merger or consolidation (the
"Issuer") and CAPITAL GROWTH INTERNATIONAL, LLC (the "Placement Agent") as agent
for the holders of the Notes (as defined below) attached to this Agreement), and
STERLING NATIONAL BANK & TRUST COMPANY OF NEW YORK, a national banking
association with offices at 355 Lexington Avenue, New York, New York 10017 (the
"Note Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Issuer proposes to offer for sale, through the Placement
Agent and pursuant to a Confidential Offering Memorandum dated March 11, 1996
(as may be supplemented or amended from time to time), certain securities of the
Issuer in the form of units (the "Units"), which Units will include, among other
securities, convertible secured notes (the Notes");
WHEREAS, the Notes provide that, at each closing of the purchase and
sale of the Units (a "Closing"), the Issuer shall irrevocably deposit into
escrow a cash amount ("Interest") sufficient to meet the Issuer's interest
payment obligations under the Notes issued at such Closing, for the first twelve
months after the issuance of such Notes (the "Term");
WHEREAS, the Notes also provide that, on each of the Principal Escrow
Payment Dates (as defined in the Note), the Issuer shall irrevocably deposit
into escrow an amount equal to the Principal Escrow Payments due on such
Principal Escrow Payment Date as provided in the Note and summarized in the
Information Sheet attached hereto; and
WHEREAS, the Issuer and the Placement Agent propose to establish two
separate escrow accounts with the Note Escrow Agent in connection with the
Offering and the Note Escrow Agent is willing to establish such escrow accounts
on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby 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 THE INTEREST ESCROW ACCOUNT.
2.1 The parties hereto shall establish an interest bearing
escrow account at the Trust Department of the Note Escrow Agent bearing the
designation "Interest Escrow Account".
2.2 As soon a practicable, but no later than five (5) business
days after the initial Closing (and as soon a practicable, but no later than
five (5) business days after each subsequent Closing) the Company shall (a) send
a notice, substantially in the form attached hereto as Exhibit A, to the Note
Escrow Agent, with a copy to the Placement Agent of (i) the principal amount of
the Notes to be issued at such Closing to each Noteholder and (ii) the amount of
Interest that will accrue on each such principal amount for a twelve month
period that is required to be deposited in such Interest Escrow Account pursuant
to the terms of the Notes, and (b) irrevocably deposit the Interest in the
Interest Escrow Account. The Note Escrow Agent shall not be required to accept
any amounts for deposit in the Note Escrow Account prior to its receipt of such
notice.
3. ESTABLISHMENT OF THE PRINCIPAL ESCROW ACCOUNT.
3.1 The parties hereto shall establish an interest bearing
escrow account at the Trust Department of the Note Escrow Agent bearing the
designation "Principal Escrow Account". The Interest Escrow Account and the
Principal Escrow Account are sometimes referred to herein individually as an
"Escrow Account" and collectively as the "Escrow Accounts".
3.2 On or before each of the following dates (the "Principal
Escrow Payment Dates"), the Company shall (a) send a notice, substantially in
the form attached hereto as Exhibit B, to the Note Escrow Agent, with a copy to
the Placement Agent, of the principal amounts of each Note then outstanding and
the amount of the Principal Escrow Payment due on such Principal Escrow Payment
Date and (b) irrevocably deposit in the Principal Escrow Account the following
cash amounts (the "Principal Escrow Payments") to secure the Company's
obligation to pay principal on the Notes outstanding on April 26, 2001 (the
"Maturity Date"):
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PRINCIPAL ESCROW PAYMENTS DUE
(REPRESENTED AS A PERCENT OF
PRINCIPAL AMOUNT OF NOTES
OUTSTANDING ON SUCH PRINCIPAL
PRINCIPAL ESCROW PAYMENT DATES ESCROW PAYMENT DATE)
Third anniversary date of the first Closing (April
26, 1999)......................................... 33 1/3%
Quarterly thereafter until and including the
Maturity Date..................................... 8 1/3%
The Company's obligations under this Section 3 shall survive until the Notes are
no longer outstanding. The Note Escrow Agent shall not be required to accept any
amounts for deposit in such Escrow Account prior to its receipt of the notice
described in this Section 3.2.
4. DEPOSITS IN THE ESCROW ACCOUNT.
4.1 All amounts received from the Company shall be deposited in
the appropriate Escrow Account, which amount will be in the form of checks,
cash, or wire transfers representing the payment of money.
4.2 Amounts deposited in the Interest Escrow Account which have
cleared the banking system and have been collected by the Note Escrow Agent for
the payment of interest are sometimes referred to herein as the "Interest Fund."
