ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of February ___, 2000,
by and between ROEX, INC., a California corporation (the "Company") and SANTA
BARBARA BANK & TRUST, as escrow agent (the "Escrow Agent"), with reference to
the following facts.
A. The Company is proposing to issue to the public up to 1,000,000 shares
of its Common Stock (the "Offering") pursuant to a Registration Statement on
Form SB-2 (the "Registration Statement") filed with the Securities and Exchange
Commission. Pursuant to the Offering, the Company would realize proceeds of up
to $5,000,000.
B. As part of the Offering, the Company has agreed to deposit into escrow
(the "Escrow") the proceeds received from subscriptions for shares until it has
received acceptable subscriptions for shares with an aggregate subscription
price of not less than $2,500,000. The Company proposes that it will terminate
the Offering and return to the investors all funds previously deposited into the
Escrow if it has not received acceptable subscriptions for a total of $2,500,000
within 90 days after the date on which the Registration Statement is declared
effective (which period may be extended for an additional 90 days by the
Company).
C. The parties desire to enter into this Agreement for purposes of
establishing the Escrow to hold the subscription proceeds until the Company has
received at least $2,500,000 in proceeds received from subscriptions for shares.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Escrow Agent agree as follows:
1. ESCROW FUNDS.
1.1 DEPOSIT. During the term of this Agreement, the Company shall deposit
with Escrow Agent the funds (the "Escrow Funds") received from investors in
connection with the Offering. The Company shall use its best efforts to deposit
all Escrow Funds with Escrow Agent by 12:00 noon on the first business day
following the date on which the Company receives the Escrow Funds from the
investors. Escrow Agent shall have no obligation to verify whether or not the
Company has timely delivered any or all of the Escrow Funds and shall be
authorized to accept all Escrow Funds from the Company regardless of the date on
which the Escrow Funds are delivered to the Escrow Agent or the date on which
they were received by the Company from the investors.
1.2 RECEIPT OF ESCROW FUNDS. Escrow Agent shall have no obligation to
accept the Company's delivery of any Escrow Funds unless and until the Company
has delivered to Escrow Agent written notice under Section 5.1 that the
Registration Statement has been declared effective. If any check or wire
transfer for any Escrow Funds does not clear normal banking channels in due
course, Escrow Agent will promptly notify the Company and return such check to
the Company or cancel such wire transfer.
1.3 HOLDING AND INVESTMENT. Escrow Agent shall hold the Escrow Funds
pursuant to the terms hereof and shall invest the Escrow Funds only in (a)
interest-bearing savings accounts and bank money-market accounts, (b) short-term
certificates of deposit issued by a bank, (c) short-term securities issued or
guaranteed by the U.S. Government or (d) any combination of the foregoing.
Escrow Agent shall retain all interest upon invested Escrow Funds and shall
distribute such accumulated interest to the Company upon distribution of the
Escrow Funds. Escrow Agent shall not be required to set up individual escrow
accounts for each investor's funds, but shall deposit all of the Escrow Funds in
one general escrow account in the name of the Company.
1.4 GENERAL INSTRUCTIONS. Escrow Agent shall establish and maintain the
Escrow in accordance with and subject to Escrow Agent's general rules and
regulations applicable to this type of escrow account.
1.5 STOP ORDER. During the period from and after the date on which the
Company delivers to Escrow Agent written notice under Section 4.2 hereof that a
stop order has been entered with respect to the Registration Statement or the
effectiveness of the Registration Statement otherwise has been suspended and
through the date on which the Company delivers to Escrow Agent written notice
that the stop order or other suspension has been terminated (the "Suspension
Period"), Escrow Agent shall continue to hold any Escrow Funds previously
delivered by the Company, but shall have no obligation to accept the Company's
delivery of any additional Escrow Funds. During the Suspension Period, Escrow
Agent shall hold all Escrow Funds previously delivered to it in accordance with
the terms of this Agreement; provided that Escrow Agent shall not disburse any
of such Escrow Funds except in accordance with the provisions of Section 2.3
hereof.
1.6 ADDITIONAL ESCROW FUNDS. The parties intend that the Escrow will be
used for purposes of holding the Escrow Funds only until the Company has
received Escrow Funds in the amount of $2,500,000 which are sufficient to
satisfy the minimum offering requirements under the Registration Statement. Even
so, Escrow Agent agrees that Escrow Funds in excess of $2,500,000 may be
deposited into the Escrow and that the Escrow shall continue until terminated in
accordance with the provisions of Section 2 hereof.
