Exhibit 1.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as of the _____
day of _____________, 1998, by and among Rushmore Financial Group, Inc., a Texas
corporation (the "Issuer"), First Southwest Company, a Texas corporation, as
representative (the "Representative") of the underwriters (the "Underwriters"),
and Bank One, Texas, NA ("Escrow Agent").
R E C I T A L S:
A. The Underwriters propose to offer and sell on behalf of the Issuer a
minimum of 750,000 shares of Common Stock, $.01 par value per share (the "Common
Stock"), aggregating $4,125,000, and a maximum of 1,250,000 shares of Common
Stock, aggregating $6,875,000, each share of Common Stock being offered at a
price of $______ per share, payable at the time of subscribing for a share of
Common Stock. The shares of Common Stock being offered by the Company are
referred to herein as the "Shares."
B. The Underwriters intend to sell the Shares on a best-efforts "minimum
or none" basis in a public offering (the "Offering") by delivering to each
subscriber a Prospectus (the "Prospectus") describing the Offering.
C. The Issuer and the Underwriters desire to establish an escrow account
in which funds received from subscribers for the Shares would be deposited
pending completion of the Escrow Period (as defined below). Bank One, Texas, NA
agrees to serve as the Escrow Agent in accordance with the terms and conditions
set forth herein.
D. As used herein, the term "Selected Dealer" shall include the
Underwriters and other Selected Dealers as part of its selling group. All
Selected Dealers shall be bound by this Agreement.
E. The Shares shall be offered to the general public pursuant to the
Registration Statement filed under Form SB-2 with the United States Securities
and Exchange Commission, under the Securities Act of 1933, as amended, and
pursuant to various state securities laws. The Prospectus constitutes part of
the Registration Statement.
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. The Issuer and the Representative hereby appoint Bank One, Texas, NA
as the Escrow Agent and the Escrow Agent shall establish an escrow account (the
"Escrow Account") on its books styled "Rushmore Financial Group, Inc. - Escrow
Account." Commencing upon the execution of this Agreement, The Escrow Agent
shall act as Escrow Agent and hereby agrees to receive and disburse the proceeds
from the Offering of the Shares in accordance with the terms hereof. The Issuer
and the Representative agree to notify the Escrow Agent promptly of the Closing
of the Offering and the sale of the Shares.
2. The Underwriters and the Selected Dealers shall cause all checks
received from subscribers for Shares to be promptly deposited into the Escrow
Account. The Underwriters and the Selected Dealers shall deliver to the Escrow
Agent checks of the subscribers made payable to the order of the Rushmore
Financial Group, Inc. - Escrow Account. Any checks that are received by The
Escrow Agent that are not made payable to the Rushmore Financial Group, Inc. -
Escrow Account shall be returned to the Representative. The Underwriters and the
Selected Dealers shall furnish to the Escrow Agent at the time of each deposit
of the above-mentioned funds a list containing the name of each subscriber, the
subscriber's address, the number of Shares purchased, the subscriber's tax
identification number and the amount of the check being delivered to the Escrow
Agent. Prior to the receipt of the Minimum (as defined below), each of the
Issuer and the Representative is aware and understands that, except as otherwise
provided by this Agreement, it is not entitled to any proceeds from
subscriptions deposited into the Escrow Account and no amounts deposited in the
Escrow Account during the Escrow Period shall become the property of the Issuer,
the Representative or any other entity, or be subject to the Debts of the
Issuer, the Representative or any other entity.
3. The Escrow Period shall commence on the date hereof and shall terminate
ten (10) business days following the earlier to occur of the following dates:
(a) The date upon which the Escrow Agent confirms upon written request of
the Issuer that it has received into the Escrow Account and collected
gross subscription proceeds from the sale of seven hundred fifty
thousand (750,000) Shares aggregating 4,125,000 in deposited funds (the
"Minimum"); or
(b) The "Cessation Date," which for the purposes of this Agreement shall be
45 days after the effective date of the Prospectus, unless (i) the
Issuer and the Representative elect to continue to offer the Shares for
sale for 15 days thereafter, as permitted by the Prospectus, and (ii)
the Issuer and the Representative notify the Escrow Agent in writing no
later than _____________, of such extension specifying the extended
Cessation Date; or
(c) The date upon which a determination is made by the Issuer and the
Representative to terminate the Offering prior to the sale of the
Minimum, as communicated to The Escrow Agent in writing.
