EXHIBIT 10.4
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into as of the 1st day of May,
1998, by and between AMERICAN CARD TECHNOLOGY, INC., a Delaware corporation
("American Card Technology, Inc."), and The Bank of New York, (the Escrow
Agent).
WHEREAS, American Card Technology, Inc. intends to publicly offer not less
than $5,001,400 nor more than $7,140,000 of common stock, each consisting of
$17.00 per share of common stock of American Card Technology, Inc. (the
"Securities"), for which each subscriber will pay $17.00 per share; and
WHEREAS, it has been determined that the proceeds to be received from the
offering should be placed in escrow until such time as subscriptions for
$5,001,400 of shares of the Securities (the "Minimum Amount"), has been
deposited into escrow, which at that time the funds will be released to the
Company ("American Card Technology, Inc.);
WHEREAS, the Escrow Agent is willing to accept appointment as Escrow Agent
for the expressed duties outlined herein.
NOW, THEREFORE, in consideration of the premises and agreements set forth
herein, the parties hereto agree as follows;
1. PROCEEDS TO BE ESCROWED. All funds received by American Card
Technology, Inc., in payment for Securities will be delivered to the Escrow
Agent within three (3) days following the day upon which such proceeds are
received by American Card Technology, Inc. and shall be retained in escrow by
the Escrow Agent and invested as stated below. During the term of this
Agreement, American Card Technology, Inc. shall cause all checks received by
and made payable to it in payments for such Securities to be endorsed in
favor of The Bank of New York as Escrow Agent for American Card Technology,
Inc.
In the event that checks deposited in the escrow accounts prove
uncollectible after the funds represented thereby have been released by the
Escrow Agent to American Card Technology, Inc., then American Card
Technology, Inc. shall promptly reimburse the Escrow Agent for any and all
cost incurred for such, upon request, and the Escrow Agent shall deliver the
returned checks to American Card Technology, Inc.
2. IDENTITY OF SUBSCRIBERS. American Card Technology, Inc. shall
furnish to the Escrow Agent with each delivery of funds, as provided in
paragraph 1 hereof, a list of the persons who have paid money for the
purchase of Securities showing the name, address, tax ID number and amount of
Securities subscribed for the amount of money paid. All proceeds so
deposited shall remain the property of the subscriber and not be subject to
any liens or charges by American Card Technology, Inc., or the Escrow Agent,
or judgments or creditor's claims against American Card Technology, Inc.,
until released to American Card Technology, Inc. as hereinafter provided.
3. DISBURSEMENT OF FUNDS. From time to time, and at the end of the
third business day following the Initial Closing Date and the Termination
Date (as defined in paragraph 4 hereof) the Escrow Agent shall notify
American Card Technology, Inc. of the amount of the funds received hereunder.
Upon the Initial Closing Date the Escrow Agent will release into the custody
of American Card Technology, Inc.
all of the Escrow Account funds. Upon the Termination Date, the balance of
the Escrow Account funds will be released into the custody of American Card
Technology, Inc. within five (5) business days after notification. If the
Minimum Amount of proceeds has not been delivered prior to the Termination
Date, the Escrow Agent shall, with a reasonable time following the
Termination Date, but in no event more than thirty (30) days after the
Termination Date, refund to each subscriber at the address appearing on the
list of subscribers, or at such other address as be furnished to the Escrow
Agent by the subscriber in writing, all sums paid by the subscriber pursuant
to his subscription agreement for Securities, together with the interest
earned on such funds in the escrow account and shall then notify American
Card Technology, Inc. in writing of such funds. American Card Technology,
Inc. may extend the offering of a maximum of no more than two (2) sixty- (60)
day periods by giving the Escrow Agent a written notice of such an event.