2. PAYMENT OF ESCROW FUNDS.
2.1 CLOSING OF OFFERING.
2.1.1INITIAL CLOSING. Subject to the provisions of Section 1.5
and hereof, so long as:
A. the amount of the Escrow Funds, exclusive of any
interest or other amount accrued on the Escrow Funds, is then not less than Two
Million Five Hundred Thousand Dollars ($2,500,000); and
B. the written instructions described below are delivered
by the Company to Escrow Agent no later than 90 days after the effective date of
the Registration Statement ( no later than 180 days after the effective date of
the Registration Statement if extended thereto by the Company); Escrow Agent
shall disburse to the Company all of the Escrow Funds and all interest and other
amounts accrued thereon within five (5) days after its receipt of written
instructions from the President of the Company or issued by a court of competent
jurisdiction confirming that (i) the Company has accepted the subscriptions for
the Escrow Funds then held by Escrow Agent, (ii) the Registration Statement is
then effective and no stop order or other suspension is then effective with
respect to the Registration Statement or the offering, and (iii) the other terms
and conditions of the Offering relating to such Escrow Funds have been fully
satisfied. Escrow Agent may condition its disbursement of the Escrow Funds on
its receipt of such acknowledgments, receipts and other documents as it
reasonably may request for purposes of confirming compliance with the terms of
this Agreement.
2.2 ABANDONMENT OF OFFERING. In the event that the Company abandons or
otherwise fails to close the Offering, whether because the Company has not
timely raised the minimum investment or otherwise, the Company promptly shall
provide written notice thereof to Escrow Agent authorizing Escrow Agent to
disburse the Escrow Funds then held by Escrow Agent directly to the investors
without interest. The Company shall promptly provide Escrow Agent with a list of
names, addresses and amounts of the investment confirmed by the Company's
President to be true, correct and complete. Promptly after its disbursal of the
Escrow Funds to the investors, Escrow Agent shall deliver to the Company a
written statement showing the amount disbursed to each investor.
2.3 NOTICE DATE. Promptly after the Registration Statement has been
declared effective, the Company shall advise Escrow Agent of the date 90 days
(or if extended 180 days)after such effective date (the "Notice Date") by which
the Company is obligated to have received acceptable subscriptions for at least
$2,500,000. If, on the Notice Date, Escrow Agent has not previously disbursed
any of the Escrow Funds to the Company under Section 2.1.1 above and does not
then hold Escrow Funds, exclusive of interest and other amounts accrued thereon,
in the amount of at least $2,500,000, Escrow Agent may, on five (5) days prior
written notice to the Company, terminate the Escrow and disburse the Escrow
Funds to the Company for the specific purposes of the Company's refund of the
Escrow Funds to the investors. If Escrow Agent delivers the Escrow Funds to the
Company for refund to the investors, the Company shall, within ten (10) business
days after the Escrow Agent's delivery of the Escrow Funds, (x) effect the
refund of the Escrow Funds to the investors and (y) deliver to Escrow Agent
written confirmation that the Company has refunded the Escrow Funds to the
investors; provided that Escrow Agent shall have no obligation to confirm that
the Escrow Funds have been delivered to the investors or to compel the Company
to provide the written confirmation to Escrow Agent.
3. ESCROW AGENT.
3.1 COMPENSATION. The Company shall pay Escrow Agent such compensation and
shall reimburse the Escrow Agent for costs and expenses in accordance with
Escrow Agent's current fee schedule.
3.2 DUTIES OF ESCROW AGENT. Escrow Agent shall have no duties or
responsibilities under this Agreement other than those specifically set forth in
this Agreement, and will act only in accordance with the provisions of this
Agreement. Escrow Agent shall be protected in acting upon any document
reasonably believed by it to be genuine and containing what purports to be the
signature of the President of the Company or a certified copy of a final
nonappealable order issued by a court of competent jurisdiction.
3.3 INDEMNITY. The Company shall indemnify, defend and hold Escrow Agent,
and each of its officers, directors, employees and agents harmless from and
against any and all claims, costs, demands, judgments, losses, damages,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) arising out of or in connection with any act or failure
to act (other than by reason of such person's willful misconduct or gross
negligence) on the part of such person in connection with any of the duties
required to be performed by Escrow Agent hereunder.
3.4 INTERPLEADER. In the event of any controversy arising hereunder,
Escrow Agent may (but shall not be required to) interplead the Escrow Funds with
a court of competent jurisdiction and, defer the distribution of any of the
Escrow Funds until its receipt of instructions from the court. The costs of such
interpleader shall be borne by the Company.
3.5 COMPLIANCE WITH INSTRUCTIONS. Escrow Agent does not have and shall not
be deemed to have any responsibility in respect of any instruction, certificate
or notice delivered to it other than faithfully to carry out the obligations
undertaken in this Agreement and to follow the directions in such instruction or
notice provided in accordance with the terms hereof.
