ESCROW AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of December,
2005, by and between FirstCity Bank, a __________________ banking association,
with its principal office located at 000 Xxxxxx Xxxxxxx Xxxxxxx, Xxxxxxxxxxx,
Xxxxxxx 00000 (the "Escrow Agent") and Sotech, Inc., a Georgia corporation, with
its principal office located at 10031 Carousel Center, Syracuse, N.Y. 13290
("Company").
WITNESSETH:
WHEREAS, the Company desires to make a public offering (the "Offering")
of up to 5,000,000 shares of its $.0001 par value common stock (the "Share") on
a best efforts basis by the executive officers of the Company at an offering
price of $0.10 cents per share; and
WHEREAS, the Offering is to be made in accordance with Rule 419 ("Rule
419") of the Securities Act of 1933, as amended (the "Act") and the offering
will be registered with the Securities and Exchange Commission (the
"Commission"); and
WHEREAS, the Company desires to establish an escrow account in which
funds received from subscribers and securities issued in connection with the
offering will be deposited pending completion of the escrow period. FirstCity
Bank, an insured depository institution in accordance with Rule 419(b)1iA,
agrees to serve as Escrow Agent in accordance with the terms and conditions set
forth herein and as more specifically directed under Rule 419.
WHEREAS, the proceeds deposited in the escrow account are to be
released to the Company only in the event of the consummation of a business
combination in accordance with the terms hereof, and within the time set forth
herein, and otherwise the escrowed proceeds are to be returned to the purchasers
of the Shares in accordance with the terms and conditions set forth herein, and
all as specifically directed under Rule 419.
WHEREAS, the Company and the Escrow Agent desire to enter into an
agreement with respect to the above-described escrow.
NOW, THEREFORE, in consideration of the foregoing and mutual promises
and covenants contained herein, it has been and IT IS HEREBY AGREED as follows:
1. ESTABLISHMENT OF ESCROW ACCOUNT.
1.1 On or prior to the date of the commencement of the offering, the
parties shall establish a non-interest bearing escrow account with the Escrow
Agent, which escrow account shall be entitled SoTech Common Stock Escrow Account
and shall be located at FirstCity Bank (the "Escrow Account").
1.2 On or before the date of the initial deposit in the Escrow Account
pursuant to this Agreement, the Company 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.
1.3 The offering period (the "Offering period), which shall be deemed
to commence on the Effective Date, shall be for a period of up to 180 days from
the effective date of the Registration Statement. The Offering Period shall be
less than 180 days if the Company sells all Securities for a total consideration
of $500,000. The last day of the Offering Period, which is either 180 days from
the Effective Date or the date on which the Company sells all Securities for a
total consideration of $500,000, whichever occurs first, is also referred to
herein as the "Termination Date." Except as provided for herein, after the
Termination Date, the Company shall not deposit, and the Escrow Agent shall not
accept, any additional amounts representing payments by prospective purchasers.
On completion of the Offering Period, the Escrow Account shall continue until
the conditions set forth in Section 5 below are satisfied.
2. ACCOUNTING FOR ESCROW FUNDS. The Company agrees that it shall
promptly deliver all monies received from subscribers in payment for the Common
Stock to the Escrow Agent for deposit in the Escrow Account, along with a
written account of each sale, which account shall set forth, among other things,
the subscriber's name and address, social security number, the number of
securities purchased, the amount paid therefore, and whether the consideration
received was in the form of a check, draft, money order or wire transfer. All
monies so deposited in the Escrow Account are hereinafter referred to as the
"Escrow Amount".
3. DEPOSITS INTO THE ESCROW ACCOUNT.
3.1 All proceeds delivered to the Escrow Agent pursuant to this
Agreement shall be deposited immediately by the Escrow Agent in the Escrow
Account. The Escrow Account shall be created and maintained subject to the
customary rules and regulations of the Escrow Agent pertaining to such accounts.
In addition, as specified in Rule 419 (b) (3) (i), all securities issued in
connection with the subject offering shall be deposited directly into the Escrow
Account promptly upon issuance. Securities held in the escrow account are to
remain as issued and deposited and shall be held for the sole benefit of the
purchasers.
3.2 All funds received by the Escrow Agent pursuant to this Escrow
Agreement and deposited and held in the Escrow Account after the subscriptions
have been accepted by the Company may only be invested in an obligation that
constitutes a "deposit" as defined in Section (3) (1) of the Federal Deposit
Insurance Act or Securities that are direct obligations or obligations
guaranteed as to principal or interest by the United States.
3.3 The Company shall promptly deliver to the Escrow Agent all funds
which it receives from prospective purchasers of the Common Stock, 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 "Sotech Common Stock
Escrow Account." Any checks payable other than to the Escrow Agent as required
hereby shall be returned to the prospective purchaser.
3.4 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."
3.5 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
Company.