Amounts deposited in the Principal Escrow Account which have cleared the banking
system and have been collected by the Note Escrow Agent for the payment of
principal are sometimes referred to herein as the "Principal Fund." The Interest
Fund and the Principal Fund are sometimes referred to herein as a "Fund".
5. DISBURSEMENTS FROM THE INTEREST ESCROW ACCOUNT.
5.1 The Note Escrow Agent will hold the Interest Payments in the
Escrow Account until each Interest Payment Date during the first twelve months
the Notes are outstanding, on which date, the Note Escrow Agent, without any
further authorization by the Company, subject to Section 7 hereof, shall use the
funds in the Interest Escrow Account to make Interest Payments in accordance
with the terms of the Notes. The Escrow Agent shall make such payments of
interest on the Notes directly to the respective Holders at each such Holder's
respective address, which addresses shall be delivered to the Escrow Agent by
the Company within three (3) business days after each Closing and updated
thereafter by the Company. The Note Escrow Agent may rely upon such
certification and shall have no responsibility to verify the contents thereof.
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5.2 Upon disbursement of the Interest Funds in the Interest
Escrow Account pursuant to the terms of this Section 5, the Note Escrow Agent
shall be relieved of all further obligations and released from all liability
under this Agreement with respect to its obligation under this Section 5. It is
expressly agreed and understood that in no event shall the aggregate amount of
payments made by the Note Escrow Agent with respect to the Interest Fund exceed
the amount of such Interest Fund.
6. DISBURSEMENTS FROM THE PRINCIPAL ESCROW ACCOUNT.
6.1. The Note Escrow Agent will hold the Principal Payments in
the Escrow Account until the Maturity Date, on which date, the Note Escrow Agent
shall use the Principal Funds in the Principal Escrow Account to make Principal
Payments in accordance with the terms of the Notes. Not later than three (3)
business days before the Maturity Date, the Company will deliver to the Note
Escrow Agent, with a copy to the Placement Agent, an Officers' Certificate
signed by the President and by the Chief Financial Officer of the Company
specifying the respective principal amounts due on the Notes outstanding on the
Maturity Date. The Escrow Agent shall, without any further authorization by the
Company, subject to Section 7 hereof, make such payments of principal on the
Notes directly to the respective Holders at each such Holder's respective
address, which addresses shall be delivered to the Escrow Agent by the Company
within three (3) business days after each Closing and updated thereafter by the
Company. The Note Escrow Agent may rely upon such certification and shall have
no responsibility to verify the contents thereof.
6.2. Upon disbursement of the Principal Funds in the Principal
Escrow Account pursuant to the terms of this Section 6, the Note Escrow Agent
shall be relieved of all further obligations and released from all liability
under this Agreement with respect to its obligation under this Section 6. It is
expressly agreed and understood that in no event shall the aggregate amount of
payments made by the Note Escrow Agent with respect to the Principal Fund exceed
the amount of such Principal Fund.
7. EVENTS OF PREPAYMENT OR CONVERSION.
7.1. Except for Notes previously converted in accordance with
their terms, all, but not less than all, of the outstanding principal amount of
the Notes, together with accrued but unpaid interest thereon, may be prepaid by
the Company in accordance with Section 4 thereof. Within three (3) business days
after the Company mails a notice of prepayment to the holders of the Notes, the
Company shall send such prepayment notice to the Note Escrow Agent, with a copy
to the Placement Agent, which notice shall include the Prepayment Price (as
defined in the Notes) payable to each of such holders. Not later than five (5)
business days before the prepayment date, the Company shall deposit in the
Principal Fund and the Interest Fund, as applicable, cash equal to the aggregate
Prepayment Price due in order to prepay all of the then outstanding Notes. Any
amounts in the Interest Fund and/or the Principal Fund may, at the direction of
the Company be applied toward the Prepayment Price. The Note Escrow Agent shall,
on the prepayment date set forth in the Company's notice of prepayment, use the
Funds to pay to each Holder of outstanding Notes their respective Prepayment
Price in accordance with the terms of the notice of prepayment.