3.6 LIMITATION. Escrow Agent is not and shall not be deemed to be liable
for any action taken or omitted by it in good faith and may relay upon, and act
in accordance with, the advice of its counsel without liability on its part for
any action taken or omitted in accordance with such advice. In any event, its
liability hereunder shall be limited to liability for gross negligence, willful
misconduct or bad faith on its part.
3.7 RELIANCE. Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction, notice, letter, facsimile, or
other written instrument believed by it to be genuine and to have been signed by
the proper party or parties.
3.8 LEGAL ACTION. Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement unless requested to do so by the Company and indemnified by
the Company to Escrow Agent's satisfaction against the cost and expense of such
defense by the party requesting such defense. If any such legal proceeding is
instituted against it, Escrow Agent shall promptly give notice thereof to the
Company. Escrow Agent shall not be required to institute legal proceedings of
any kind.
3.9 NO WAIVER. Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either under
this Agreement or generally, unless such waiver be in writing, and no waiver
shall be valid unless it is in writing, signed by Escrow Agent, and only to the
extent expressly therein set forth. A waiver by Escrow Agent under any term of
this Agreement shall not be construed as a bar to, or waiver of, the same or any
other such right or remedy which it would otherwise have on any other occasion.
3.10 RESIGNATION. Escrow Agent may resign as such hereunder by giving
thirty (30) days written notice thereof to the Company. Within twenty (20) days
after receipt of such notice, the Company shall furnish to Escrow Agent written
instructions for the release of the Escrow Funds to a substitute Escrow Agent
which (whether designated by written instructions from the Company or, in the
absence thereof, by instructions to Escrow Agent from a court of competent
jurisdiction) shall be a bank or trust company organized and doing business
under the laws of the United States or any state thereof. Such substitute Escrow
Agent shall thereafter hold any Escrow Funds received by it pursuant to the
terms of this Agreement and otherwise act hereunder as if it were Escrow Agent
originally named herein. Escrow Agent's duties and responsibilities hereunder
shall terminate upon the release of all of the Escrow Funds then held in escrow
according to such written instruction or upon such delivery as herein provided.
This Agreement shall not otherwise be assignable by Escrow Agent without the
prior written consent of the Company.
4. MISCELLANEOUS PROVISIONS.
4.1 REGISTRATION STATEMENT. The Company shall promptly notify Escrow Agent
in writing of the date on which the Registration Statement has been declared
effective. The Company acknowledges that Escrow Agent has not participated in
the preparation of the Registration Statement. The Company shall promptly notify
Escrow Agent of the entry of any stop order or any other notion which suspends
the effectiveness of the Registration Statement. Escrow Agent may conclusively
rely on any such notice from the Company and shall have no obligation to
independently confirm the effectiveness of the Registration Statement or the
entry of any stop order or suspension.
4.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when actually received or on the
second business day after being mailed by certified or registered United States
mail, return receipted, addressed to the party to be notified at the address set
forth on the signature page of this Agreement or such other address as the party
may provide for such purpose.
4.3 PARTIAL INVALIDITY. Each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law. If any term or
provision of this Agreement or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, then the
remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those to which it is held invalid or
unenforceable, shall not be affected thereby.
4.4 ARBITRATION. Unless the relief sought requires the exercise of the
equity powers of a court of competent jurisdiction, any dispute arising in
connection with the interpretation or enforcement of the provisions of this
Agreement, or the application or validity thereof, shall be submitted to
arbitration. Such arbitration proceedings shall be held in Santa Barbara,
California, in accordance with the rules then obtaining of the American
Arbitration Association. This agreement to arbitrate shall be specifically
enforceable. Any award rendered in any such arbitration proceedings shall be
final and binding on each of the parties hereto, and judgment may be entered
thereon in any court of competent jurisdiction.
4.5 GOVERNING LAW. All questions with respect to the construction of this
Agreement and the rights and liabilities of the parties with respect thereto
shall be governed by the laws of the State of California applicable to contracts
made and to be fully performed in the State of California.
4.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties relating to the subject matter of this Agreement, and
supersedes any prior written or oral agreements between them respecting the
subject matter contained herein. There are no representations, agreements,
arrangements, or understandings, either oral or written, between or among any of
the Owners relating to the subject matter of this Agreement which are not fully
expressed herein.
4.7 BINDING NATURE. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns, provided that Escrow Agent
may not assign its obligations hereunder without the written consent of Company.
4.8 REPORTS. Escrow Agent shall, on a monthly basis or otherwise as
reasonable requested by the Company, provide the Company with a report as to the
balance of the Escrow Funds and the interest earned thereon.
