Exhibit 99.1
ESCROW AGREEMENT
This agreement dated June __, 2003 is between Regions Bank (the "Escrow Agent")
and Xxxxxxxxx Communities Inc., a Georgia corporation (the "Company").
The Company proposes to offer directly for sale to investors (the
"Offering") up to 5,000,000 shares of its Series A Convertible Preferred Stock
(the "Shares") at a price of $10.00 per share (the "Proceeds") as described in
its Prospectus. The Company desires to establish an escrow account in which
funds received from investors will be deposited pending completion of the escrow
period. Regions Bank agrees to serve as Escrow Agent in accordance with the
terms and conditions of this agreement, including the attached Exhibit A, and
certifies that it is not affiliated with the Company.
1. Establishment of Escrow Account. Effective as of the date of the
commencement of the Offering, the Company establishes an interest bearing escrow
account with the Escrow Agent, entitled "Regions Bank, Escrow Agent u/a
Xxxxxxxxx Communities Inc. Escrow Account No. ____________," or some similar
designation (the "Escrow Account").
2. Escrow Period. The Escrow Period shall begin with the commencement
of the Offering and shall terminate upon the earlier to occur of: (a) the date
upon which the Escrow Agent has received in the Escrow Account gross proceeds of
$2,000,000 in deposited funds (the "Minimum"), (b) March 31, 2004, or (c) the
date upon which a determination is made by the Company to terminate the offering
prior to the sale of the Minimum.
3. Deposits into the Escrow Account. The Company agrees that it shall
properly deliver, within 48 hours of its receipt, all monies received from
investors for the payment of the Shares to the Escrow Agent for deposit in the
Escrow Account, accompanied with a copy of the attached form of "Share Purchase
Order," which shall include the name, address and tax identification number of
each investor and the date and amount of each order, executed by the Company and
the investor. Checks payable to the Company shall be endorsed by the Company for
deposit to the Escrow Account. If checks are delivered to the Escrow Agent
unendorsed, the Escrow Agent may supply the Company's endorsement and deposit
them into the Escrow Account. All payments to the Company by reason of credit
card purchases of the Shares shall be forwarded into the Escrow Account. The
Company shall date and number-stamp each Share Purchase Order and provide the
Escrow Agent with, and maintain for its own records, a copy of each Share
Purchase Order
4. Disbursements from the Escrow Account.
A. In the event the Escrow Agent does not receive the Minimum
deposits totaling $2,000,000 prior to the termination of the Escrow
Period, the Escrow Agent shall promptly refund to each investor, in
accordance with paragraph 6, the amount received from such investor,
with interest and without deduction, penalty or expense to such
investor, and the Escrow Agent shall notify the Company of such
distribution. The purchase money returned to each investor shall be
free and clear of any and all claims of the Company or any of its
creditors.
B. In the event the Escrow Agent receives the Minimum prior to
the termination of the Escrow Period, the funds in the Escrow Account
which are collected funds will be released to the Company upon receipt
by the Escrow Agent of written direction from the Company. 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, plus any interest accrued on such funds.
The Minimum may be met by funds that are deposited from the effective
date of the offering up to and including the date on which the Minimum
must be received.
C. Upon the return or release of funds in the Escrow Account,
the Escrow Agent shall notify Xxxxxxxxxxx X. prior, Assistant Director,
Division of Corporation Finance, Pennsylvania Securities Commission,
Eastgate Office Building, 2nd Floor, 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000-0000 (the Administrator.) The Administrator has
the right to inspect and make copies of the records of the Escrow Agent
at any reasonable time wherever the records are located.
5. Collection Procedure. The Company agrees that if a deposited check
is returned unpaid for any reason, the Escrow Agent may charge the Escrow
Account for the amount of the check. However, the Escrow Agent may represent a
returned check for payment to the financial institution on which it is drawn,
but the Escrow Agent is not required to do so.
The Escrow Agent may represent the check without notifying the Company that it
is doing so or that the check was not paid. Any check returned unpaid to the
Escrow Agent a second time shall be returned to the Company.
6. Investment of and Interest on Funds in Escrow Account. Pending
disposition of the funds in the Escrow Account, the Escrow Agent shall invest
those funds in direct obligations of the United States government which may be
liquidated, in whole or in part, at any time. In the absence of investment
instructions, the Escrow Agent shall invest those funds in the investment medium
it uses for similar fiduciary purposes. Refunds to investors pursuant to
paragraph 4A shall include each investor's pro-rata share of any interest earned
while the investor's funds were on deposit.
7. Records to be Maintained by the Escrow Agent. Records and accounts
of the transactions kept by the Escrow Agent shall include records of all
transactions in the Escrow Account and copies of all Share Purchase Orders. The
Company shall maintain the original Share Purchase Orders and copies of all
checks, along with any other records of transactions for a period of five years
after the termination of the Escrow Period.