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7.2. If the Notes are not prepaid by the Company in accordance
with Section 7.1 above and Section 4 of the Notes, each Holder has the option,
at any time prior to the Maturity Date, to convert all, but not less than all,
of the principal amount of such Holder's Notes and accrued but unpaid interest
thereon into shares of the Company's Common Stock, pursuant to Section 6 of the
Notes. Within three (3) business days after conversion of any Note, the Company
shall send a notice to the Note Escrow Agent, with a copy to the Placement
Agent, together with a copy of the Conversion Notice sent by the holder. The
notice shall state the name of the holder of the Note and the amount of
principal and interest converted. The Note Escrow Agent shall be entitled to
rely on such notice without independent verification thereof. The Company's
obligation to pay the principal amount and accrued but unpaid interest on each
Note converted shall, upon conversion, be discharged; and, unless the Note
Escrow Agent shall have received a notice from the Placement Agent as agent for
the Noteholders that an Event of Default under the Notes has occurred and is
continuing, any Principal Funds and/or Interest Funds attributable to such
converted Note shall be applied by the Note Escrow Agent, first, to reduce the
next due Principal Escrow Payment pursuant to Section 3.2 hereof, which
reduction shall be set forth on the notice delivered to the Note Escrow Agent
pursuant to Section 3.2 hereof and, second, if any Funds remain after all the
Notes are either prepaid or converted in accordance with their terms, such
remaining Funds shall be returned to the Company provided that no outstanding
amounts hereunder are due to the Note Escrow Agent.
8. EVENTS OF DEFAULT. If an Event of Default shall occur and be
continuing under Section 2 of the Notes, the Placement Agent shall promptly give
notice to the Note Escrow Agent and upon receipt of such notice, the Note Escrow
Agent shall be entitled to hold a Fund, or a portion thereof, in such Escrow
Account pending the resolution of any uncertainty as to the proper disbursement
of such Fund to the Note Escrow Agent's sole satisfaction, by final judgment of
a court of competent jurisdiction or otherwise, provided, however, that the Note
Escrow Agent shall be entitled to rely without independent verification on any
instructions received with respect to the Funds that is executed by the Company
and by or on behalf of the holders of at least 50% of the aggregate principal
amount of the Notes then outstanding; or the Note Escrow Agent, at its sole
option, may deposit such Fund (and any other amounts that thereafter become part
of such 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
Note Escrow Agent of such Fund with the Clerk of any court, the Note Escrow
Agent shall be relieved of all further obligations and released from all
liability hereunder.
9. RIGHTS, DUTIES AND RESPONSIBILITIES OF NOTE ESCROW AGENT. It
is understood and agreed that the duties of the Note Escrow Agent are purely
ministerial in nature, and that:
9.1 The Note Escrow Agent shall not be responsible for or be
required to enforce any of the terms or conditions of the Notes or of any
agreement between the Placement Agent and the Issuer nor shall the Note Escrow
Agent be responsible for the performance by the Issuer of its obligations under
the Notes, or by the Placement Agent or the Issuer of their respective
obligations under this Agreement.
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9.2 The Note Escrow Agent shall be under no duty or responsibility
to enforce collection of any check delivered to it hereunder.
9.3 The Note 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 document which is
given to the Note Escrow Agent pursuant to this Agreement whether containing
original or facsimile signatures without the necessity of the Note Escrow Agent
verifying the truth or accuracy thereof, including, without limitation, the
accuracy of the Issuer's calculations of interest and principal payments and the
addresses of the holders of the Notes as furnished by the Issuer. The Note
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 instruction or to execute any such certificate, instrument or document.
9.4 In the event that the Note Escrow Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions with respect
to an Escrow Account or a Fund which, in its sole determination, are in conflict
either with other instructions received by it or with any provisions of this
Agreement, it shall be entitled to hold such Fund, or a portion thereof, in such
Escrow Account pending the resolution of such uncertainty to the Note Escrow
Agent's sole satisfaction, by final judgment of a court of competent
jurisdiction or otherwise; or the Note Escrow Agent, at its sole option, may
deposit such Fund (and any other amounts that thereafter become part of such
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 Note Escrow
Agent of such Fund with the Clerk of any court, the Note Escrow Agent shall be
relieved of all further obligations and released from all liability hereunder.
9.5. The Note Escrow Agent shall not be liable for any action
taken or omitted hereunder, or for the misconduct of any employee, agent or
attorney appointed by it, except in the case of willful misconduct. The Note
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.
9.6. The Note Escrow Agent shall have no responsibility at any
time to ascertain whether or not any security interest exists in any Fund or any
part of any Fund or to file any financing statement under the Uniform Commercial
Code with respect to any Fund or any part of any Fund.
9.7. The Note Escrow Agent shall be relieved from its obligations
hereunder to make any payment of principal or interest on the Notes if the
Issuer shall have defaulted on its obligations to deposit funds with the Note
Escrow Agent sufficient to make such payments pursuant to Sections 2, 3 and 7
hereof.