Notwithstanding anything to the contrary contained herein, the
Cessation Date is intended to signify the date of the cessation of the
Offering as provided in the Memorandum, and not the termination of the
Escrow Period of this Agreement, and upon the occurrence of any of the
events described in (a), (b) or (c) above, the Escrow Period shall continue
for such ten (10) business-day period solely for the limited purposes of
collecting subscribers' checks that have been deposited prior to such event
and disbursing funds from the Escrow Account as provided herein. The
Escrow Agent will not accept deposits of subscribers' checks after notice
that any of the events described in subparagraphs (a), (b) and (c) has
occurred.
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4. The Escrow Agent will deposit the subscribers' checks for collection
and credit the proceeds to the Escrow Account to be held by it under the terms
of this Agreement. The Escrow Agent shall hold the subscription proceeds in
trust as the Escrow Agent only and shall not claim or be entitled to ownership
of such funds. Notwithstanding anything to the contrary contained herein, the
Escrow Agent is under no duty or responsibility to enforce collection of any
checks delivered to the Escrow Agent hereunder. The Escrow Agent shall forward
each check for collection and deposit the proceeds in the Escrow Account. The
Escrow Agent may telephone the bank on which the check is drawn to confirm that
the check has been paid. Additionally, to insure that such funds have cleared
normal banking channels for collection, the Escrow Agent is authorized to hold
for ten (10) business days funds to be released. The Issuer shall immediately
reimburse the Escrow Agent any monies paid to it if thereafter the subscriber's
check is returned unpaid. Any item returned unpaid to the Escrow Agent on its
first presentation for payment shall be returned to Representative and need not
be again presented by the Escrow Agent for collection. The Issuer agrees to
reimburse the Escrow Agent for the cost incurred with any returned check. The
Escrow Agent shall not be required to invest any funds deposited in the Escrow
Account and shall in no event be liable for any investment loss. If
subscription funds are invested, such investments shall only be made in
investments permissible under SEC Rule 15c2-4. For purposes of this Agreement,
the term "collected funds" or the term "collected" when referring to the
proceeds of subscribers' checks shall mean all funds received by the Escrow
Agent that have cleared normal banking channels and are in the form of cash.
The Escrow Agent shall maintain records of all subscription funds received and
deposited into the Escrow Account. The records shall separately identify the
name and mailing address of each subscriber, the number of shares subscribed
for, the date on which the subscription funds were received by the Escrow Agent
and the date on which the proceeds of the subscription funds were collected by
the Escrow Agent.
5. If prior to the Cessation Date, subscriber's checks in an amount of at
least the Minimum have been deposited in the Escrow Account, upon request from
the Issuer and the Representative, the Escrow Agent will confirm the amounts
collected by it from subscriber's checks. If such amount is at least equal to
the Minimum, the Issuer and the Representative may send the Escrow Agent a
written notice providing a list of all accepted subscribers, specifying the
total amount of their subscription to be remitted to the Issuer, and containing
a request to terminate the Escrow Period and remit such amount, less any fees or
other amounts then owing from the Issuer to the Escrow Agent hereunder, to the
Issuer as promptly as possible, but in no event later than ten (10) business
days after such termination, by issuing its bank check payable to the Issuer or
by depositing such amount directly into the account of the Issuer maintained
with Bank One, Texas, NA, as designated in writing by the Issuer to the Escrow
Agent. The Escrow Period shall not terminate upon receipt by the Escrow Agent
of such notice, but shall continue for such (10) business-day period solely for
the limited purposes of collecting subscribers' checks that have been deposited
prior to the Escrow Agent's receipt of such notice and disbursing funds from the
Escrow Account as provided herein. Escrow Agent will not accept deposits of
subscriber's checks after receipt of such notice.