8. Compensation of Escrow Agent. The Company shall pay the Escrow Agent
fees for its escrow services as set forth in Exhibit B.
9. Protection of the Escrow Agent from Liability. The sole duty of the
Escrow Agent, other than specified in this Agreement, shall be to establish and
maintain the Escrow Account and receive and hold the funds deposited by the
Company. The Company acknowledges that the Escrow Agent is performing the
limited function of Escrow Agent and that this fact in no way means the Escrow
Agent has passed in any way upon the merits or qualifications of, or has
recommended, or given approval to, any person, security or transaction. The
Escrow Agent may conclusively rely on, and shall be protected, when it acts in
good faith upon, a writing signed by Xxxx X. Xxxxxxxx, President and Chief
Executive Officer of the Company. Provided it uses due care, 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 the Agreement unless it is indemnified to its
satisfaction. The Escrow Agent may consult counsel in respect of any questions
arising under this Agreement and the Escrow Agent shall not be liable for any
action taken, or omitted, in good faith upon advice of such counsel.
10. Indemnification of the Escrow Agent. The Company hereby agrees to
defend, indemnify, and to hold the Escrow Agent harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
the part of Escrow Agent arising out of or in connection with its entering into
this Agreement and carrying out its duties hereunder, including the cost and
expense of defending itself against any claim or liability.
11. Direction by Court. In the event the Escrow Agent shall be
uncertain as to its duties or rights hereunder or it shall receive instructions,
claims or demands from any of the parties hereto or from third parties with
respect to the property held hereunder, which, in its opinion, are in conflict
with any provision of this Agreement, it shall be entitled to refrain from
taking any action (other than to keep safely the funds in the Escrow Account)
until it shall be directed to act by order or judgment of a court of competent
jurisdiction.
12. Escrow Funds not Subject to Claims. During the Escrow Period, the
Company is aware and understands that it is not entitled to any funds received
into the Escrow Account, such funds are not assets of the Company and no amounts
deposited in the Escrow Account shall become property of the Company or any
other entity, or be subject to the debts of the Company or any other entity. The
funds in the Escrow Account are not subject to claims by creditors of the
Company, or any of its affiliates, associates or underwriters until the funds
have been released to the Company pursuant to the terms of this Agreement.
13. Binding upon Successors. This Agreement shall be binding upon, and
inure to, the benefit of the parties hereto, their heirs, successors and
assigns.
14. Termination of Agreement. This agreement shall terminate in its
entirety when all funds in the Escrow Account have been distributed as provided
in paragraph 4., above.
15. Notices. All statements and other notices produced by the Escrow
Agent related to the Escrow Account shall be made via United States Postal
Service regular mail or facsimile transmission to the Company at:
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000 Facsimile: 678.455.1114
Attn:Xxxx X. Xxxxxxxx, President
Except for deposits, all notices and other communications from the
Company shall be made via United States Postal Service regular mail or facsimile
transmission to the Escrow Agent at:
Regions Bank
00 Xxxxxxxx Xxxxxx, Xxxxxxxxx Trust, 2nd Floor
Xxxxxxxxxx XX 00000 Voice: 000-000-0000 Facsimile:
Attn: Xxxxxx X. Xxxxxxxx, Senior Vice President and Corporate
Trust Officer
The Escrow Agent shall be entitled to rely on all notices and instructions
received from Xxxx X. Xxxxxxxx, President of the Company.
16. Governing Law. This Agreement shall be governed by Georgia law and
any action or proceeding, including arbitration, arising in connection with this
Agreement shall be brought and held in Georgia.
17. Resignation of the Escrow Agent. Escrow Agent or any successor may
resign its position and be discharged of its duties or obligations hereunder by
giving thirty (30) days written notice to the parties hereto. Such resignation
shall take effect at the earliest to occur of the end of such thirty (30) days,
provided the escrow funds have been tendered into the registry or custody of any
court of competent jurisdiction or the appointment by the Company of, and
delivery of the escrow funds to, a successor. From and after the effective date
of such resignation or appointment of a successor, Escrow Agent shall not be
obligated to perform any of the duties of Escrow Agent hereunder, other than
prompt transfer of the escrow funds to a successor, or if no successor is
appointed, the registry or custody of any court of competent jurisdiction, and
will not be liable for any nonperformance thereof nor for any act or failure to
act whatsoever on the part of any successor Escrow Agent.
18. Amendment. No modification or amendment to this Escrow Agreement
shall be valid unless produced in writing and signed by the parties hereto.
Regions Bank Xxxxxxxxx Communities Inc.
By: __________________________ By: __________________________
Xxxxxx X. Xxxxxxxx Xxxx X. Xxxxxxxx
Senior Vice President and President
Corporate Trust Officer
A copy of the Prospectus follows this page.