4. TERMS OF ESCROW. The "Initial Closing Date" shall be the date upon
which the proceeds received into the Escrow Account equal or exceed
$5,001,400. The "Termination Date" shall be the earlier of 180 days from the
date of the Public Offering effectiveness from the Securities and Exchange
Commission; or (ii) the date the Escrow Agent received written notice from
American Card Technology, Inc. that it is abandoning the sale of the
securities, subject to section 3. American Card Technology, Inc. may extend
the termination date two (2) sixty- (60) day periods upon written notice to
the Escrow Agent. In all events this escrow shall terminate upon the one-
(1) year anniversary from the date of this Agreement.
5. DUTY AND LIABILITY OF THE ESCROW AGENT. The sole duty of the
Escrow Agent, other than as herein specified, shall be to receive said funds
and hold them subject to release, in accordance herewith, and the Escrow
Agent shall be under no duty to determine whether American Card Technology,
Inc. is complying with requirements of this Agreement in tendering to the
Escrow Agent said proceeds of the sale of said securities. The Escrow Agent
may conclusively rely upon and be protected in acting upon any statement,
certificate, notice, request, consent, order or other document believed by it
to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent shall have no duty or liability to verify any such
statement, certificate, notice, request, consent, order or other document,
and its sole responsibility shall be to act only as expressly set forth in
this Agreement. The Escrow Agent shall be under no obligation to institute
or defend any action, suit or proceeding in connection with this agreement
unless first indemnified to its satisfaction. The Escrow Agent may consult
counsel in respect of any question arising under this Agreement and the
Escrow Agent shall not be liable for any action taken or omitted in good
faith upon advise of such counsel. The Escrow Agent shall not be liable for
any action taken in the absence of gross negligence or willful misconduct
while following the terms of this Agreement.
6. ESCROW AGENT FEE. The Escrow Agent shall be entitled to
compensation for its services as stated in the fee schedule attached hereto
as Exhibit A, which compensation shall be paid by American Card Technology,
Inc. The fee agreed upon for the services rendered hereunder is intended as
full compensation for the Escrow Agent's services as contemplated by this
Agreement; PROVIDED, HOWEVER, that in the event that the conditions for the
disbursement of funds under this Agreement are not fulfilled, or the Escrow
Agent renders any material service not contemplated in this Agreement, or
there is any assignment of interest in the subject matter of this Agreement,
or any material modification hereof, or if any material controversy arises
hereunder, or the Escrow Agent is made a party to any litigation pertaining
to this Agreement, or the subject matter hereof, then the Escrow Agent shall
be reasonably compensated for such extraordinary services and reimbursed for
all cost and expenses, including reasonable attorney's fees, occasioned by
any delay, controversy, litigation or event, and the same shall be
recoverable from American Card Technology, Inc.
7. INVESTMENT OF PROCEEDS. All funds held by the Escrow Agent
pursuant to this Agreement shall constitute trust property for the purposes
for which they are held. The Escrow Agent shall invest all funds received
from subscribers in The Bank of New York Cash Reserve Fund.
8. ISSUANCE OF CERTIFICATES. Until the terms of this Agreement with
respect to Securities have been met and the funds hereunder received from
subscriptions for Securities have been released to American Card Technology,
Inc., American Card Technology, Inc. may not issue any certificates or other
evidence of Securities, except subscription agreements.
9. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been
duly given (a) on the date of service if served personally on the party to
whom notice is to be given, (b) on the day of transmission if sent by
facsimile transmission to the facsimile number given below, along with a
hardcopy to follow through the mail, and telephonic confirmation of receipt
is obtained promptly after completion of transmission, (c) on the day after
delivery to Federal Express or similar overnight courier or the Express Mail
service maintained by the United States Postal Service, Or (d) on the fifth
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed, return receipt requested, to the party as follows:
If to American Card Technology, Inc.:
American Card Technology, Inc.
1355 Terrell Mill Road
Building 1462, Suite 200
Marietta, GA 30067
(770) 951-2284 FAX (770) 951-9221
Attn: President
If to Escrow Agent:
The Bank of New York
101 Barclay Street - 12 East
New York, NY 10286
(212) 815-7172 FAX (212) 815-7181
Attn: Matthew Louis
Insurance Trust and Escrow Unit
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
10. INDEMNIFICATION OF ESCROW AGENT. American Card Technology, Inc.
hereby indemnifies and holds harmless the Escrow Agent from and against, any
and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Escrow Agent may suffer or
incur by reason of any action, claim or proceeding brought against the Escrow
Agent 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 Escrow Agent. The
Escrow Agent may consult counsel in respect of any question arising under the
Escrow Agreement and the Escrow Agent shall not be liable for any action
taken or omitted in good faith upon advice of such counsel. This
Indemnification will survive the termination of this Escrow Agreement.
11. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent to the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect. This Agreement shall inure to the
benefit of and shall be binding upon the successors and permitted assigns of
the parties hereto.
12. GOVERNING LAW; JURISDICTION. This Agreement shall be constructed,
performed and enforced in accordance with, and governed by, the internal laws
of the State of New York, without giving effect to the principles of
conflicts of laws thereof.
13. SEVERABILITY. In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be null,
void, or unenforceable, said provision shall survive to the extent it is not
so declared, and all of the other provisions of this Agreement shall remain
in full force and effect.
14. AMENDMENTS; WAIVERS. This Agreement may be amended or modified,
and any of the terms, covenants, representations, warranties, or conditions
hereof may be waived, only by a written instrument executed by the parties
hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision,
term, covenant, representation, or warranty contained in this Agreement, in
any one or more instances, shall not be deemed to be nor construed as further
or continuing waiver, of any such condition, or of the breach of any other
provision, term, covenant, representation, or warranty of this Agreement.
15. ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties hereto with respect to the escrow contemplated hereby and
supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written, with regard to such escrow.
16. SECTION HEADINGS. The section headings in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which constitute the same
instrument.
18. RESIGNATION. Escrow Agent may resign upon 30 days advance written
notice to American Card Technology, Inc. If a successor escrow agent is not
appointed within the 30 day period following such notice, Escrow Agent may
petition any court of competent jurisdiction to name a successor escrow agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first set forth above.
AMERICAN CARD TECHNOLOGY, INC.
By: /s/ Raymond Findley
----------------------
President
THE BANK OF NEW YORK
By: /s/ Matthew Louis
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EXHIBIT A
SUBSCRIPTION ESCROW AGENT PROPOSAL
FOR
AMERICAN CARD TECHNOLOGY
ADMINISTRATION FEE ....................................................$7,500.00
This one time charge is payable at the initial closing and
includes the following services:
- - Review of the Escrow Agreement
- - Establishment of administrative an operational account procedures
- - Receipt and investment of funds
- - Generation of account statements
- - Daily account reconciliation
Investor accounts, each ...................................................$8.00
1099's, each ..............................................................$3.00
Additional closings, each ...............................................$500.00
(Return of Investor Funds) "bust outs," each .............................$25.00
Returned checks, each ....................................................$25.00
Wire transfers, each .....................................................$25.00
TERMS OF PROPOSAL
OUT-OF-POCKET EXPENSES: ESTIMATE
$250.00 Fees quoted do not include any out-of-pocket expenses including,
but not limited to, stationery, postage, telephone, telex, wire
transfer, original issue delivery costs and retention of records which
will be billed to the account.
EXTERNAL COUNSEL FEES:
Fees quoted do not include outside counsel fees. A bill for services
rendered up to closing will be presented for payment on the closing date.
MISCELLANEOUS SERVICES:
The charges for performing services not contemplated at the time of the
execution of the documents or not specifically covered elsewhere in the
schedule will be determined by appraisal in amounts commensurate with
the service.
GENERAL:
Our administrative fee covers a period of one year or any portion
thereof and is not subject to proration. The Bank of New York's final
acceptance of this appointment is subject to the full review and
approval of all related documentation related hereto, and standard
conflict procedures. This offer shall be deemed terminated if we do not
enter into a written agreement within three months from the date of
transmittal. In the event the transaction terminates before closing,
you will be responsible for paying all out-of-pocket expenses incurred,
including counsel fees, if applicable.