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If, on the Cessation Date, the Minimum Amount has not been deposited with
the Escrow Agent and collected, or if the Issuer and the Representative notify
the Escrow Agent in writing that the Issuer and the Representative elect to
terminate the Offering as provided in paragraph 3(c) above, the Escrow Agent
shall then issue and mail its bank checks to the subscribers in the amount of
the subscribers' respective checks, without deduction, penalty or expense to the
subscriber, and shall, for this purpose, be authorized to rely upon the names
and addresses of subscribers furnished it as contemplated above. Each
subscriber shall be paid interest, if any, with respect to such deposited funds.
The purchase money returned to each subscriber shall be free and clear of any
and all claims of the Issuer and any of its creditors. For each subscription
for which the Escrow Agent has not collected funds but has submitted the
subscriber's check for collection, the Escrow Agent shall promptly issue a check
to such subscriber in the amount of the collected funds from such subscriber's
check after the Escrow Agent has collected such funds. If Escrow Agent has not
yet submitted such subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to such subscriber.
At such time as Escrow Agent shall have made the payments and remittances
provided in the Agreement, the Escrow Agent shall be completely discharged and
released of any and all further liabilities and responsibilities hereunder.
6. As consideration for its agreement to act as Escrow Agent as herein
described, the Issuer agrees to pay the Escrow Agent an administration fee of
__________ upon execution of this Agreement, plus the fees described on the
attached fee schedule. Further, the Issuer agrees to pay all disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder, including reasonable fees, expenses and disbursements of its counsel,
all in accordance with the attached fee schedule or the other provisions of this
Agreement. No such fees or reimbursements shall be paid out of or chargeable to
the funds on deposit in the Escrow Account until such time as the Minimum has
been collected.
If the Issuer rejects any subscription for which Escrow Agent has already
collected funds, the Escrow Agent shall promptly issue a refund check to the
rejected subscriber in the amount of the subscriber's check. If the Issuer
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 collected funds from the
subscriber's check to the rejected subscriber after the Escrow 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.
7. This Agreement shall automatically terminate upon the earlier of (i)
twenty (20) days after the Cessation Date or (ii) twenty (20) days after the
date upon which the Escrow Agent has delivered the final portion of Escrow
Account funds pursuant to the terms of this Agreement.
8. The Escrow Agent reserves the right to resign hereunder, upon thirty
(30) days prior written notice to the Issuer. In the event of said resignation,
and prior to the effective date thereof,
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the Issuer and the Representative, by written notice to the Escrow Agent, shall
designate a successor escrow agent to assume the responsibilities of the Escrow
Agent under this Agreement, and the Escrow Agent immediately shall deliver any
undisbursed Escrow Account funds to such successor escrow agent. If the Issuer
and the Representative shall fail to designate such a successor escrow agent
within such time period, the Escrow Agent may deliver any undisbursed funds into
the registry of any court having jurisdiction.
9. The parties hereto agree that the following provisions shall control
with respect to the rights, duties, liabilities, privileges and immunities of
the Escrow Agent:
a. The Escrow Agent shall have no obligation to invest the Escrow Account.
b. The Escrow Agent shall have no responsibility except for the safekeeping
and delivery of the amounts deposited in the Escrow Account in
accordance with this Agreement. The Escrow Agent shall not be liable for
any act done or omitted to be done under this Agreement or in connection
with the amounts deposited in the Escrow Account, except as a result of
the escrow Agent's gross negligence, willful misconduct or fraud. The
Escrow Agent is not a party to nor is it bound by, nor need it give
consideration to the terms of provisions of, even though it may have
knowledge of, (i) any agreement or undertaking by, between or among the
Issuer and any other party, except this Agreement, (ii) any agreement or
undertaking that may be evidenced by this Agreement, (iii) any other
agreements that may now or in the future be deposited with the Escrow
Agent in connection with this Agreement. The Escrow Agent is not a party
to, is not responsible for, and makes no representation with respect to
the offer, sale or distribution of the Shares including, but not limited
to, matters set forth in any offering documents prepared and distributed
in connection with the offer, sale and distribution of the Shares. The
Issuer covenants that it will not commence any action against the Escrow
Agent at law, in equity, or otherwise as a result of any action against
the Escrow Agent at law, in equity, or otherwise as a result of any
action taken or thing done by the Escrow Agent pursuant to this
Agreement, or for any disbursement made as authorized herein upon
failure of the Issuer to give the notice within the times herein
prescribed. The Escrow Agent has no duty to determine or inquire into
any happening or occurrence of or of any performance or failure of
performance of the Issuer or of any other party with respect to
agreements or arrangements with any other party. If any question,
dispute or disagreement arises among the parties hereto and/or any other
party with respect to the funds deposited in the Escrow Account or the
proper interpretation of this Agreement, the Escrow Agent shall not be
required to act and shall not be held liable for refusal to act until
the question or dispute is settled, and the Escrow Agent has the
absolute right at its discretion to do either or both of the following:
(i) withhold and/or stop all further performance under this Agreement
until the Escrow Agent is satisfied, by receipt of a written
document in form and
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substance satisfactory to the Escrow Agent and executed and
binding upon all interested parties hereto (who may include the
subscribers), that the question, dispute or disagreement had been
resolved; or
(ii) file a suite in interpleader and obtain by final judgment,
rendered by a court of competent jurisdiction, an order binding
all parties interested in the matter. In any such suit, or should
the Escrow Agent become involved in litigation in any manner
whatsoever on account of this Agreement or the Escrow Account, the
Escrow Agent shall be entitled to recover from the Issuer its
attorneys' fees and costs.
The Escrow Agent shall never be required to post a bond in connection
with any services hereunder. The Escrow Agent may consult with counsel
of its own choice and shall have full and complete authorization and
protection for and shall not be liable for any action taken or suffered
by it hereunder in good faith and believed by it to be authorized
hereby, nor for action taken or omitted by it in accordance with the
advice of such counsel (who shall not be counsel for the Issuer).
c. The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth in this Agreement and may rely and
shall be protected in acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and believed by
it to be genuine and to have been signed or presented by the proper
party or parties and to take statements made therein as authorized and
correct without any affirmative duty of investigation.
d. The Issuer hereby agrees to indemnify the Escrow Agent for, and to hold
it harmless against, any loss, liability, or expense (including, without
limitation, all legal expenses incurred in enforcing any of the
provisions of this Agreement or otherwise in connection herewith)
incurred without gross negligence, willful misconduct or fraud on the
part of the Escrow Agent, arising out of or in connection with its
entering into this Agreement and carrying out its duties hereunder,
including the costs and expenses of defending itself against any claim
of liability hereunder or arising out of or in connection with the sale
of the Shares. This covenant shall survive the termination of this
Agreement.
e. The Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, recision or supersession of this Agreement
unless the same shall be in writing and signed by all of the other
parties hereto and, if its duties as Escrow Agent hereunder are affected
thereby, unless it shall have given prior written consent thereto.
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10. Notices required to be sent hereunder shall be delivered by hand, sent
by an express mail service or sent via United States mail, postage
prepaid, certified, return receipt requested, to the following address:
If to the Issuer: Rushmore Financial Group, Inc.
Attn: Ms. Xxxxx Xxxxxx
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to the Representative: First Southwest Company
Attn: Mr. Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to Escrow Agent: Bank One, Texas, NA
Corporate Trust Department
0000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
No notice to the Escrow Agent shall be deemed to be delivered until actually
received by the Escrow Agent. From time to time any party hereto may designate
an address other than the address listed above by giving the other parties
hereto not less than five (5) days advance notice of such change in address in
accordance with the provisions hereof.
11. Each of the parties hereto agrees that the Securities Administrator of
the North American Securities Administrators Association, Inc. (the
"Administrator") shall have the right to inspect and make copies of the records
of the Escrow Agent relating to the Escrow Account at the offices of the Escrow
Agent upon reasonable advance written notice.
12. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Texas and the laws of the United States applicable to
transactions in Texas.
EXECUTED on the date first written above.
ISSUER:
By:
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Title:
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REPRESENTATIVE:
By:
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Title:
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ESCROW AGENT:
By:
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Title:
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