5. FEES AND EXPENSES. Upon execution of this Agreement and initial deposit of
the Company Stockholders' Escrow Shares with the Escrow Agent, Escrow Agent will
be entitled to fees in accordance with the Escrow Agent's fee schedules in
effect at that time. The Escrow Agent will also be entitled to reimbursement on
demand for extraordinary expenses incurred in performance of its duties
hereunder including, without limitation, payment of any reasonable legal fees
and expenses incurred by the Escrow Agent in connection with the resolution of
any claim by any party hereunder in accordance with the Escrow Agent's fee
schedule in effect from time to time. Parent shall pay the reasonable fees and
extraordinary expenses of the Escrow Agent for the services to be rendered by
the Escrow Agent hereunder including reasonable legal fees incurred in
connection with the preparation of this Agreement
6. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) Neither Escrow Agent nor any of its directors, officers or employees shall
incur any liability with respect to any action taken or suffered by it in
reliance upon any notice, direction, instruction consent, statement or other
documents believed by it to be genuine and duly authorized, nor for other action
or inaction except its own willful misconduct or gross negligence. The Escrow
Agent shall have no duty to inquire into or investigate the validity accuracy or
content of any document delivered to it nor shall the Escrow Agent be
responsible for the validity or sufficiency of this Agreement. In all questions
arising under this Agreement the Escrow Agent may rely on thc advice of counsel,
including in-house counsel, and for any-thing done, omitted or suffered in good
faith by the Escrow Agent based on such advice the Escrow Agent shall not be
liable to anyone. The Escrow Agent shall not be required to take any action
hereunder involving any expense unless the payment of such expense is made or
provided for in a manner reasonably satisfactory to it. The Escrow Agent shall
not be responsible for any of the agreements referred to herein, including the
Registration Statement, but shall be obligated only for the performance of such
duties as are specifically set forth in this Agreement.
(b) In the event conflicting demands are made or conflicting notices are served
upon the Escrow Agent, the Escrow Agent will have the absolute right, at the
Escrow Agent's election, to do either or both of thc following: (i) resign so a
successor can be appointed hereof, or (ii) file a suit in interpleader and
obtain an order from a court of competent jurisdiction requiring the parties to
interplead and litigate in such court their several claims and rights among
themselves. In the event such interpleader suit is brought, the Escrow Agent
will thereby be fully released and discharged from all further obligations
imposed upon it under this Agreement. and Company will pay the Escrow Agent all
costs, expenses and reasonable attorneys' fees expended or incurred by the
Escrow Agent pursuant to the exercise of the Escrow Agent `s rights under this
Section 6(b) (such costs, fees and expenses will be treated as extraordinary
fees and expenses for the purposes of Section 3 hereof).
(c) The Company hereby agrees to indemnify the Escrow Agent for, and hold it
harmless against, any loss, damage liability on expense incurred without gross
negligence or willful misconduct on the part of Escrow Agent, arising out of or
in connection with its carrying out of its duties hereunder including, but not
limited to reasonable legal fees and other costs and expenses of defending or
preparing to defend against any claim or liability in the premises. In the event
of any such claim of indemnity by the Escrow Agent, the Company shall advance
immediately available funds in an amount sufficient to cover such costs or
expenses, up to an aggregate amount of $5O,OOO for all such claims. In no event
shall the Escrow Agent be liable for indirect, punitive, special or
consequential damages.
(d) The Company agrees to assume any and all obligations imposed now or
hereafter by any applicable tax law with respect to the release of any Escrow
Funds under this Agreement, and to indemnify and hold the Escrow Agent harmless
from and against any taxes, additions for late payment, interest, penalties and
other expenses, that may be assessed against the Escrow Agent in any such
release or other activities under this Agreement. The Company undertakes to
instruct the Escrow Agent in writing with respect to the Escrow Agent's
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting in connection
with its acting as Escrow Agent under this Agreement. The Company agrees to
indemnify and hold the Escrow Agent harmless from any liability on account of
taxes, assessments or other governmental charges, including without limitation
the withholding or deduction or the failure to withhold or deduct the same, and
any liability for failure to obtain proper certifications or to properly report
to governmental authorities, to which the Escrow Agent may be or become subject
in connection with or which arises out of this Agreement, including costs and
expenses (including reasonable legal fees and expenses), interest and penalties.
7. NOTICES. All notices, instruction and other communications given hereunder or
in connection herewith shall be in writing. Any such notice, instruction or
communication shall be sent either (i) by registered or certified mail, return
receipt requested, postage prepaid, or (ii) via a reputable nationwide overnight
courier service, or (iii) via facsimile, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one (1) business
day after it is sent via a reputable nationwide overnight courier service, or
upon confirmed receipt if sent by facsimile.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the day and year first above-written.
SANTA BARBARA BANK & TRUST ROEX, INC.
By: By:
------------------------- -----------------------------
Rodney H. Burreson, President