10. AMENDMENT; RESIGNATION. This Agreement may be altered or
amended only with the written consent of the Issuer, the Placement Agent and the
Note Escrow Agent. The Note Escrow Agent may resign for any reason upon three
(3) business days' written notice to
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the Issuer and the Placement Agent. Should the Note Escrow Agent resign as
herein provided, it shall not be required to accept any deposit, make any
disbursement or otherwise dispose of a Fund, but its only duty shall be to hold
such 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 Note Escrow Agent by the Issuer, the Placement Agent and such
successor escrow agent, then the resigning Note Escrow Agent shall pay over to
the successor escrow agent such Fund, less any portion thereof previously paid
out in accordance with this Agreement; or (b) if the resigning Note Escrow Agent
shall not have received a written notice signed by the Issuer, the Placement
Agent and a successor escrow agent, then the resigning Note Escrow Agent shall
promptly refund the amount in such Fund to each prospective purchaser, without
interest thereon or deduction therefrom, and the resigning Note Escrow Agent
shall notify the Issuer and the Placement Agent in writing of its liquidation
and distribution of such Fund; whereupon, in either case, the Note Escrow Agent
shall be relieved of all further obligations and released from all liability
under this Agreement. Without limiting the provisions of Section 12 hereof, the
resigning Note Escrow Agent shall be entitled to be reimbursed by the Issuer for
any expenses incurred in connection with its resignation, transfer of a Fund to
a successor escrow agent or distribution of a Fund pursuant to this Section 10.
11. REPRESENTATIONS AND WARRANTIES. The Issuer hereby represents
and warrants to the Note Escrow Agent that:
11.1 To the best of its knowledge, no party other than the
parties hereto and the Noteholders have, or shall have, any lien, claim or
security interest in any Fund or any part of any Fund.
11.2 To the best of its knowledge, 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) any Fund or any
part of any Fund.
11.3 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 each
Fund, true and correct in all material respects.
11.4 The information contained in any notice given pursuant to
Sections 2.2, 3.2, 7.1 or 7.2 hereof shall be true and correct in all material
respects on the date such notice is given and on the date any funds are
disbursed pursuant to such notice, and that all of the information contained in
any certificate given under this Agreement shall be true and correct in all
material respects on the date such certificate is given and on the date any
funds are disbursed pursuant to such certificate.
12. FEES AND EXPENSES. The Note Escrow Agent shall be entitled
to the Note Escrow Agent Fee set forth on the Information Sheet, payable upon
execution of this Agreement. In addition, the Issuer agrees to reimburse the
Note Escrow Agent for any reasonable expense incurred in connection with this
Agreement.
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13. INDEMNIFICATION AND CONTRIBUTION.
13.1 The Issuer (the "Indemnitor") agrees to indemnify the Note
Escrow Agent and its officers, directors, employees, agents and shareholders
(jointly and severally the "Indemnitees") against, and hold them harmless of and
from, any and 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 in the
result of the willful misconduct or gross negligence of the Indemnitees.
13.2 If the indemnification provided for in this Section 13 is
applicable, but for any reason is held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, any amount paid in settlement
of, any action, claim or proceeding arising out of or relating in any way to any
actions or omission of the Indemnitor.
13.3 The provisions of this Section 13 shall survive any
termination of this Agreement, whether by disbursement of each Fund, resignation
of the Note Escrow Agent or otherwise.
14. GOVERNING LAW AND ASSIGNMENT. This Agreement shall be
construed in accordance with and 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 Note Escrow Agent unless:
(a) written notice thereof shall be given to the Note
Escrow Agent; and
(b) the Note Escrow Agent shall have consented in writing
to such assignment or transfer.
The Note Escrow Agent hereby acknowledges notice of the merger (the
"Merger") of the Issuer with and into Asia-America Corporation, a Nevada
corporation ("Asia-America"), pursuant to which Asia-America will succeed to all
the rights and obligations of the Issuer, including those under the Notes and
under this Agreement. The Note Escrow Agent hereby consents to the Merger and is
authorized to accept and act upon any and all notices, certificates and other
communications from Asia-America as if such notices, certificates and
communications were submitted by the Issuer.
15. 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, or by any overnight delivery
service, or by facsimile if confirmation of such
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transmission is received by the sender thereof, and addressed, if to the Issuer
or the Placement Agent, at their respective addresses set forth on the
Information Sheet, and if to the Note Escrow Agent, at its address set forth
above, to the attention of the Trust Department.
16. 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.
17. 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.
18. 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.
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IN WITNESS WHEREOF, the undersigned have executed this Note Escrow
Agreement as of the day and year first above written.
STERLING NATIONAL BANK & TRUST
COMPANY OF NEW YORK
By:
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Name:
Title:
FIRST AMERICAN RAILWAYS, INC.
By:
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Name:
Title:
CAPITAL GROWTH INTERNATIONAL, LLC,
as agent for the holders of the Notes
By:
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Name:
Title: