EXHIBIT 10.1
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is made by and between the
Manufacturers and Traders Trust Company, a New York banking corporation., with
its principal office located at One M & T Plaza, Buffalo New York 14203 (the
"Escrow Agent"), and M.E.R. Corporation, a Nevada corporation, with its
principal office located at 2400, 10303 Jasper Avenue, Edmonton, Alberta, Canada
T5J 3T8 (the "Issuer").
W I T N E S S E T H:
WHEREAS, the Issuer has filed with the Securities and Exchange Commission
(the "Commission"), Washington, D.C., an SB-2 Registration Statement (the
"Registration Statement"), and related Prospectus, File No. __________, in
connection with an initial public offering of the Issuer's securities,
comprising 500,000 shares of the Issuer's common stock to be sold at a price of
$0.10 per share (the "Securities"), which shall not exceed 50 subscribers;
WHEREAS, the Issuer proposes to offer the Securities to the public on a
"best efforts, all or none" basis as set forth in the Registration Statement;
WHEREAS, the Issuer proposes to establish an escrow account (the "Escrow
Account"), to which subscription funds and securities which are received by the
Escrow Agent in connection with such public offering are to be credited, and the
Escrow Agent is willing to establish the Escrow Account on the terms and subject
to the conditions hereinafter set forth; and
WHEREAS, the Escrow Agent will establish an Escrow Account into which the
subscription funds and securities which are received by the Escrow Agent and
credited to the Escrow Account, are to be deposited.
NOW, THEREFORE, for and in consideration of the promises and mutual
covenants herein contained, and other valuable consideration, the parties hereto
hereby agree as follows:
1.0 THE REGISTRATION STATEMENT.
1.1 The Issuer has filed the Registration Statement with the Commission and
is included herein as Exhibit A to this Agreement, and is made a part hereof.
2.0 ESTABLISHMENT OF THE ESCROW ACCOUNT.
2.1 The Issuer shall establish a non-interest-bearing Escrow Account at the
Escrow Agent. The purpose of the Escrow Account is for (a) the deposit of all
subscription funds (checks or wire transfers) which are received by the Issuer
from prospective purchasers of the Securities and are delivered by the Issuer to
the Escrow Agent; (b) the holding of amounts of subscription funds which are
collected through the banking system, and (c) the disbursement of collected
funds, all as described herein.
2.2 On or before the date of the initial deposit in the Escrow Account
pursuant to this Agreement, the Issuer shall notify the Escrow Agent in writing
of the effective date (the "Effective Date") of the Registration Statement, and
the Escrow Agent shall not be required to accept any amounts for credit to the
Escrow Account or for deposit in the Escrow Account prior to its receipt of such
notification.
2.3 The offering period (the "Offering Period"), which shall be deemed to
commence on the Effective Date, shall consist of the number of calendar days or
business days as set forth in the Registration Statement. The Offering Period
shall be extended by an extension period only if the Escrow Agent shall have
received written notice thereof at least five business days prior to the
expiration of the Offering Period. The extension period, which shall be deemed
to commence the next calendar day following the expiration of the Offering
Period, shall consist of the number of calendar days or business days set forth
in the Registration Statement. The last day of the Offering Period, or the last
day of the extension period, is referred to herein as the "Termination Date."
Except as provided in Section 4.3 hereof, after the Termination Date, the Issuer
shall not deposit, and the Escrow Agent shall not accept, any additional amounts
representing payments by prospective purchasers.
3.0 DEPOSITS TO THE ESCROW ACCOUNT.
3.1 The Issuer shall promptly deliver to the Escrow Agent all funds which
it receives from prospective purchasers of the Securities, which funds shall be
in the form of checks or wire transfers. Upon the Escrow Agent's receipt of such
funds, they shall be credited to the Escrow Account. All checks delivered to the
Escrow Agent shall be made payable to the " Manufacturers and Traders Trust
Company / M.E.R. Corporation Escrow Account." Any checks payable other than to
the Escrow Agent as required hereby shall be returned to the prospective
purchaser.
3.2 Promptly after receiving subscription funds as described in Section
3.1, the Escrow Agent shall deposit the same into the Escrow Account. Amounts of
funds so deposited are hereinafter referred to as "Escrow Amounts." The Escrow
Agent shall cause to process all Escrow Amounts for collection through the
banking system. Simultaneously with each deposit to the Escrow Account, the
Issuer shall inform the Escrow Agent in writing of the name, address and social
security number of the prospective purchaser, the amount of Securities
subscribed for by such purchaser, and the aggregate dollar amount of such
subscription (collectively, the "Subscription Information").
3.3 The Escrow Agent shall not be required to accept for credit to 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.
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3.4 The Escrow Agent shall not be required to accept in the Escrow Account
any amounts representing payments by prospective purchasers, whether by check,
or wire, except during the Escrow Agent's regular business hours.
3.5 Only those Escrow Amounts, which have been deposited in the Escrow
Account and which have cleared the banking system and have been collected by the
Escrow Agent, are herein referred to as the "Fund."
3.6 If the proposed offering is terminated before the Termination Date, the
Escrow Agent shall refund any portion of the Fund prior to disbursement of the
Fund in accordance with Article 4 hereof upon instructions in from the Issuer.
4.0 DISBURSEMENT FROM THE ESCROW ACCOUNT.
4.1 Subject to Section 4.3 below, if by the close of regular banking hours
on the Termination Date the Escrow Agent determines that the amount in the Fund
is less than the minimum amount of the offering, then 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 system, without interest thereon or deduction therefrom, by drawing
checks on the Escrow Account for the amounts of such payments and mail them to
the purchasers. In such event, the Escrow Agent shall promptly notify the Issuer
of its distribution of the Fund.
4.2 The terms of the offering must provide, and the Issuer must satisfy,
the following conditions:
within five business days after the effective date of the post-effective
amendment, the Issuer shall send by first class mail to each purchaser
of securities held in escrow, a copy of the prospectus contained in the
post-effective amendment and any amendment or supplement thereto;
each purchaser shall have no fewer than 20 business days and no more
than 45 business days from the effective date of the post-effective
amendment to notify the Issuer in writing that the purchaser elects to
remain an investor. If the Issuer has not received such written
notification by the 45th business day following the effective date of
the post-effective amendment, funds and interest or dividends, if any
held in escrow shall be sent by first class mail or other equally prompt
means to the purchaser within five business days; the acquisition
meeting the criteria set forth above will be consummated if a sufficient
number of purchasers confirm their investment with the Issuer; and if a
consummated acquisition meeting the requirements above has not occurred
by a date 6 months after the effective date of the Issuer's initial
registration statement, funds held in escrow shall be returned by first
class mail to the purchasers with five business days following that
date. Issuer shall promptly notify Escrow Agent if any of the above
conditions are not timely satisfied.
Funds held in the escrow account may be released to the Issuer and
securities may be delivered to the purchaser only at the same time as or
after:
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the escrow agent has received a signed representation from the Issuer,
together with other evidence acceptable to the escrow agent, that the
requirements of paragraphs (e)(1) and (e)(2) of Rule 419 have been met;
and
the escrow agent has received a signed representation from the Issuer,
together with other evidence acceptable to the escrow agent, that the
requirements of paragraph (e)(2)(iii) of Rule 419 have been met.
4.3 If the Escrow Agent 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 offering amount, and result in the
Fund representing the sale of the minimum offering amount, the Collection
Period, consisting of the number of business days set forth in the Registration
Statement, shall be utilized to allow such uncollected funds to clear the
banking system.
4.4 Upon disbursement of the Fund pursuant to the terms of this Article 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 aggregate amount of payments made by the Escrow Agent
exceed the amount of the Fund.
5.0 RIGHTS, DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT;
INDEMNIFICATION.
5.1 The Escrow Agent shall notify the Issuer on a regular basis of the
escrow amounts which have been deposited in the Escrow Account and of the
amounts, constituting the Fund, which have cleared the banking system and have
been collected by the Escrow Agent.
5.2 The Escrow Agent shall not be responsible for or be required to enforce
any of the terms or conditions of the Agreement with respect to the Issuer.
5.3 The Escrow Agent shall not be required to accept from the Issuer any
subscription information pertaining to prospective purchasers unless such
Subscription Information is accompanied by checks or wire transfers meeting the
requirement of Section 3.1, nor shall the Escrow Agent be required to keep
records of any information with respect to payments deposited by the Issuer,
except as to the amount of such payments; however, the Escrow Agent shall notify
the Issuer 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
Agent until such discrepancy has been resolved.
5.4 The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent, within a
reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information which accompanied such
check.
5.5 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 by the Issuer pursuant to this Agreement without the
necessity of the Escrow Agent verifying the truth or accuracy thereof. The
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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.
5.6 If the Escrow Agent is uncertain as to its duties or rights hereunder
or shall receive instructions with respect to the Escrow Account, the escrow
amounts of 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 escrow amounts, 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 of competent
jurisdiction or otherwise; or the Escrow Agent, at its sole option, may deposit
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 or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct or gross negligence. 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 escrow amounts, 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.
5.9 The Corporation agrees to indemnify the 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 losses,
liabilities, costs, damages, and expenses, including, but not limited to,
reasonable fees and disbursements for counsel of its own choosing (collectively,
"Liabilities"), that the Indemnitees may suffer or incur and which arise out of
or relate to this Agreement or any transaction to which this Agreement relates,
unless such Liability is the result of the willful misconduct or gross
negligence of the Indemnitees.
5.10 If the indemnification provided for in this Section 5 is applicable
but is held to be unavailable, the Corporation shall contribute such amounts as
are just and equitable to pay or to reimburse the Indemnitees for the aggregate
of any and all Liabilities 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 omissions of
the Corporation.
5.11 The provisions of this Section 5 shall survive any termination of this
Agreement, whether by disbursement of the Fund, resignation of the Escrow Agent,
or otherwise.
6.0 AMENDMENT; RESIGNATION.
6.1 This Agreement may be altered or amended only with the written consent
of the parties hereto. The Escrow Agent may resign for any reason upon five
business days' written notice to the Issuer. Should the Escrow Agent resign as
herein provided, it shall not be required to accept any deposit, make any
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disbursement or otherwise dispose of the escrow amounts, but its only duty shall
be to hold the escrow accounts until they clear the banking system and the Fund
for a period of not more than five 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 shall have been given to the resigning
escrow agent by the Issuer and such successor escrow agent, then the resigning
escrow agent shall pay over to the successor escrow agent the Fund, less any
portion thereof previously paid out in accordance with this Agreement; or (b) if
the resigning escrow agent shall not have received written notice signed by the
Issuer and a successor escrow agent, then the resigning escrow agent shall
promptly refund the amount in the Fund to each prospective purchaser, without
interest thereon or deduction therefrom, and the resigning Escrow Agent shall
promptly notify the Issuer 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 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.
7.0 REPRESENTATIONS AND WARRANTIES.
7.1 The Issuer represents and warrants to the Escrow Agent that no party
other than the parties hereto and the prospective purchasers have, or shall
have, any 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 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 payment by
the purchaser described therein for the amount of Securities set forth in such
Subscription Information.
7.4 All of the information contained in the Registration Statement is, as
of the date hereof, and will be, at the time of any disbursement of the Fund,
true and correct.
8.0 FEES AND EXPENSES.
8.1 The Escrow Agent shall be entitled to an acceptance fee of $1,000 and
an annual administrative fee of $2,000, payable upon the execution of this
Agreement. In addition, the Issuer agrees to reimburse the Escrow Agent for any
reasonable fees and expenses incurred in connection with this Agreement,
including, but not limited to, disbursement fees not to exceed $50 per
subscriber in excess of 15 subscribers.
9.0 GOVERNING LAW AND ASSIGNMENT.
9.1 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 Escrow Agent unless (a) written
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notice thereof shall be given to the Escrow Agent; and (b) the Escrow Agent
shall have consented in writing to such assignment or transfer.
10.0 NOTICES.
10.1 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 Express Mail service offered by
the United States Post Office to the addresses set forth in the beginning of
this Agreement or such other address as the parties hereto may designate.
11.0 SEVERABILITY.
11.1 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 of 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.
12.0 EXECUTION IN SEVERAL COUNTERPARTS; ENTIRE AGREEMENT.
12.1 This Agreement may be executed in several counterparts or by separate
instruments, all of such counterparts and instruments shall constitute one
agreement, binding on all of the parties hereto.
12.2 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
therewith.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
upon proper legal authority as of the 30th day of August, 2004.
MANUFACTURERS AND TRADERS TRUST COMPANY, a
New York banking corporation
By: /s/ Leslie Boynton
Leslie Boynton, its VicePresident
M.E.R. CORPORATION, a Nevada corporation
By: /s/ Ronald Mercier
Ronald Mercier, its President
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