3.6 Until all funds in the Escrow Account are disbursed in accordance
with the terms and conditions of this Escrow Agreement, all funds deposited into
each Escrow Account shall be considered the property of the subscribers. The
funds deposited and held in the Escrow Account shall not become the property of
the Company or be subject to the Company's debts or obligations, unless and
until such funds have been disbursed to the Company in accordance with the terms
and conditions of this Escrow Agreement. The Escrow Agent shall not make any
disbursements of funds from the Escrow Accounts except as expressly provided
herein.
3.7 Within a reasonable time after the deposit of the proceeds from the
purchase of common stock, the Company shall issue certificates for the common
stock purchased and shall deposit such certificate with the Escrow Agent. Any
other securities issued respecting the deposited securities, such as stock
dividend or stock splits, shall also be deposited directly in the Escrow
account. The identity of the purchaser of the common stock shall be included on
the stock certificate or other documents evidencing such securities. Securities
held in the Escrow Account are to remain as issued and deposited and shall be
held for the sole benefit of the purchasers, who shall have voting rights, if
any, with respect to securities held in their names, as provided by applicable
state law. Warrants, convertible securities or other derivative securities
relating to deposited securities held in the Escrow Account may be exercised or
converted in accordance with their terms; provided, however, that the securities
received upon exercise or conversion together with any cash or other
consideration paid in connection with the exercise or conversion are to be
promptly deposited into the escrow account.
3.8 Interest, dividends or other property earned on the Funds or the
securities deposited shall be held in escrow by the Escrow Agent, and they shall
be distributed to the subscribers pro-rata if the conditions of Section 5(b) are
met or they shall be distributed to the Company if the conditions set forth in
5(a) are met.
4. RIGHTS OF THE ESCROW FUNDS.
4.1 During the Escrow Period (as hereinafter defined), the Company is
aware and understands that all proceeds deposited in the Escrow Account shall
not become the property of the Company or other entity, or be subject to the
debts of the Company or any other entity. Except as expressly provided for
herein, the Escrow Agent shall neither make nor permit any disbursements from
the Escrow Account.
4.2 The shares of common stock held in the Escrow Account shall not be
transferred other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of 1986 as amended or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. In no event, however, shall any Shares
held in the Escrow Account be released or delivered by the Escrow Agent except
as expressly provided elsewhere herein.
5. TERMINATION OF ESCROW. The Escrow Account shall terminate when:
(a) the following two conditions have been satisfied (i) the Escrow
Agent has received a signed representation from the Company, together with other
evidence acceptable to the Escrow Agent, that the requirements of paragraphs (e)
(1) and (e) (2) of Rule 419 of the Act have been met; and (ii) Consummation of a
combination of companies meeting the requirements of paragraph (e)(2)(iii) of
Rule 419 of the Act, or
(b) Eighteen (18) months after the effective date of the original
registration statement, if the conditions set forth in Section 5(a) above have
not been satisfied.
6. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
6.1 When the events set forth in paragraph 5(a) above have occurred,
this escrow will terminate and the proceeds on deposit shall be delivered to or
on behalf of the Company as directed by the Company's counsel or designated
principal officer. 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.
6.2 In the event the conditions set forth in Section 5(b) above have
occurred, then the Escrow Agent shall promptly return to each of the subscribers
to the Company's common stock the amounts paid by them for such common stock,
without any deductions and without any interest earned. Prior to the return of
funds to subscribers as set forth above, the Escrow Agent shall notify the
Company of its intent to disburse the funds to the subscribers. The amounts paid
or payable to each subscriber pursuant to this paragraph shall be deemed to be
the property of the subscriber, free and clear of any or all claims of the
Company or of any of its creditors, and the respective agreements to purchase
the Company's common stock made and entered into by the subscribers shall be
deemed to be canceled without further liability of said subscribers to pay for
the common stock purchased. At such times as the Escrow Agent shall have made
all the payments and remittances provided for in this paragraph, the Escrow
Agent shall be completely discharged and released from any and all further
liabilities and responsibilities hereunder.
6.3 The Certificate for Common Stock deposited in the Escrow Account,
shall be promptly released and delivered to the share purchaser or other
registered holder identified with the deposit when the conditions set forth in
paragraph 5(a) has been satisfied. If the conditions set forth in paragraph 5(a)
are not satisfied, such certificates shall be returned to the Company and shall
then be cancelled.
7. RIGHTS, DUTIES AND RESPONSIBILITIES OF ESCROW AGENT'S
INDEMNIFICATION.
7.1 The Escrow Agent shall be fully protected in every reasonable
exercise of its discretion and shall have no obligations hereunder either to the
Company or to any other party, except as expressly set forth herein. It is
understood and agreed that the duties of the Escrow Agent are entirely
ministerial, being limited to receiving monies and securities from the Company
and holding and disbursing such monies and shares in accordance with this
Agreement,
7.2 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 Company pursuant to this Agreement without the
necessity of the Escrow Agent verifying the truth or accuracy thereof. The
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.
7.3 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 in accordance with
Section 14 hereof. 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
7.4 The Company 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.
7.5 The Escrow Agent shall not be liable to the Company or to anyone
else for any action taken or omitted by it, or any action suffered by it to be
taken or omitted, in good faith and in the exercise of its own best judgment.
The Escrow Agent may rely conclusively and shall be protected in acting upon any
order, notice, demand, certificate, opinion or advice of counsel (including
counsel chosen by the Escrow Agent), statement, instrument, report or other
paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained), which is believed by the Escrow Agent, as
applicable, to be genuine and to be signed or presented by the proper person or
persons. The Escrow Agent shall not be bound by any notice or demand, or any
waiver, modification, termination or rescission of this Escrow Agreement or any
of the terms thereof, unless evidenced by a writing delivered to the Escrow
Agent, as applicable, signed by the proper party or parties and, if the duties
or rights of the Escrow Agent, as applicable, are affected, unless it shall give
its prior written consent thereto.
7.6 The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness of,
any document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein, nor shall the Escrow Agent be responsible or liable to
the other parties hereto or to anyone else in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any document or property pursuant to the
provisions of this Agreement. Except as specifically provided for herein, the
Escrow Agent shall have no responsibility with respect to the use or application
of any funds or other property paid or delivered by the Escrow Agent pursuant to
the provisions hereof. The Escrow Agent shall not be liable to the Company or to
anyone else for any loss which may be incurred by reason of any investment of
any monies which it holds hereunder provided the Escrow Agent, as applicable,
has complied with the provisions of Section 3.2 hereunder.
7.7 The Escrow Agent shall have the right to assume in the absence of
written notice to the contrary from the proper person or persons that a fact or
an event by reason of which an action would or might be taken by the Escrow
Agent, as applicable, does not exist or has not occurred, without incurring
liability to the other parties hereto or to anyone else for any action taken or
omitted, or any action suffered by it to be taken or omitted, in good faith and
in the exercise of its own best judgment, in reliance upon such assumption.
7.8 The Escrow Agent may resign at any time and be discharged from its
duties as Escrow Agent hereunder by giving the Company and the subscribers at
least thirty (30) days' notice thereof. As soon as practicable after its
resignation, the Escrow Agent shall turn over to a successor escrow agent
appointed by the Company all monies and property held hereunder upon
presentation of the document appointing the new escrow agent and its acceptance
thereof. If no new Escrow Agent is so appointed within the sixty (60) day period
following such notice of resignation, the Escrow Agent may deposit the aforesaid
monies and property with any court it deems appropriate.
8. 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.
Any check returned unpaid to the Escrow Agent shall be returned to the
investor that submitted the check. 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 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.
9. ESCROW-FEES. The Escrow Agent shall be entitled to an acceptance fee
of $100.00 and an annual administrative fee of $500.00. The fees agreed upon for
services rendered hereunder is intended as full compensation for the Escrow
Agent's services as contemplated by this Agreement. The fees to be paid to the
Escrow Agent hereunder shall not be paid out of, or be chargeable to, the funds
on deposit in the Escrow Account.
10. INDEMNITY OF ESCROW AGENT. The Company hereby agrees to indemnify
and hold harmless the Escrow Agent against any and all losses, claims, damages,
liabilities and expenses, including any litigation arising from this Agreement
or involving the subject matter hereof
11. ENTIRE AGREEMENT. This is the entire Agreement of the parties. Any
other agreements of any nature whether oral or written not contained herein are
expressly made null and void.
12. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Georgia.
13. INTERPLEADER. In the event conflicting demands are made or notices
served upon the Escrow Agent with respect to the Escrow Account, the Escrow
Agent shall have the absolute right at its election to do either or both of the
following: (a) Withhold and stop all further proceedings in, and performance of,
this escrow or (b) File a suit in interpleader with any court of competent
jurisdiction in the State of Georgia and obtain an order from the court
requiring the parties to litigate their several claims and rights among
themselves. In the event such interpleader suit is brought, the Escrow Agent
shall be fully released from any obligation to perform any further duties
imposed upon it hereunder, and the Company shall pay the Escrow Agent all costs,
expenses and reasonable attorney's fees expended or incurred by Escrow Holder
(or allocable to its in-house counsel), the amount thereof to be fixed and a
judgment thereof to be rendered by the court in such suit.
14. GOVERNING LAW AND ASSIGNMENT. This Agreement shall be construed in
accordance with and governed by the laws of the State of Georgia 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 notice thereof shall be given to the Escrow
Agent; and (b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
15. NOTICES. All notices required to be given in connection with this
Fund Escrow 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.
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 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.
17. EXECUTION IN SEVERAL COUNTERPARTS; ENTIRE AGREEMENT.
17.1 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.
17.2 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 Company, and the Escrow Agent have executed this
Fund Escrow Agreement on the day and year first above-written.
SOTECH, INC.
-------------------------------------
Authorized Officer
FIRSTCITY BANK
By:______________________________
Authorized Officer
